LSG a rising winner This is my take...plain...simple...many blanks missing...I'm just trying to wrestle with what we have and where it can go. Please critique to help us all.
1 oz gold = $1700 .....operating cost soon to be rounded to $700/oz......free cash about $1000/oz
produce 100,000 oz / year leaves LSG with $100,000,000 / 415,000,000 shares = $0.24 per share
produce 150,000 oz / year $150,000,000 / 415,000,000 " = $0.36 "
produce 200,000 oz / year $200,000,000 / 415,000,000 " = $0.48 "
produce 300,000 oz / year $300,000,000 / 415,000,000 " = $0.72 "
LSG management indicates capital spending will drop a lot in the next 1 to 2 years. Is this a good thing? In the short run it gives LSG time to pay back loans...that is good. It allows them to save a bit of cash for future capital spending....is this a good thing? Is it better to borrow and expand for the greater income potential. Would it be more profitable to save cash and expand the resource with the intention of selling the company at a much higher price. A few weeks ago someone made mention of large mill in Timmins with plenty of room for more feed...Goldcorp?? Can LSG polish up the ore body resource with the intention to one day sell the package?
200,000,000 oz production is not far away...perhaps two years. LSG can have all debt paid down and earn 48 cents a share. Perhaps 24 cents is clear cash !!! At what price per share would someone be willing to pay and hold a junior mining company?? If 24 cents is paid to a $2 share that is a 12% yield...pretty attractive!!! 24 cents would yield 6% for a $4 stock...not too shabby.
Another attraction to building a war chest of cash is the on going exploration potential.Tremendous upside. LSG can increase the current reserves by finding the outside boundaries of known ore bodies. Most of the orebodies require much drilling to find the horizontal and vertical contacts.The bottoms may continue for thousands of feet. These orebdies can be part of a future 100 year mining company. The physical size of the zones can increase. LSG may discover some very high grade gold pockets. These high grade pockets will drive mining costs lower. It would drive the share price higher.
Another attraction is finding new orebodies. The best place to find a mine is near a mine.
LSG is dripping with gold. Do we spend capital to produce or spend capital to explore??Anyone that understands exploration knows how very difficult it is to find ore bodies. We are sitting in a bath tub of targets.
It is very exciting for me to watch this company build from scratch. For the non mining/exploration types you just got to be very patient. This stock may not move for a while. It may remain a sleeper. The financial types look at the accounting numbers and swing to stocks that give the greatest dollar yield. LSG has not quite peaked the interest of the sideline money. One day this will happen and all the waiting will have been worth the ride.