GREY:PGDIF - Post by User
Post by
ekimon Jun 02, 2018 12:58pm
162 Views
Post# 28115566
Enterprise Value - Chidliak
Enterprise Value - ChidliakA lot of people talk about EV or Enterprise value for a project.
What is the EV of Chidliak?
At one time, when those inital drillholes at CH-6 went right through the HG zone and were released to the public (they didn't know it was an internal zone at the time)...the EV hit about CAD$600 million.
That was a long time ago.
Now we sit at an NPV after tax of CAD$679 million....but what is the EV of Chidliak?
Some people just take the Market cap of a company, subtract the cash in the treasury and zero out any lesser assets to get to the EV of the prime asset for that company.
Does that make sense to do that here?
442 million shares x 0.155 $/share = CAD$68 million
minus $1 to $1.5 million chas = CAD$67 million.
So is that the EV of Chidliak?
If you look at potential suitors like De Beers or Rio tinto or DDM or other producers.....and these companies were able to buy PGD at current market prices....how much would it cost them?
It would not cost them CAD$67 million.
Offer CAD$68 million to pay the shareholders.
Take the cash and put it in the bank after the deal is done.
Take the CAD$100+ million in taxable benefits and apply them to current operations.
Almost instant CAD$13 million in tax rebates.
Total cost to those type of suitors = CAD$54 million.
From that perpsective (from the suitors point of view)
You could spend CAD$54 million in cash and receive:
Chidliak at CAD$1,069 million discounted pre-tax NPV
Known material under 300 mbs not included in the economics.
Known excavated material from CH-20 not included in the economics.
Dozens and dozens of under sampled kimberlite pipes
Majority interest in DO-27.
Full Access to the BHP sample database.
Throw $4 million on all those non-chidliak assets.
Then you end up with an EV of Chidliak at CAD$50 million.
With a pre-tax NPV of over a billion.
pre-tax NPV to EV is ~ 20 to 1 ratio.
This is basically what the market is valuing Chidliak.
The bigger question is what are the Friedlands valuing it at?
Only a select few under a NDA would have any clue what that answer is.
Only Robert/Eric themselves would know the final answer.
"We are currently assessing various options to advance the project and hope to be in a position to outline a comprehensive way forward to our shareholders very soon."
Maybe we find out 'very soon'....maybe not.
LONG...PGD
EKIM