RE: RE: RE: NGD warrant leverageThe B Warrants are a 10:1 exchange. ie if the stock is ITM by $2, your warrants would be worth 20 cents. If you buy $4,000 and this stock hits $15, you would net 2/10 = 20 cents x 100,000 = 20k less 4 = 16k.
still not bad, but no 700k is not that realistic here, unless gold starts to shoot to the moon and next week.
With NGD MKT CAP about 2 Billion now, a $20 share price equates to a 6 BLN mkt cap, and needs a FCF of at least 0.30 to 0.5 Billion per year at what the market considered to be median gold prices, or 0.5 - 1 billion if the market thought gold was temporarily elevated, such as now.
New gold's production profile, leverage / costs at about 500, the margin would need to be such that (POG - 500) x 500k = 0.5 BLN
ie would have to hit ~1500 for this to become true. POG of 2000 would support FCF of 750 M, or up to 15 BLN MKT CAP. ie a $25-45 stock. with a PE at 20:1.
could well be a likely scenario, but not likely inside 2 year as more time has to pass with gold at 1500 so that a new benchmark will be reflected in long term valuations of models with those prices.
Ther market it pricing gold stocks as though gold is going back to 100 or even 800 however.
If NGD does become a 1M oz producer, as they have mandated, the POG required becomes such that only half the margin assumed, however as they do M&A the sharebase will likely increase on some basis in parallel with production growth, so unless they make a major discovery on their own claims, these are the margins and leverage structures that is it safe to assume.
Realistically, in 2 years time with gold at 1500, and the market say using 1250 as a Long term assumption by the time the B warrants expire, FCF is about 400M, should put a value of about 4-5 Billion on NGD, or in other words a 13-16 dollar share price.
So there is a good likelyhood that these options will be ITM, for a decent 5, 10 or 20 bagger. The longshot if gold skyrockets, maybe NGD hits 28-30, and these options are worth $1.50 per share or a 40 bagger.
Then again these could very well be worthless, expecially given the mandate to acquire oz and dilute the sharebase, and obviously current shareholders not wanting the company diluted cheaply if the POG does start to really run.