The math - correct me if I'm wrongI am not drawing any conclusion simply putting forth some thoughts: How about it Browndog and Issimo,, Am I correct?
Fact: This is cut and pasted from Aquila Resources financial statement: "Some lands are subject to net smelter royalties varying from 1% to 3.5%, with certain lands subject to a 2%-7% state royalty, which under state law can be renegotiated. The entire project is subject to a 7% net distributable earnings royalty ("net profits after payback") payable to a former joint venture partner."
So we have a range. It appears the lowest amount of royalty they could pay is 10%. The highest is 17.5%. If we average those I get 13.75%. This is off the top....
Lowest possible Highest Possible
1% 7%
2% 2%
7% 7%
________ ______
10% 17.5%
Fact: There are 70,000,000 shares outstanding. Current stock price last I looked was $0.28 share.
To raise the $150-200,000,000.00 more needed (comparative with what Kennecott says they will have spent). This does not include a processing site and permit…. How much more will that cost? Wouldn't this require selling 535,000,000 – 714,000,000 more shares at present price? Add that to the present 70,000,000 shares wouldn't that be 600,000,000 – 800,000,000 shares outstanding…. Would it be a concern that selling that much stock would dilute the present value so more stock would need to be sold,,, diluting the value even more?
What will it cost per year to run this operation? Plus reclamation costs? Forgive me but I don’t remember the specific number but I do believe the range (when gas was still at $2.20 a gallon) was roughly $50.00 per ton. Was that assuming they could process on site? Thats a BIG variable if they can't.
My Thoughts: Assuming this deposit is worth $1BB. Let’s be generous and say the high side is $2BB…. Off the top comes 10 – 17.5%. We average that 13.75%. At $1BB that is $135,000,000.00 at $2BB that’s $270,000,000.00. Add the $150,000,000.00-200,000,000.00 spent to get the mine up and running. These amounts are taken off the top… Plus the day to day expenses of running a mine…adding it up and without digging an ounce you’re at $335,000,000.00 for a $1BB deposit and $470,000,000.00 for a $2BB deposit (more if the smelter fee is the high 17.5%). Plus - how many hundreds of millions over the course of its lifetime to run this mine? Add taxes,,,, reclamation costs, money held in escrow past mine closing,,,,
Taking all the costs and dividing it by the amount of shares that would need to be sold to raise the amount necessary, on a comparative basis with what Kennecott says they will have spent; the most, absolute most this stock could be worth under this equation is what? And when would this all happen? …if ever?
Please correct my math up or down. Add any costs or overhead I may have missed... my calculator only goes to 999MM