Cheap GoldHere is an article of value of the gold in the ground at some mines.....compared with the price of gold today, and the amount of gold and the valuation of the stock....you can see some pretty cheap gold.
I wonder what the valuation of YNG is?....or even the Queenstake property......maybe we should get our pencils out.
Thhis was taken off the .......
MINEWEB'S DAILYNEWSLETTER............Richard
HOME >GOLD ANALYSIS
GOLD ANALYSIS
WORLD'S TOP 40 GOLD TARGETS
Millions of gold ounces, at fancy discounts
Inthis story, 369m ounces of gold can be had for a cost of $35.18/oz,plus, of course, a bit of a premium for the bother, plus lots of botherfinding capital to build the mines.
Author: Barry Sergeant
Posted:Thursday,14 May 2009
JOHANNESBURG -
A recentmanifestation of the enquiry as to the world's most likely savouredpotential gold acquisition targets prompted questions as to why all 20entities were listed in Canada. While the selection of such a list issubjective, to say the least, the answer is probably that it's just nocoincidence that all are listed in Canada. To be fair to the rest ofthe world, and extend the enquiry further, a list of 40 "top" potentialtargets has now been selected.
Each stock selected has been treated as if its main gold project, orproducing mine, is its only asset, and, of course, only attributableounces are counted. If the project, or mine, concerned, contains otherpay metals and/or minerals, those are simply ignored. The numbers canthus be crunched out to produce a listing of most likely potential goldtargets, for major gold, or other, miners. Stock price movements,particularly over the past six or so months, provide further clues, asto what investors, at least, are speculating.
Thus, for example, Australia listed Highlands Pacific currently holds an attributable 2.29mounces of gold at the Frieda River Project, located in the SandaunProvince of Western Papua New Guinea, ranked as one of the world'slargest undeveloped copper and gold deposits. The deposits holds amonster 7.5m tonnes of copper, and 14.3m ounces of gold, and at thisstage. The main stakeholders are Highlands Pacific, with 16.6%, with74.9% held by a subsidiary of Xstrata.
These numbers may change in the future, depending on how certainexisting agreements play out. Studies have indicated that a potentialmine here could produce 220 000 tonnes of copper and 330 000 ounces ofgold a year, with a mine life in excess of 23 years. At this point,Highlands Gold carries a market value (capitalisation) of $47m, meaningthat its 2.29m attributable gold ounces at the Frieda River Projectcompute at $20.55/oz, on a simple market valuation, without adjustingfor net debt/cash.
The valuations for the 40 selected potential targets vary from $2.30/oz for Rye Patch Gold's Nevada-based 2.95m ounces to $313.64/oz for the relevant 1.16m ounces for Dominion Mining, which operates the Challenger minein Australia. The mine is ranked by Dominion Mining as holding anorebody of more than 1m ounces of gold; production is running at around100 000 ounces a year, at what the company describes as a high cashmargin. The mine could be expanded to around 130 000 ounces a year.Dominion, which ranks its historical cost of finding gold at aroundA$15 per reserve ounce, also holds a string of exploration assetsacross Australia.
In all, the exercise covering 40 listed gold and related stockscounts 369m ounces of gold, for a weighted average valuation of$35.18/oz.
The costs of building a gold mine are hugely challenging, as shownby some recent figures that have become available from two hugedeposits. Barrick, the world's biggest gold miner, by value and production, last week announced the go-ahead for the $2.9bn Pascua-Lama gold-silver-copper mine that straddles high country in Argentina and Chile. In April, fresh information on mining Alaska's Donlin Creekwas released, including a capital cost of $4.5bn. Barrick has somefunding relief for the latter, given its status as a 50:50 jointventure with Novagold; a go-ahead for Donlin Creek, however, remains pending.
Based on reserves at Pascua-Lama and Donlin Creek, capitalexpenditure calculates at just under $160/oz of reserves. In verysimple terms, that would transform to a capital cost of $160m for amine with a gold deposit of 1m ounces. Barrick recently poured firstgold at Buzwagi (3.3m ounces in reserve) in Tanzania, which was recently completed at a (now historic) capital cost of $400m.
The metrics leave a good number of smaller gold stocks at the mercy of the markets. Greystar's monster 15.02mounces Angostura discovery in Colombia would cost around USD 2.4bn tobuild, if all its resource ounces are converted to reserves. Greystar'smarket value, however, is a relatively light USD 167m, ranking itsounces at USD 15.02/oz.
For Canada's Osisko, the story is quite different, with its 8.93m ounces of gold Canadian Malarctic project. Osisko raisedthe equivalent of some $343m in February this year, raising its cashresources to $582m. The stock, which currently ranks as one of theworld's best performing stocks of any kind, recentlypresented capital expenditure of just under $800m for CanadianMalarctic, with output projected at around 600 000 ounces a year forwhat could be at least ten years.
This projected capital outlay is steeply less than the $1.4bnprojected by the numbers derived from Pascua-Lama and Donlin Creek. TheCanadian Malarctic project, however, is located in a historic miningarea in Quebec, with substantial existing infrastructure, low powercosts, low taxation, zero government royalties, and cash refunds fornon-flow through mineral exploration activities. Given Osisko's currentmarket value of $1.2bn, raising further funds for mine build, if andwhen, required, would be a relative walk in the park.