OGC valuation and new shares1) obviously this is not good news for the stock for the next 45 days or so. It will probably trade around $2 to 2.10 for a while. ( at current gold price)
2) It does not change the math however. OGC will be a 3.25+ stock if gold stays where it is or goes up, or even down a bit. The Caveat is the management must deliver on their 400,000 ounces next year at 1100 AISC. The new shares + the over allotment ( they will be taken) will net around 170 million after fees Canadian. They owe 170 million net US so they will be left with about 43 million US net debt. So take a share price of 2.06 Can / 1.335 x 709 million shares now + 43 you get an enterprise value of 1137 million. US.
Take 400,000 ouces at AISC of 1100 at gold price 1850 US you get 300,000.
Use multiple of 6 you get 1.8billion US. That gives you about a 3.30 share price.
Probably as good as can be hoped for within 12 months without Didipio, or increase in gold price.
A more probable case would be less gold produced . In any case the share price should be somewhere above 2.50 within 12 months, even if performance is sub par. That is a 0 base case for Dipidio.
My investment philosophy is no emotion, look at investment as of tomorrow. Would you buy it
with fresh money and I would say yes for probably a 25% gain somewhere in next 12 months.
I will not sell and I will not buy more until I get clarity over operations and Dipidio. I remain constructive on gold. They are far more important than these additional shares.
What is important is the reason for additional capital via equity. (suspect bank prodding due to bad hedges, lower production and two bad reports to come, as well as lots of ongoing capital costs.)
We know that the next 2 quarters will not be great but they should be a minimum of cash neutral excluding capital costs. I thought that was what the hedging was for so I assume the Covid slowdown in Haile is ongoing and significant)
For those talking about financial problems and bankruptcy, forget it, at gold prices anywhere near where they are and operations anywhere near what they say. Only reason they are hurting for money is the bad hedges and the lower operating results from Covid. The hedges are over in 3 months and Covid is over in NZ and hurricane season will be over soon in SC and hopefully Covid will be restrained there soon. The 2021 hedge is in the money currently.
Also Dipidio cash drain should be over very soon and maybe a surprise gift.
So in summary, easy for me to say suck it up and wait until we get operations clarity before deciding to sell all or buy more. I never take any significant position in Oil or mining stocks
Been burned before years ago. Lucky to have bought most when it was near lows, but it would not matter. You must always be detached and look at situation as if you own none and are thinking about buying it fresh at probably around 2.06 or thereabouts.
I would call this stock a hold now. Definitely not a buy until more clarity Just my thoughts and
what I am doing.