Is ESM overvalued /undervalued at 62.00/oz Great read from Seeking Alpha . Gold junior takeover values
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Gold Juniors Index: How The Barkerville Buy-Out Stacks Up Against Prior Takeovers. Sept 2019
Some interesting comments
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Basically, what the above chart is suggesting is that there is no reason to expect juniors to fetch a higher premium due to a higher gold price. Common sense would suggest this is the case, but the facts are suggesting otherwise, at least for the time being. Based on this, while fair value an ounce for acquisitions may seem like it is $100 - $200/oz in takeover scenarios, the reality is that it's $62.14/oz. One is a fact; the other is only an opinion.
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The takeaway here is that while world-class producing assets like Atlantic Gold can expect to fetch $150/oz or higher for ounces in the ground, juniors are a completely different story. The market itself is telling us that the price paid for ounces in the ground for juniors has not changed since Q1 2016 despite a much higher gold price than the $1,250/oz levels in Q1 2016. Based on this, buying junior mining companies at an enterprise value per ounce above $62/oz is unlikely to pay off very handsomely in a takeover scenario. If the average price juniors are getting is $62/oz, and this figure is not trending higher, investors need to temper their expectations until these facts change.