RE:RE:RE:More PumpingThe projected AISC of C$731 (roughly = US$551) for Triangle is shown in Slide 18 of the latest Corp Presentation. For the current PoG, say C$1731... for easy math, the profit would be something like C$1000/oz. For a 100,000oz/yr production the profit would be C$100M.
One good way to verify this profitable potential is to look at the Goldex operation, keeping in mind that Triangle has a much better grade (~9 gpt compared to 1.6 gpt for Goldex...that is why Goldex requires a much larger mill through put @ 6000 tpd to get 100,000 oz/yr. Math: 6000 tpd x 300d/yr x 1.6gpt/31g/oz = ~100,000 oz/yr).
Ref: https://www.agnicoeagle.com/en/operations/northern-operations/goldex/pages/default.aspx
A Capex of $85M (Slide 18) would be required to get the mine in production of 100,000 oz/yr. Another $15, as contingency fund for a SAG mill for further expansion to 5000 tonnes/day would be need for future expansion. Total fund required = $100M
ICG could go to the banks and borrow $100M (since pay back period is short ~1 year, there would be many banks which would be willing to provide a loan), or take an equity financing route @ something over $1/s, say 1.25/s for a max dilution of 80/(500 + 80) = 14%.
A max dlilution of 14% should not be a big deal (FD of 580Ms compared to now at 500Ms) if ICG can rake in $100M, for fast tracking Triangle to crank out a profit of $100M/yr, which could be doubled once the mill has been upgraded to 5000 tpd.
Usually, after an initial dip, the SP would recover quite quickly given this kind of potential profit. Even though the number of shares are up by 14%, let's not forget that the company now has $100M cash in its treasury. Also, because of the larger number of shares it would cost the potential suitor more money to pay for ICG. Perhaps this is a good way to bait a potential suitor into a pre-emptive strike... and a bidding war?
One potential suitor is ELD. Can we count on ELD to get something going? Note: A 14% increase in the share count would reduce ELD investment from ~12.4% to 10.6%.
- To maintain the 15% level would cost ELD ~$30M.
- To increase investment to 19.9% (ELD's practice before taking a plunge in previous TOs) would cost ELD over $60M. This would resulting in a bit more dilution and more money in ICG treasury.
Or, ELD could just start the TO attempt the moment ICG initiate a PP for $100M.
Notes:
- All values are order of magnitude estimates just to illustrate the point.
- It was assumed that ELD would want it all, at least the Triangle Area, where they sit on the Drilling Tech Committee.
- There are other options, e.g. a JV, but this is a subject for further speculations.
GH