There are many ways to look at this...expensive? cheap?
A year ago I thought this was a .75 stock.
Now is it cheap? Maybe. It depends on how you value it. Do you count the underground mine potential? I expect they will get all the permits necessary in time. It could be argued that it is cheap compared to both what the stock price was, and some peers.
Is it expensive? Well unfortunately the $12 million drilling program last year did not show any areas that in my opinion are worth exploring further. They did acquire some new property rights to the north of Goldboro, that may potentially show some expansion potential. The last drill program drilled north of goldboro and the results came up with nil gold in the hole.
A new and updated reserve calculation could be very exciting for the company. It was Feb 6, 2023 that Kevin said they were working on that and that some of the inferred , meaured and indicated reserves, would become probable reserves, or something to that effect.
Perhaps it is not worth spending the money on. Anyone interested in buying will look at the data themselves anyway.
So is it expensive.
This is what I see as roadblocks.
The price to build a mill and get it into production is likely now $400 million. They still have permits to get, and then the building of the mine will take a few years. Interest rates are high now for these types of projects. !0% is a bargain of a rate and hardly anyone can get that. So if a company were to finance most of the development, add $30 million a year in interest on the financing. We are now up to $500 million. The recent $12 million dollar drill program shows there is not much room for expanding the 2 open pits.
So we are at $500 million before production. And as anyone here knows, the costs always go up. So it is more likely $700 million to get to production. This is for 1.1 million ounces.
After the mine is built, let's say an AISC of $1000 US per ounce.
What if gold goes back to $1800 which is a real possibility. That is probably close to the price companies will use when deciding to buy. They have to factor in this is a risk. There is no guarantee that gold will stay at $2300 US.
So they pay $700 Cdn per ounce over the life of the mine to get it started. Then they are going to make $800 million an ounce while in production. By the time they pay the initial investment off , it will take about 8 years. And then they will have 3 years of production left.
Add into those costs the costs of buying out Goldboro. $30 million in debt. If the shareholders get 30 cents each, that is another $100 million. So add $130 million to the above costs.
That is a high risk to take... basically betting that the price of gold will stay at $2300. Then it is very profitable. But if the price goes down , not so good. Who is going to make the $700 million dollar bet?
Good Luck as always.