New update at www.goldsilverdata.comColossus Minerals is difficult to value because we do not have a resource estimate or production guidance. I have heard nothing but good things about this stock from analysts, but the stock has crashed 95% the past year from $5 a share to .18 cents! You would think something caused this crash. However, I can’t find anything. They raised $37 million in August, so raising money is not an issue. The mine construction is almost completed, with production scheduled for 2014. The still need more financing to complete construction, but very much more from looking at the pictures of construction progress.
This is going to be an economic mine, because of the high grade gold and platinum and palladium offsets. I would expect cash costs under $500 per oz. They have to give Sandstorm 35% of platinum and palladium production at a loss, but the remaining 65% will lower their costs substantially. I usually do not like these types of financial deals, but I think this was a good one for Colossus. They also have $45 million in debt, but that isn’t very much for a 200,000 oz producer (my guess on their output).
When I look at it from a valuation standpoint, I have to guess. My estimate is that they will mine at least 4 million oz (3 million oz 1 opt surface and 1 million oz 2 opt underground). Production at Serra Pelada begins in Q2 2014 at about 200,000 oz (about 1,000 tpd). That will likely increase to at least 250,000 oz. At those numbers, that is likely a 5 bagger with their low cash costs (when you include the palladium and platinum offsets). Note that they will get 75% of production.
This is a pretty good speculation stock, because of the high grades, low cash costs, and their next project (Cutia). Also, if Serra Pelada is larger than my estimates, this could be a 25 bagger, and a true Colossus mine. Today it is has a very small FD market cap of $42 million. A year ago their market cap was about $600 million. The only red flag is their final financing. With their low share price, it could get diluted substantially.