Aurora-ing to Go!https://www.andrewjohns.ca/sites/default/files/GUY083111c_143041.pdf
If a Buyer Comes Knocking?
In our previous Feb-28-11 comment on the company we discussed, in depth, potential
take out valuations for Guyana Goldfields ranging from $15 to $20/sh as quite
reasonable given the gold price environment and our assumptions at the time (and
based on the average historic takeout discount to spot of 30-40%). However, in today’s
environment, with record high gold prices, a similar discount to spot would derive a
current valuation of over $30/sh. A discount to current spot prices of 50%, based on
more recent transactions would imply a takeout valuation of something in the $23-
$26/sh range, which is supported by our NAV estimate at flat $1,800 gold of $23.50/sh
illustrating the potential for a solid take out premium for development companies with
quality assets in stable regions.
Valuation
We are maintaining our Outperform rating and C$15.00 target price. Guyana Goldfields
is currently trading at a P/NAV of 0.7x, in-line with the developer group average of 0.7x.
We apply a 1.1x NAV multiple given its stage, size, exploration potential, large and
prospective land package, and mining friendly jurisdiction