Nice project, but https://www.rt.com/op-ed/538492-military-takeover-khartoum-knell-us/
https://www.zerohedge.com/geopolitical/sudanese-pm-cabinet-arrested-internet-curtailed-apparent-military-coup
https://seekingalpha.com/article/4374457-orca-gold-look-revised-feasibility-study So, why is Orca Gold so cheap? For investors looking at Orca Gold from a valuation standpoint, the numbers are certainly a head-scratcher. Based on the company's 234 million shares outstanding and a share price of US$0.41, the company is trading at a market cap of $96 million, which works out to a P/NAV ratio of 0.14 based on a $1,410/oz gold price ($96 / $691). However, we have to subtract a portion of this After-Tax NPV (5%) as the company owns only 70% of Block 14, and the numbers are based on a 100% basis. If we use a 70% basis, we come up with a P/NAV of $425 million at $1,410/oz gold, which increases the company's P/NAV to 0.23. However, this is too conservative, in my opinion, so for an upside case, we can use a $1,950/oz gold price. At a $1,950/oz gold price, the After-Tax NPV (5%) on a 70% basis comes in at $1,012 million, meaning that Orca is trading at 0.1x P/NAV. This is a dirt-cheap valuation for a gold developer, as even Tier-3 jurisdiction developers typically command valuations above 0.25x. I believe there are two reasons for this deep discount: The first reason is that Orca will not have an easy time financing this project without a partner or significant dilution as the initial capex is 220% higher than the company's current market cap ($321 million vs. $96 million). It's possible the company could look to finance 40% of the costs with debt and another half with shares, but even in this case, we would be looking at at least 180 million shares sold at US$1.00 per share to raise $180 million, with another $140 million in debt. This is not ideal and might be one reason that the market isn't paying up for Orca until we get a better idea of the financing terms. (Source: State.Gov, Sponsors of Terrorism) The second reason for the discount is likely the jurisdiction, with Sudan being one of four countries on the State Sponsors of Terrorism List [SSTL]. There are currently four countries on this list: North Korea, Iran, Sudan, and Syria. The good news is that Sudan's longtime dictator Omar al-Bashir was ousted recently, and we are seeing, and the country is working towards a transition to democracy. However, until the country is officially off the list, this may be another reason for the discount vs. peers. It's important to note that this SSTL designation does not prevent private investment, but it might lead to some pause when it comes to financing large projects like Block 14.