Oromin Explorations Ltd OLEPF

New Math Formula = $2.24

[Goldfather]

Fellow OLE shareholders, here is my math formula for the what should be the minimum takeout price: 

      ** please note that the $135 mil # below may be off a bit. Its the last # i could find/remember.

---$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 us which is $9,000,0000 (i.e.  ½ of 13% of the $135,000,000,000** that Bendon & OLE have spent developing the concession).  That total now equals $337,000,000.00.  Divide that by 150,600,000 fully diluted shares and you have the minimum Fair Market Value per share of $2.24 .

·        That excludes any blue sky premium

·        That excludes interest on the Badr advances (minor)

·        That $2.24 is what a 3^rd 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 $2.24 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 $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. $3.24) 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

[dmuy]

You can't exp[ect to get the full NPV as the buyer would have to assume risks and want a decent return on their investment. Also, I think the NPV calculation only starts when CAPEX needs to kick in so there would be further discounting from the time of the buyout to when the mine actually starts getting built. This is really about the leverage of the gold price to the NPV and IIR.

[Capharnaum]

From what I've heard, OLE would have a minimum of 45% as the interests would be at a high figure (ie: why would Oromin have to take a loan of $5M at over 15% all in but at the same time finance Badr for less than that?). Also, I wouldn't take Senegal's share in $$$ as it could be carried over. Lastly, while I don't think they could get NAV, you'd have to add $$$ for the

[tony1969]

Good job GF.  It must have taken you some time to do all this.  I think that they have spent just over $150 million not $135 on the property so far. I have to agree with dmuy however on the price estimate.  I think that you can knock off a good 25 to 30% off of that $2.24 figure. That figure would be in a perfect world or with gold much higher.  I believe something around $1.50

[bluestar]

if you want to buy something you pay what the asking price is,not what you think it should be.

[Goldfather]

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

[Capharnaum]

For options, you need to add the option price to the total to be split (ie: if 5M options have a strike price of $1.30, then they only get a net $.95 from the total proceeds).

[1sanman1]

Tony I have the upmost respect for your contribution on this board but correct me if I'm wrong the value of the company is not the same as the value of gold, I believe that when your investing in a company you have to value the company according to the risk, but I think that the company that purchases this property is not parse buying OLE but the gold in its property and based on what you are

[tony1969]

Thanks 1sanman1 for your kind words. I am just basing my estimate on them getting roughly aroung $600 to $650 million for the property.  That is $1.72 using $600 million and $1.87 per share using $650 million.  Take out the 10% they will owe Senegal and you land somewhere around my $1.50 to $1.70 figure.  I actually upped the lower end of my estimate after the study. 

[nailati]

Good discussion guys/gals. Lot of variables to consider when analyzing this, but generally all indicators are that we see a much higher price within the next quarter.

[1sanman1]

No problem Tony, in my opinion well deserved. I'm still hoping you are on the low side.