RE:RE:Junior attempts a build - Argonaut Gold edition - A RevisitI tend to disagree with an analysis that says a fair selling price is 50% of the NPV. The value of the metal in the ground is zero until and unless a mine is built and operates. Most of the work, effort, cost to do so comes after a buyout. I realize long term shareholders may feel entitled to a big slice of the pie, but do we really deserve it? What has been done on "our" watch? Define the size, richness, design, and economics of the deposit. Reduce some risk. Navigate some of the local rules and regulations to obtain permits. Set up infrastructure deals - port, road, maybe eventually electricity.
Now let's look at what is accomplished after buyout. Build a crushing mill, build a flotation plant, build a head-leach facility. Build a power plant. This list costs nearly $4 billion.
So the question becomes - how much of the NPV pie goes to share owners who did the first list, and how much to the company that does the second list?
A dispassionate analysis can't result in a 50%-50% split when weighing the cost and effort of the two lists. I think shareholders would be fortunate to see a 25%-75% split, but I believe it will end up being closer to 20%-80% because that reflects the reality of a large, capital intensive project in a remote location like Casino.
Our NPV is higher than $5 billion at current copper, gold, silver, and molybdenum prices. 20% of that is around $1B, which at current share count means about 4x current share price.
We all want more, I'm sure, but I'll be extremely surprised if a buyout is more than 20% of NPV, because most of the effort and cost isn't borne by us currently shareholders.