RE: Goldex Royalty Hello Canbeam,
Your simplying math is one way to put the $ fugure on the potential worlth of a deposit. The approach is quite logical and as you have indicated the royalty could go up to $30 M (depending on the assumptions of course).
Another way to have a crude estimate is to take the resource (assuming inferred is as good as indicated) and multiply that by the market valuation of the in-situ oz Au. One good read is given in the link below.
https://www.stockhouse.com/columnists/2010/feb/1/valuing-a-junior-miner-s-gold-in-the-ground.aspx
There are so many factors that would influence this valuation including sentiment toward the jurisdiction, the management, etc.
You could do this by (also simple) math: 400,000 oz x $50/oz = $20M for PRB portion of Goldex, or
400,000 x 20 = $8M
as 2 examples.
Note that we have assumed inferred = indicated, and we have not even considered metallurgy, etc.
Let's bring in PRB Borden Lake as a third example for discussion purposes:
-The Mkt Valuation for the entire PRB = $138M
- Cash: $27M in the bank
- BC in the RoF (some of us put a value over $100M for this holding...Apparently, according some rumours, Dave turned down an offer of $60M a few years ago). But for this valuation, the market seems to attach no value to this.
So, by simple math (138-27)/5.8 M oz at BL and still growing) = $19.1/oz in-situ (among the lowest in the juniors)
IMO, getting a royalty of $18M now is a good deal (bird in hand), rather than drips and drops per year starting in 2013?, noting also that, AEM has total control of the timing and production of that portion of PRB.
The $18M cash infusion with no dilution would add significantly to the current cash in the bank: 27+18 =$45M. Plus, in 2013 the warrants would come in, with some dilution, for another $17-18M....45M + 17M = $63M (which is a very sum to have around...so that a junior company does not have to come begging for financing from some bankers that don't care much about the company's shareholders...we were taken to the cleaner before).
Hope the above is helpful.
goldhunter
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