RE:RE:4.15 million ouncesBlue,
I noticed the effective date of 9 May 2017 for Sigma RE ( and the announcement of the proposed TO by ELD on Monday 14 May) as well. Finally, we the shareholders have the privilege to see Sigma RE (on 14 June). Presumably, ELD put in the low-ball offer without knowing anything about Sigma RE... detected any sarcasm?
Anyway, let start with some basic knowledge.
- Sigma has a historical RE of 2.4Moz, we all know about this, but it would be a safe bet to assume that as an insider ELD would know a lot more than us.
- This new RE (as described in the NR) is just an attempt to provide support for the remaining RE at Sigma (4.5Moz has been scooped out of Sigma, from surface to 1800m, along with approximately the same amount from Lamaque mine from surface to 1100m). As expected, the new estimate would give a more conservative value (lower than 2.4Moz) given the reasons stated in the NR (mainly the cut-off grades...note that the RE increases sharply as the cut-off grade is reduced as shown in Table 2) along with other conservative assumptions.
- At any rate, an additional RE from Sigma ( of 0.89Moz, rounded off to ~1.0Moz for Sigma) would be a significant amount compared to the 4.15Moz, the global RE for Lamaque Gold Project. Note also that in this global RE, #4 plug RE is under-estimated by ~0.5Moz (my estimate).
- In addition, there is the RE for the West Plug Extension (0.22Moz) and Lamaque Historical (1.6Moz), ref. Deloitte report.
- Add them all up: 1Moz (Sigma) + 0.5Moz (#4 Plug) + 1.6Moz (Lamaque Historical) + 0.2Moz (west Plug Ext) = 3.3MozAu.
- Grand total: 4.15 + 3.3 = 7.45MozAu
In other words, ELD has ignored the contribution from the mill, the tailings and other infrastruction above and below ground (at least $100M in value,..the ramp alone would cost over $26M)... and the permits. Also, the offer was apparently based on a RE of about 4.15MozAu, rather than 7.45Moz (80% higher).
A significant deposit heading toward 10Moz in a safe place like Val d'Or would be worth at least $130/oz in-situ. Even, at $100/oz, ICG would be worth, at least, $745M + $100M = $845M (= $1.74/s, which is consistent with analyst upper range recommendation).
Vote NO to ELD low-ball offer, and be prepare to kick out the current BoD and management. They have sold us out.
GH