Columbus Gold Corp CGTFF

RE:RE:RE:RE:RE:Columbus Gold Announces Positive Bankable Feasibility Study

[eebler]

The market is having "fun" with this.  For those on the Cdn side of things, it could end up down in the 70's again, although for now it seems to be finding a potential bottom.  All those people that can't trade in the day will go home tonight, see the drop, and try to decide if they need to put in sell orders for tomorrow, which could be what pushes it into the 70's for a while.  That being said, this could present a good opportunity for those looking to pick up more shares for the long-term, or simply for those interested in short-term trading.  This same market reaction happened to Guyana Goldfields when they came out with a feasibility study that was underwhelming in relation to what the market was hoping to see.  They went back to the drawing board and were able to put something together that the market was willing to get behind and the share price appreciated accordindty.  Based on the run-up in price yesterday for CGT, the market was pricing in a blockbuster BFS but didn't get what it wanted.  

Agree to your last point.  Unless CGT decides for some reason to hold onto their share through to production (why?!) then we as shareholders will see M D'Or sold off and end up with cash and shares in a NewCo that will hold onto Eastside.

Selfishly, my interest now turns to how many ozs they can get converted to Indicated and how many more ozs they can drill out via drilling extensions and step-outs.  The selfish goals of CGT management should be to maximize the value of M D'Or to ensure that a reasonable offer comes through.  I think the best bests are on extensions and step-outs because at the current resource pit-depth they probably can't go much deeper without notable increases to stripping ratios, and the grades are not good enough to make underground cost-effective.  

Turning to a buyout, I believe there is a formula in the JV that combines P&P with Capex to come up with a relative dilution rate.  I have no idea how that translates into real life, but I will be doing some reading.  In the meantime, a sometimes-ratio used is $100 to $125 per oz-in-the-ground for Indicated resources, with little to no attributable value associated with Inferred ozs.  I think they would have a hard time saying Inferred have no value given the results of step-out drilling.  But assuming no value for Inferred, CGT  now has 45% of approx 3m ozs, which works out to about 1.35m ozs.  Using $100-$125 that gives anywhere from $135m to $170m as a range that serves as possible comparable.   If they can avoid a quick buyout and convert more ounces and/or gain some value from all of the Inferred, it would make for a better buyout.  If they decide to keep their share and participate in the full development, I’ll take the implied value associated with about 100k ozs per year of attributable production.  

Should be an interesting next few months.