RE: RE: News, or the lack of itTo paraphrase an old American TV commercial, I'm not a mining stock analyst, I just play one on a message board - so you really don't want to put a lot of credence in my musings.
I read yesterday that Andean Resources, with I believe a mere two million proven up ounces at their project in Argentina, was snatched from Eldorado's grasp by Goldcorp, and at some impossibly high price per oz in the ground. With a lot of two million oz deposits out there, and very few ten million oz deposits, one might ask, Why a mini bidding war for this? Why not buy resource-heavy Andina on the cheap instead?
I think the answer to that is that the big miners' main objective, even more than growing their resource base, is to MAKE MONEY. The cost per ounce in the ground that everybody uses to calculate back-of-the-envelope valuations (including me) can really seduce you into making a bad investment, because it doesn't take into account internal rate of return. The cost per ounce of gold net after copper, silver, whatever else they pull out of there for Andean is $60 per ounce! And the possibility for significant expansion of the resource base with the same cost per oz hinted at by recent drilling (in other words, it's not a lock) apparently is also a contributor the high oz-in-the-ground price.
On the basis of oz in the ground, Stockhouse posters who own Tower Hill (which I own) were calculating a take out of around $18/sh. or better. Now that the PEA has come up short (management is working to improve it), it has languished ever since at $6.00/$6.50. Osisko, which I recall just reading as having a projected IRR of 25%, has powered ahead.
IMO unless and until the company can meaningfully improve the IRR, I'd guess the oz-in-the-ground price for Andina right now is probably the $20-$30 you mention. BUT - even that assumes that the project can generate a high enough cash flow to get somebody interested in the first place. Because of this, even though I got in at the bottom, I still consider this investment as having substantial risk.