This is from a post on A gora comI came across info from Scotia Capital, an excerpt of which isattached, which supports Peter G's analysis this a.m. Seems like thestars are starting to align for SQI after quite a quiet period in theweeds.....hip hip horay for those who bought it! Much better than croakcroak!
“From Scotia Capital Report…..SQI
RVC/NGD Follow On…Don’t Forget the SQI Stub:Recall that Silver Quest (SQI-CN, not covered) owns a participating 25%interest in the Davidson property (75% RVC) which comprises thenorthern half of the Blackwater property (see map below). This morning,New Gold announced the friendly all stock acquisition of RVC. OnMarch 29th, SQI and RVC executed a formal joint venture agreement regarding advancement of the Davidson property (https://www.silverquest.ca/s/NewsReleases.asp?ReportID=449276&_Type=News-Releases&_Title=Silver-Quest-Executes-Formal-Joint-Venture-Agreement-on-Davidson-Property-B...) which in hindsight was clearly a hurdle that had to be overcome before New Gold would launch their bid for RVC. We see upside to the current SQI share price (~
.72/sh), and think itshould currently be valued >$1/sh, and ~$1.50/sh with drill successon either their Davidson JV property (3 drills currently turning) or their Yukon projects (see valuation breakdown below).
Looking at the valuation implication for SQI,considering the transaction value on RVC is $513mm (netting out cash)the NGD bid implies $134/oz for RVC using both indicated and inferredounces. As SQI’s 25% interest in the Davidson property nets them342.5koz (as per the table above), simple math is as follows:
342.5k oz * $134/oz = $45.9mm, or
.50/sh.
Company had ~$7.3mm in cash at February 15, or ~
.08/sh
Company also has 100k freely-tradeable shares of RVC, say $10/sh * 100k = $1mm,
.01/sh
Companyalso has a large land package in the Yukon near ATAC (ATC-CN, notcovered, $670mm market cap), Kaminak (KAM-CN, not covered, $225mm marketcap). Earlier stage peer companies such as Northern Tiger (NTC-CN, notcovered, $44mm market cap) have market caps in the $40 - $50mm range,so assuming the midpoint $45mm, or
.49/sh. A $4-5mm drill program is planned for this summer.
So, $45.9 + $7.3mm + $1mm + $45mm = $99.2mm / 92.7mm outstanding = $1.07/share
Andremember, last week RVC / SQI announced the approval of an $8.6mmexploration program for the Davidson property ($1.8mm SQI’s share),including 20,000 metres of drilling. This should materially increasethe number of ounces on the Davidson property beyond the 1.37mm ozcurrently (100%-basis)…from Trevor: “This is likely due to theupside potential represented by lack of in-fill drilling on the 75%owned northern half of the property and open area targets.”….rememberthat the David / Jarrit claims to the south (100% RVC) host 2.8mm oz at~1.05 g/t gold and most of the work to date has been focused on thispart of the property (see drill hole distribution map below). AssumingDavidson eventually also hosts 2.8mm oz, at $134/oz SQI’s 25% sharewould be worth $93.8mm, or $1.01/sh (so an additional
.48/sh for$1.55/SQI sh total). “