RE:Highper big holder here with questions.brodude wrote: Would you mind explaining the potential upside to Teuton assuming the following:
1. Treaty Creek is proved up to have 6-7 million ounces that can be economically mined;
2. Tunnel deal is reached favorable to Teuton;
3. One of the wildcat anomolies (not Treaty Creek) results in iron cap type deposit;
4. Some value is assigned to Teuton's TC royalty and its other greenfield properties; and finally
5 Gold approaches its lifetime high of $1950-$2000 per ounce.
You see, I like to dream of Carribean islands and large sailboats.
Bro
Reposting my criteria for valuation of Teuton stock:
My baseline valuation for TUO right now, assuming no gold discoveries and no new options for this year is $.23 USD per share. This includes only the existing assets - cash, incoming options payments and stock due (at current market value), claims as they stand on the balance sheet (which is declining every year as option payments come in, so it's a very low number), bonds, and property.
There is also about $4 million in tax loss carryforwards (TLC) which would be useful to a profitable company acquiring TUO, so another $.10 there, but only in a takeover situation.
Treaty Creek value for the KSM project - I am assuming 1% of total project cost for Treaty Creek tunnel rights, or 1% of $5 Billion, or $50 million, of which 20% ($10 million) would be for TUO - $.25 USD per share. Keep in mind that a deal for the tunnel rights could also include a buyout of Teuton's NSR or the 20% T/C stake. A lot depends on this deal for the Teuton stock price.
I am valuing every 1 million economic oz. Au found at Treaty Creek as follows:
$40 million for value of gold in the ground based on Cipher Research data showing $40 per oz. for projects that are in development. This is based on over 200 actual transactions over more than 20 years. [If you don't consider Treaty Creek to be in development, use $31 per oz. which is the Cipher Research median number for Canadian gold in the ground that is not under development]. So for every 1 million ounces found, $8 million (20%) would be for TUO, or $.20 per share USD. For 6 million ounces, $1.20/share for 7 million oz. $1.40/share. This would also be true of new discoveries on Teuton properties, pro rated if Teuton does not own 100%, as with some of the properties jointly owned with Silver Grail, etc. The discovery would have to be economic.
The TUO NSR on Treaty Creek is a bit fuzzy since I don't know where they have .98%, or where they have .49%. I use .49% for the NSR number and $1250/oz. as the price of gold. So I get $.15 per share US$ for every million oz. less transportation and refining costs,
as it is mined in the future. To be conservative I use net $.10/share. This is also true of the Teuton optioned properties such as the Pretium or Tudor options, where Teuton has NSR's.
If the price of gold changes I add/subtract 2% to the valuation for every 1% that gold increases/decreases. This reflects the fact that mining stock prices (especially juniors) move more than the price of gold. If gold increases 50% to $1995/oz Teuton stock approximately doubles.
I am assuming that TUO will not be paying anything for the Treaty Creek project after a production decision has been made - I think they will do a transaction to get out of the project and convert it to cash, possibly retaining the NSR. The TUO business model is project generation, not mining.
I assume about $1 CDN = $.75 US$
Open to input on these assumptions as always. Do your own DD as I am not an authority on anything.