(my calculations)
I recently highlighted that High River’s Total (Booked) Asset Value at March 31, 2009 was C$734,600,000. With HRG’s debt estimated to be US$106.5M (C$122.9M) at the end of June, there is an overwhelming difference here.
I decided to perform a detailed valuation work up based on 43-101 ounces in ground, coupled with the costs to bring the various existing operating mines into production in today’s world, to see if I can get back to the C$734,600,000 gross asset value. Using this detailed method, it turns out that the value is even greater that what is booked into the HRG’s balance sheet.
I arrive at a Gross Value for HRG (using this method) of C$930,067,789, which is even a more overwhelming gap versus the estimated debt of US$106.5M (C$122.9M).
Ounce in ground assumptions:
US$100 = 1 P&P Reserve 43-101 oz in ground (based on my observations, this is what many CEO’s often use when discussing minimum value for a reserve ounce in ground)
US$50 = 1 M&I 43-101 oz in ground (based on my analysis performed on an in ground deposit purchased in late 2008 by Kinross from Teck Cominco and Anglo-American – called Lobo Marte (the US$50 represents a blended M&I value, between a lower Indicated value and a higher Measured value))
US$10 = 1 Inferred 43-101 oz in ground (based on same analysis as M&I)
Exchange rate = 1.1538
ALL OUNCES QUALIFY WITH NI43-101 STATUS
Detailed Calculations:
1) Zun-Holda (84.5%):
P&P Reserves, 250,000 ounces = C$28,845,000 (100%
Other M&I, 23,000 ounces = C$1,326,870 (100%)
Inferred, 120,000 ounces = C$1,384,560 (100%)
Total Zun-Holda (84.5%) = C$26,665,183(C$31.6M @100%)
2) Irokinda (84.5%):
P&P Reserves, 184,000 ounces = C$21,229,920 (100%
Other M&I, 12,000 ounces = C$692,280 (100%)
Inferred, 60,000 ounces = C$692,280 (100%)
Total Irokinda (84.5%) = C$19,109,236(C$22.6M @100%)
3) Berezitovy (99%) – gold + gold eq silver (50 to 1 ratio):
P&P Reserves, 1,133,414 ounces = C$130,773,353
Other M&I, 106,679 ounces = C$6,154,335
Inferred, 22,869 ounces = C$263,863
Total Berezitovy (99%) = C$137,191,551
4) Taparko-Bouroun (90%):
P&P Reserves, 720,000 ounces = C$83,073,600
Other M&I, 170,100 ounces = C$9,813,069
Inferred, 91,800 ounces = C$1,059,188
Total Taparko-Bouroun (90%) = C$93,945,857
5) Bissa:
P&P Reserves, 0 ounces = C$0
Other M&I, 924,000 ounces = C$53,305,560
Inferred, 799,000 ounces = C$9,218,862
Total Bissa = C$62,524,422
6) Prognoz (50%) – gold eq (50 to 1 ratio):
P&P Reserves, 0 ounces = C$0
Other M&I, 1,020,000 gold eq ounces = C$58,843,800
Inferred, 1,030,000 gold eq ounces = C$11,884,140
Total Prognoz (50%) = C$70,727,940
7) Financing and development costs to bring Berezitovy into production:
ballpark C$167,301,000 (US$145M)
This is based on my analysis posted on Stockhouse on June 5’09. The analysis is largely based on published data, including info provided by High River Gold at the September’07 Denver Gold Forum.
Here is a link to my original Stockhouse post with the detailed work up:
https://www.stockhouse.com/Bullboards/MessageDetail.aspx?s=HRG&t=LIST&m=27196170&l=0&pd=0&r=0
8) Financing and development costs to bring Taparko into production:
ballpark C$152,301,600 (US$132M)
This is also based on my analysis posted on Stockhouse on June 5’09. Again, the analysis is largely based on published data, including info provided by High River Gold at the September’07 Denver Gold Forum.
9) Zun-Holda – financing and development costs one would incur to bring a Zun-Holda type operation into production in today’s world:
ballpark C$83,650,500(conservatively assumed 50% of Berezitovy)
10) Irokinda – financing and development costs one would incur to bring a Irokinda type operation into production in today’s world:
ballpark C$83,650,500(conservatively assumed 50% of Berezitovy)
11) Strategic Investments (including Detour Gold) – C$33,000,000
12) Total Gross Value of High River Gold = C$930,067,789