Thoughts Midas Gold looks like it's shaping up to be Idaho's Long Canyon (Fronteer Gold buy-out by Newmont) for $2 + billion dollars. The deal valued Fronteer at over $300 / oz for its 6 million ounces which were considered high-grade for a low-grade deposit. Fronteer was in Nevada and had 6 million ounces @ 2.0 + g/t au roughly.
After looking at the new Corporate Presentation and Geophysical targets along with very impressive drill results over the past 2 months, it looks like MAX has a potential for 8 - 12 million ounces at their Golden Meadows Project between the 3 deposits along with a hit at one other geophysical target of the 5.
Midas Gold's project is currently separated between three different deposits.
a) The Hangar Flats Deposit which hosts a current resource of 1.8 Moz at 2.25~ g/t au average.
- Recent drill results of 23 m @ 2.1 g/t au, 332 g/t ag (9 g/t au equivalent)!!.
b) The Yellow Pine Deposit hosts a resource of 2.4 Moz @ 2.2 g/t au.
Recent drill results include 175 m @ 2.56 g/t au, 100 m @ 2.95 g/t au, 100 m @ 2.97 g/t au, 59 m @ 2.8 g/t au. These grades are quite a bit higher than the current resource and are expanding the resource to depth as well as infilling.
c) The West-End Deposit currently hosts a resource of 1.5 Moz @ 1.4 g/t au. Still awaiting results since only a few holes have been released in 2012 thus far.
The current resource is 5.7 Moz @ 1.6 g/t au~.
The new resource would likely be 6.8 Moz - 7.0 @ 1.8 g/t au.
Based on a grade increase of 10% across the deposit, a depth increase of 20% and a strike increase of 10% used in the upcoming resource, the current resource would expand to 6.5 million ounces just using the current 3 deposits. The grade would also be 10% higher making MAX more attractive and moving it out of the lower grade explorer bracket currently shared by several juniors. 1.8 g/t au puts MAX in the range of KAM and other type deposits and ahead of Rainy River in Ontario at 1.5 g/t au average.
Based on 6.9 Moz (the new resource) MAX's current valuation of $486 million (after cash) gives it a valuation of only $70 / oz based on the new resource. RR currently trades at $100 + oz ~ based on 6.8 Moz in Ontario. A 30% discount for MAX seems a bit extreme given MAX's 20% grade increase over RR.
The geophysical targets if any are hit will add 1.0 - 1.8 million ounces each to the global resouce at the Golden Meadows Project. Currently there's 5 (Sugar, Hermes, Fern, Rabbit and a unnamed one). I think as a long term hold this is a very solid play and a major's dream for district wide exploration potential + a 500,000 oz producer.