Western Copper and Gold Corp WRN

Junior attempts a build - Argonaut Gold edition - A Revisit

[jclarke042]

We discussed Argonaut on these pages sometime in 2023 - Stockhouse's non-existant search function precludes me from finding the original link, because who has time for that? 

Bringing newcomers up to speed: Argonaut Gold (AR.to) thought they'd build the Magino gold mine themselves, following a construction decision a few years ago. 600k oz annual production, increasing to 900k over time. Fast forward to 2023/2024, and continuous capital raises to fund the build equated to a share count of over 1billion. LT shareholders excited about the possiblity of $5000 Gold making the wait all worth it, Sort of like we hear here.

Today, released Alamos Gold entered into a "friendly acquisition" of Magino for 40 cents (CAD) per share. The all time high was nearly 11 dollars.

So, to our "only speaks in price per share, and believes any previous ATH per share must account for inflation to determine future price targets" friends out there: 

Looking at the history of juniors building alone, resultant dilution to near worthlessness on a per-share basis, does it look like WRN has any capacity to build this solo and produce returns to original shareholders? Or does it look like we need to sell to someone with the cash and overall capacity to build this?

[Heywood_Silvers]

I don't think any serious investor here believes that WRN will attempt to build the mine themselves.  The primary function of WRN is to source gold, delineate the resource, pursue (and or complete) permitting and get the project shovel-ready or a good piece down that path. What WRN is selling to a potential suitor are the rights to the NPV of the project.  One can argue endlessly at

[CopperAndGold14]

I 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

[MetalMinded]

With all due respect I am not sure you are fully looking at it fully.  There are three key things to consider.   1) First and foremost is that there is over $90B worth of metal in the ground at current prices.  Even with some % of NPV buyout, construction costs, and ongoing costs...there is a lot of very profitable mine life here. 2) The NPV takes into account the construction

[Sooner]

the next question becomes --- what are the inputs in the NPV calculation? What are the "long term" metal prices to be used? The acquiring company likely could care less about current spot...let alone assumptions in our FS. What discount factor to use? We used 8%...many companies use 5%. I've been told that Gold usually uses 5% but base metals 8%. Changing from 8% to 5% i believe

[Heywood_Silvers]

One can argue that the present values of construction costs utilized to generate the NPV are too conservatie and will be larger, however the price of the metal concentrate payables will also increase and I am betting at a higher clip than construction costs.  Alleviating the construction risks and costs of operating obviously is one reason that RIO is slow walking this until they have more

[Pinegrove1]

If I thought for a moment that WRN was seriously considering building it themselves I'd dump my shares immediately. I agree that they are a development company and they are doing what they should be doing. They don't have the money, the staff, the expertise - they don't have any of these as it's not the business they are in. They are replicating Western Silver and that is what the

[Sooner]

Paul could very well have been WRONG when he made that statement...just like Dale was dead wrong about 3 years ago when he said Rio had very little DD left. Take a look at Gold Source acquisition and the long term chart and let me know if they got an inflation adjusted return from the all time high...and also let me know what the acquiring price is relative to % of NPV of their project. Again, i

[MetalMinded]

Yeah, that horse has been dead for a while now.  That statement may be true for manufacturing or other businesses that are in operation and generating income.  For junior miners, it's a relationship to NPV and the share price works itself out.