Asset Sale will Unlock Hidden value Management is doing the right thing here, by putting the company up for sale either in whole or in part.
Mauds Creek is an excellent example of unlocking hidden asset value.
The recent update and scoping analyses of Mauds Creek underlines its strong value.
Approximately 1 million oz in the 43-101 estimates , with 628,000 oz within a defined high grade zone of 6.4 gms per ton in mineralized zones located immediately below the existing oxide open pit.
Most of this mining will be conducted from underground and utilizing a simple flotation circuit, with a minimal, and easily mitigated, environmental disturbance.
Initial scoping indicates that for the first three years of mine production approximately 70,000 ounces per annum is achievable, with an average annual Life of Mine production of greater than 50,000 ounces per year.
Being high grade and easily accessable, cash costs will be very low.
Lets say $600 per oz.
At such high grades, recovery will be about 95 %, meaning that about 600,000 oz will be recovered from just this high grade zone along.
At the current gold price, gross recoveries will amount to nearly $1 billion over the life of the u/g mine, with additional gold from the existing open pit and several high grade lodes that have been identifed and drilled in late 2011 but not yet assayed.
Simple discounted NPV analyses would should at least $150 million in net present value or about
.50 per share.
Capex will be very modest, with an ore processing scenario that involves the construction of a dedicated concentrator at the Maud Creek mine site, utilizing a simple flotation circuit (with a gravity gold circuit). The concentrator will produce a gold rich sulphide concentrate (of between 2 ounces and 5 ounces Au per tonne) with a high overall total gold recovery of greater than 95%.
0pportunities exist to utilize the Company's Union Reefs processing facility to reduce capital costs and perating costs with the installation of a dedicated circuit to treat the concentrate from the Maud Creek mill and recover gold directly on site. This dedicated circuit will provide considerable savings in concentrate transport costs as well as concentrate Treatment and Refining charges compared to the option of shipping the concentrate to a facility equipped to process and recover gold from the concentrate.
Maud Creek is just one example of several assets and projects that are not reflected in the current market cap.
Let the asset sale begin.