AN UPPER LIMIT ON VALUATIONShort of a NI 43-101, the best you can do is extrapolate from drill results (and the resultant geo model) and make comparisons to other companies. KL seems to be a decent comparison, but we already have TWO advantages over KL:
(1) We have discovered high-grade ore earlier in the process, and
(2) Our ore is about 300m or closer to surface, which means if it continues we will be able to mine open pit (read cheaper to mine, MUCH cheaper, lower AISC, and much more profit).
Keep in mind that we are not as advanced in development as KL (they are producing!). But, something tells me QH intends to move into production asap and has something up his sleeve regarding the Maritime mill relatively close by. So, a bit of a discount is due to that for sure.
KL's market cap is currently Can$14 Billion, or US$11.6 Billion.
If one gives NFG credit for the potential higher profits from open pit, but takes away the same amount for KL being further along in the development process, could we extrapolate from a roughly equal market cap?
If so, we're looking at a NFG share price of:
Can$83.33 ($14 B market cap/168 M shares)
US$69.05 ($11.6 B market cap/168 M shares)
Yes, this is getting WAY ahead of ourselves, but one could rationally say this is the UPPER limit of what we're looking at right this moment. Of course, the LOWER limit would be zero - and would require a conclusion that QH is salting the cores, a la Bre-X. Fat chance in my opinion - QH oozes integrity just from what I've seen.
If the drill results continue to pour in, I would not be surprised, especially in today's environment of a high gold price which will continue for years to come - unless of course the government outlaws gold or something (yes, it has happened).