Teranga Gold Corporation T.TGZ

Whoa!

[templetooth2]

At $6 per share, pro-forma mkt cap is just over $1 B Cdn. or $770-odd US. Add $310 net debt and you have an enterprise value of $1.08 B US or $1.4 B Cdn.

From the share proceeds of about $150 million, about $75 will have to be paid to Barrick and the smaller vendor, leaving about $75 million to be applied to capex. That isn't nearly enough. Capex is supposed to be around $200 million, or at least that was Canaccord's opinion a few months ago. So expect another $125 added to the debt number.

The above numbers do not make allowance for cash that will be generated between now and end of construction, but I think that today's enthusiasm is still a bit much. As I understand it, the Masawa ore is "complex", mining-speak for troublesome. Having paid $146 per ounce in the ground (ignoring price bonus later) this deal could produce a hiccup or two along the way to the promised land!

[Consvestor]

Very, very impressive trading today, considering the secondary offering was priced at 10% below yesterday’s close.

[BobMabena]

I hear you,  the deal is not a home run.   The IRR on the Barrick feasibility study was around 37% at a GP of 1400.  That was after they had spent almost 100 million to get the project to that point.  The mine was going to cost another 400 odd million to complete in several phases.  So 400-440 million plus the cost of some upgrades will mean that Massawa now benefits

[mercedesman]

"If you compare the value to others in that area like EDV,  TGZ,  still looks undervalued." Agree. EDV has a market cap of 2.7B now running over 700k oz/ year. Four long life, low cost mines. ( and making a play on an Egyptian mine to get to a 1 M oz tier one producer )  TGZ has a ways to go to get there, but could get there (700 oz +) in 3 to 5 years with careful