So first and foremost, how does our Net Smelter Royalty (NSR) really work? Do we just receive 1% of the value of whatever gold First Uranium sells? Or do are we actually entitled to 1% of the production? First Uranium entered into an agreement with Gold Wheaton to sell them 25% of the estimated 2.1 million ounces at MWS for an upfront payment of $125 million, and then ~$400 per ounce delivered thereafter. Way too low imho, but I think they needed that upfront capital.
I don't think they've forward sold Ezulwini production though...
Either way: the 1% NSR is on all of the gold production from both First Uranium's MWS and Ezulwini projects.
According to this: https://www.firsturanium.com/sjfu/view/sjfu/en/page172
The expected life of mine production from Ezulwini is 5.8 million ounces - from MWS it that 2.1 million.
That is 7.9 million ounces total and we're entitled to 1% over the life of the projects (18 years for Ezulwini, 16 for MWS).
But Aberdeen also reported that we are: "entitled to a 1% royalty on any gold produced from the greater Buffels Area comprising twelve claims including the Hartebeestefontein 422IP claim which contains the Strathmore project.... could potentially provide 11.9 million ounces of gold production which would be subject to the to the Company's 1% life of mine royalty."
So we could be entitled to another 119,000 ounces. But it gets better!! A little digging found that that project could contain as much as 35.2 million ounces!!!
https://www.mineweb.com/mineweb/view/mineweb/en/page674?oid=45040&sn=Detail
That could mean we'll be entitled to another 352,000 more ounces!!
So we've got the 79,000 ounces from MWS and Ezulwini, and potentially 352,000 (or perhaps even more!) from the Strathmore project.
But how should we really go about valuing these ounces??
Gold is now at $980.
$980 * 79,000 = $77,420,000
But of this needs to be discounted over the life of the projects....
5% at 17 years at $980 oz. (U.S) --> $36,716,783 Canadian (at current USD/CAD of 1.087).
Each +/- $100 move in gold (U.S.) would change this value by +/- ~$3,750,000 Canadian.
Pretty nice, eh?
Now, it may just be a total pipe dream, but let us assume that there were the additional 35.2 million ounces in the Strathmore area...
Aberdeen would be entitled to 352,000 ounces * $980 --> $344,960,000 U.S.!!
Over, say, 25 years: would yield a present value of current value of... drumroll.... ~$110,730,129!!!
We currently have... 85,000,000 shares outstanding.
Well, actually 88,212,000 given the ridiculous options they granted themselves at $.12
But then again, if we do get those additional 352,000 ounces, I'll certainly recant on my complaints... lol... :-)