ICG Valuation as a producer of 100,000oz/yrIn this post I will take a stab at ICG evaluation, not from the spread sheet and detailed calculations taken by analysts from outfits like Raymond James, Paradigm, etc, but from a "macro economic" point of view by picking a similar company such as Richmont Mines (RIC, just happens to be a lucky winner for my example).
A presentation at the Denver Gold Forum, link below, provides a nice summary.
https://s21.q4cdn.com/763136974/files/doc_presentations/2016/09-13-16-RIC-Denver-Gold-2016.pdf
The salient points:
- A small/medium gold producer: 100,000 oz/yr with 80% from the Island Gold Mine and 20% from the Beaufort Mine (which is next door to PRB in the Val d'Or area)
- UG operation, grades are good ranging from 6-8 gpt (same range with ICG)
- M&I and INF; some 1M oz (on the low side compared to the potential ICG may have after all a RE confirmation from the drilling...in my opinion ICG has a lot more (6-8Moz?), but let's not nail down the number)
- Mine life: 7.5 yrs (approx 10yrs)
- OS: 63Ms
- SP: 14.41/s, or = approximately $2.0 taken into account the OS of ICG of 475Ms. In other words, if RIC had the same OS as ICG its SP would be around $2/s.
- Cap: $950M (almost $1B, compared to around $400M for the ICG in its current state)
Question 1: What would be the value of ICG if it achieved the same producer status (or has a potential to achieve the same status) as the current RIC (Timing: In one year?)
Answer 1: The Cap woud be expected to approach $1B (FD is about 500Ms) and SP would be about $2.0/s.
Question 2: What if the production were 200,000 oz/yr by upgrading the mill to 5000 tpd?
Answer 2: $4?
A more detailed analysis can be carried out by examining the differences between the 2 companies.
For example, one that came to mind is the AISC which is over C$1000/oz for RIC, compared to less than C$1000/oz for ICG.
I would leave the rest for your imagination (proximity to Val d'Or?).
Cheers,
GH