How much is it worth?At Macassa you have 5.3moz net of reserves and resources, including MI&I, net of prodution year to date, producing at a 45% operating margin net of sustaining capital. Say you make an aggressive assumption that all resources are converted to reserves. At Fosterville you have 1.6moz reserves net of production year to date, producing at a 60% operating margin. Reserve grade is higher than head grade by 10%, so call it a 65% operating margin. Resources ex-reserves are low-grade, and will not produce much profit. Take a 1300 gold price, and assume a 30% tax rate.
Macassa: 0.7 x 0.45 x 5.3 x 1300 = 2.2b
Fosterville: 0.7 x 0.65 x 1.6 x 1300 = 950m
Discount Macassa by 50% because it will take decades to produces all those reserves at current rates, and this is high-cost, low-productivity, high-grade underground gold mining in very deep mines with a lot of sustaining capital. This would equate to a 25 year annuity at 8%. You could discount at 5%, but resources do not have the confidence of reserves, so call it 8. This would also equate to a 16 multiple on the fun rate for FCF, which is fairly resonable too. Discount Fosterville (mostly Swan) by 20% because it will take a few years to produce.
Macassa: 0.5 x 2.2 = 1.1b
Fosterville: 0.8 x 950 = 760m
Reserve valuation: 1.86b
Cash: 200m
Securities: 150m
Macassa & Fosterville: USD 2.2 billion
The other producing mines are either small or marginal, or both. Add an extra 300m to be generous.
Total: USD 2.5 billion
The question is, how much value do you give to their land, their exploration potential? At a market cap of 5.6b, the market is saying the exploration potential is worth 3.1 billion, more than the value of all the reserves and resources. That seems pretty aggressive. If there is a bevy of swans in Fosterville deeps, then this could grow into its valuation, but for now it is mostly blue sky.
Since this is the gold miner with the best assets in the world, I would guess it will keep rising, as it is adopted as the go-to names for gold exposure among institutional investors, to stratospheric overvaluation. Much like the senior miners today, whose market caps are not supported by reserves, by any rational business valuation, quite uncommon in this strange world of mining. Once the Swan is depleted and maybe Macassa has some operational issues, it will fall out of favour, perhaps from much higher levels. A good analogy would be Goldcorp, which had one good asset at Red Lake, which they parlayed into a stake in many other mines to grow production, at the expense of profitability, which turned it into a large, inefficient conglomerate, now rather failing, and recently put out of its misery.