Is this an epiphany or an unrealistic scenario... Even though they supposedly do not get along very well as many neighbors do not, how about if TGZ and OLE management get together and decide to pitch their two companies as one to potential bidders. How much does a mill with a capacity of producing 400,000 ounces of gold per year and combined properties that easily have over 10 million ounces (probably closer to 15 million ounces fully exploited) of gold worth. Both management teams meet and agree on a percentage that each company would get considering all factors involved. For example TGZ would have an advantage because they have a mill but that advantage would be lessened because OLE has much more gold at a much higher grade.
(TGZ Indicated Resource 2.1 M oz vs. OLE 3.78 M Oz – TGZ avg. grade 1.17g/t Au vs. OLE 1.77 g/t Au).*
*Courtesy of PG
As you can see OLE has 1.68 million more indicated ounces than TGZ and .60 more grade per ounce. Combined they would have 5.88 million ounces of m&i gold and 2.47 milion ounces inferred. (OLE has .96 million ounces inferred with a 1.73 grade and TGZ has 1.51 million ounces inferred with a .98 grade) As you can see OLE's inferred ounces also have .75 more grade per ounce than TGZ's inferred ounces. By combing both m&i and inferred ounces both properties already have 8.35 million ounces of gold. That is why I was being conservative with my 10 million ounce figure above. Much more gold is to be discovered in both properties. A top of my head ownership percentage estimate would be 40% for OLE and 60% for TGZ. On a $1.5 billion deal this would be $900 million for TGZ and $600 million for OLE.
By working together both companies will speed up the inevitable which is a major someday owning both of them.
Remember my quote from a week or so ago.
Synergy is two or more things functioning together to produce a result not independently obtainable.
By negotiating a deal as one entity these two companies can take advantage of rising gold prices, a ready to produce mill and millions of discovered and lots of undiscovered (blue sky) gold. 1 plus 1 will equal 3 in this case.
Think about it Chet. It makes sense. Love thy neighbor as it says in the bible.
Tony Arias, long term shareholder.
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