DFS - NPV over $1 billion and IRR=34% at current gold price Once again Scott Moore has undermined shareholder value by using a worst case scenario for the gold and copper prices used in the DFS. It uses gold at $1550/oz that is about $200 below today's price and copper at $3.30 being $0.80 below the current price. The forecasted prices used in the DFS make a huge difference to the economics of the project.
As most experienced investors know, only a lucky guess can accurately predict what the price of gold and copper will be over the next 20 years. Current economic conditions with massive government spending leading to inflationary pressures in the near future are very positive for long term gold prices. But the only known fact for sure is what the price of gold is today and this price should have also been used to show its affect on the DFS. The DFS did show IRR and NPV calculations if the gold price falls $200 below current levels of $1725, but failed to show calculations if gold will be just as easily $200 above current prices to $2,000/oz, as follows:
Price of Gold (per oz) $ 1550 $ 1725 $ 2000
Pre-Tax IRR 21% 34% 44%
Pre-Tax NPV (5% discount) $ 447 mill $ 1,040 mill $ 2,464 mill
Pre-Tax NPV per share $ 2.64 $ 6.15 $ 14.58
( 169.021 mill shares)
Notice how the leverage of the DFS dramatically increases the NPV of the project as higher forecasted gold prices are used. For every $200 increase in the gold price, the NPV more than doubles.
Most experts agree that a pre-tax IRR over 30% is necessary to make a project robust enough to attract any buyers. Obviously the higher the better. In the above graph a 30% IRR for this project is not achieved until a gold price of greater than $1700 /oz is reached.. Many long term shareholders and certainly Scott Moore knew this before the DFS was completed. He probably low balled the forecasted price in the DFS to protect himself from possible future liability from shareholders should gold not stay above this pricing. Hopefully it wasn’t to justify a future low ball offer to one of his mining buddies.
These projections show that this project is
economically viable if it has a capable CEO and management team. Unfortunately at present it does not and the forecasted numbers used in the DFS proves it. Once again Scott Moore is holding the share price down because he does not care about shareholder value, he only cares about himself
NPV over $! billion and IRR of 34% at current gold prices
Once again Scott Moore has undermined shareholder value by using a worst case scenario for the gold and copper prices used in the DFS. It uses gold at $1550/oz that is about $200 below today's price and copper at $3.30 being $0.80 below the current price. The forecasted prices used in the DFS make a huge difference to the economics of the project.