RE: RE: Reserves are larger - here is the referencShort version: I said, calculate it any way you like, but you will be very hard pressed to come up with a value of .14 IMO
Power thinks that is fair value, and he may be right. I think it is considerably higher. Why? First, there is NO comparison of producers vs exploration plays. I love DGC, and after all HRG owns 3,085,000 shares, so whats not to like. However, they are years away from a producing mine, HRG has production with some nagging issues.
Now then the risks: who knows what the costs will be for DGC to get their mine up and operating. The history in Canada is for things to cost A HUGE amount more than the best laid plans. So having the 50 mill, in cash is great, but it will cost FAR more to get that situation up and running, and when is the other question of course. Not before 2011 probably, correct?? Do you think it will cost anywhere near the $140-150 mill HRG has in debts??? I think you need to start with FAR higher costs, don't you? Thus they get dilution, or debt or both over the next few years. But do not get me wrong, it is a fantastic property, and may get bought itself, by a major.
With HRG you can produce now, and if the price takes off, you reap the reward NOW. So value per ounce is higher than your estimate, from my point of view. BUT even if you are right, you are coming up at around three times current price.
What about if the reserves increase, AND the price of gold goes up. Not unlikely is it, given Bisa and the current market outlook.
Thus I see a higher value. But hey, I will not worry if it only goes up three times in price!!
Cheers.