Why Canaco Is CheapOne thing the mining people I know all agree upon, is that majors are not interested in deposits containing less than 5 million ozs. So when Andy says world class, we can be pretty certain than he has just put a floor on the resource of 5M ozs. Personnally, I think Andy's number is likely 10M ozs+.
When gold was trading around $800 the number that majors were paying for ounces in the ground was between $100 and $200 depending on grade, infrastructure, depth and many other things. Let's say $150 average.
So how much of the $1000 increase in the price of gold has been swallowed up by inflation and how much is left for the selling shareholders? Quite frankly, I have no idea. Not many deals have been done lately with gold over $1500. But just for the sake of argument, let's be really conservative and say that 20% of the price increase can now be paid to the vendors without impairing the economics.
So the new number has to be north of $350. If Canaco has 5M ozs the deposit is worth $1.75 billion or about $8 per share fully diluted. At 10M ozs we are looking at double that.
So you tell me why $3 is not a hell of a deal for those prepared to wait.