RE:RE:RE:RE:RE:RE:RE:Sprott lending planned bankruptcy Bootstrapping Dufferin did not lead to bankruptcy. Poor cash management did.
RCG’s in-situ gold took at 65% haircut in the insolvency process and a weak market.
Other juniors should be cautious.
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Regional valuations
NPV,5% = $400/oz
indicated = $25/oz
inferred = $5/oz
Indicated = 5 times more valuable than inferred.
Dufferin, Tangier, Forest Hill have approximately 700,000oz of gold including 130,000oz of indicated.
By regional valuations Dufferin, Tangier and Forest Hill are worth
25*130 + 5*570 = $6.1M
In 2016, RCG had purchased properties including the mill for 11.5M=10M+1.5M
The difference of $5.4M can be attributed to the mill and existing Dufferin mine infrastructure.
$11.5 - $6.1 = $5.4M
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The insolvency process values the properties at $2.2M.
x = value of inferred per oz
indicated = 5*inferred
Assume the mill has zero value
2.2M = 130*5x + 570x + mill
2.2M = 1.22M eq.oz
inferred = $1.8/oz
indicated = $9/oz
RCG's in-situ gold took a 65% haircut compared to other regional players.
9/25 = 35%
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The same 65% haircut could be applied to other regional players.
Anaconda acquired Goldboro, a 50/50 mix of indicated/inferred, for $15/oz.
It would go for $5.4/oz in an insolvency process. (9+1.8)/2 = $5.4M