BAR's response to a simple question.
Well, I was not going to post this. But after further deliberation I decided perhaps I should? I don’t think John would mind, since I feel it was sincere response to the question I posed to him 3 days ago when all Hell broke lose. My email was quite simple.
It was “John, perhaps it's time for BAR to re-purchase some shares. Now is the time.”
I think the current situation was hopefully a wakeup call for BAR and better strategy will be used in the future. At least there appears to be a willingness to sort the mess out.
Below is the response I received from John today – I view it as a positive moving forward. Much more information than I expected and I do plan on having a conversation with him. Perhaps other received this as a stock reply to inquiries, I don’t know.
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Absolutely! Especially now that the restriction is off and they are incredibly cheap.
Very sorry for not responding sooner, I am just working through a very large backlog of correspondence in response to the IRE. I can call you regarding this tomorrow or Monday if you wish, I’m at your disposal.
On the market response:
This is a solid Initial Resource Estimate for the shallow portion of a new Abitibi gold system using real-world mining costs and a lower than current gold price, and delivers 26-42% of our target guidance (1.5-2.5M Ozs) for the system overall. Clearly however, the combination of our failure to effectively manage the market’s expectations, coupled with but unmanageable expectations (and rampant speculation) of ‘it better be 1-2M ounces+ after five bloody years’ has led to a severe selloff. It’s reactionary, and overdone by a wide margin in my eyes.
On the current valuation:
In preparation for this report, I looked at 21 of our peers in the Abitibi, either existing pre-production gold companies or ones that have been acquired in the past 6 years. With the size and quality of this Initial Resource Estimate we clearly join their ranks. I wanted to answer a simple question: what is an ounce of quality Abitibi gold worth?
Quality pre-production gold assets in the Abitibi are currently valued at between C$46 and C$157 per in-situ ounce, averaging C$101. The most comparable asset to Martiniere is Probe’s Val D’or East project, which carries a C$98M valuation, or ~C$70 per in-situ ounce.
Quality pre-production gold assets in the Abitibi at acquisition have averaged C$192 per in-situ ounce over the past 6 years or so, with the closest comparable asset to Martiniere (and most recent transaction) being Integra’s Lamaque Project, where the overall resource fetched C$172 per ounce and the core asset (Triangle) C$224 per ounce.
With this week’s selloff we are approaching a C$30M enterprise value, which means that assigning even a nominal value to Grasset and the land package values the resource we just announced at Martiniere at a fraction of any of these metrics. This to me says we are badly oversold at this level, and have a lot of value to regain once the dust settles and we begin to show growth of the system.
I can provide extensive details on all of this, please don’t hesitate to ask.
Would love to talk about the Resource estimate, the response, and most importantly our plan to recoup and add market value starting today.
Best,
John Foulkes
VP, Corporate Development