RE:Market insanity!Goldbug52 wrote: Some simple math! Detour Gold at $1500 gold assuming $1100 AISC = $400*600 K ozs or $240 million profit! Kirkland Lake at $1500 gold assuming $600 AISC = 900*1,000,000 ozs or $900 million profit! Together $1,140,000,000 of profit before tax :-)) ! Assuming tax at 30% this will equal approximately $800 million to their bottom line on an yearly basis. With the new share structure of approx 290 million shares, the EPS will be approx. $2.75. P/E will be 16 or probably, by far, the lowest among any of the majors. Please correct me if I'm wrong.
KL is grossly underpriced here and with the probability that they will significantly lower the AISC at Detour, the upside is huge! Sorry for this overt pumping :-)) !
I agree with eatmorefibre. At first I as thinking I was reading a post from 457 and waiting for the hammer to somehow drop ;-))
I like your calcs but the last one was incorrect I think the $2.75 isn't P/E (price per share) but profit per share.
With quite normal P/E of 25 for a producer a profit per share of $2.75 would indicate the share price should be US $68.75 instead of current US $44-$45.
Let me be a bit more of an optimist for a moment.
Lets say KL is able to reduce the AISC at Detour in 2020 by increasing production to 700K Oz and finding some synergies in buying and combined management efficiencies.
Lets also assume POG increases to average $1600 for 2020
All the above are quite possible I think and not grossly out of the possible.
That translates into $600 times 700k Oz = $420M for DGC
$1000 times 1M Oz = $1B for KL But .taxes at KL's Victoria Australia properties will be up a little but they may be able to offset with some additional production from Northern Territories so I'll use your 30% as a rough estimate
that leaves an after taxes profit of $1420M times 70% = 994M or almost $1B US
at a 25 price per share multiple the share price should then increase to 994/290 x 25 = $85.69 or at current exchange rate of .76 CAD per US dollar = $112.75 CAD not a bad price for this time next year.
Heres to hoping.