RE: New Math Formula = $2.25w/ Corrected Data Fellow OLE shareholders, here is my math formula for what should be the minimum takeout price: (w/revised Badr # and Project costs.)
$740,000,000 NPV from PR#1 + $98,000,000 NPV from PR#2 (heap leach)=$838,000,000. Multiply that by 43.5%=$364,500,00. Take out 10% or $36,500,000 to Gov’t of Senegal. That leaves $328,000,000. Add to that what Badr owes Ole which is $10,500,0000 (i.e. ½ of 13% of the $78,878,000 that OLE alone has spent developing the concession. See Note 4 to 11/30/12 Oromin Financial Statements). That total now equals $338,500,000.00. Divide that by 150,600,000 fully diluted shares and you have the minimum Fair Market Value per share of $2.25 .
· That excludes any blue sky premium
· That excludes interest on the Badr advances (minor)
· That $2.25 is what a 3rd party non-TGZ buyer could pay and get a stellar 28% IRR as it includes $297 million for a new mill.
· TGZ could pay a full $1.00 more than $2.25 and have the same 28% IRR. Why? TGZ is the only firm on the globe with a mill right next door. Here’s how I get to $1.00. $297 million x ½(43.5% rounded) $148.5 million divided by 150.6 million fully diluted =$1.00 ($.99 rounded)
· In fact if TGZ paid a full $1.00 more (i.e. $3.25) their IRR would be higher than 28% because they could mill OLE ore immediately whereas others would need 18-24 months to build a mill and IRR calculation ALWAYS takes into account “time value of money”. Ore today is more valuable than Ore tomorrow.
Peter Grandich, I know you see this. I would greatly appreciate your comments to my calculations. If you like it , feel free to post it on your site. Just trying to be more factual.
Yours truly, Goldfather. J