RE:RE:Paul West interview this weekAgreed Sooner, seems the main dichotomy between our respective buyout thesis dollar amounts revolves around the % of NPV figures. Two comments regarding this which gives me confidence that we will get more than the $6 figure you are sticking with:
1) RIO isn't concerned with calcuating a NPV and then assigning an arbitrary buyout figure based upon those calculations. Anything we are doing here is sorta internal metnal gynmastics to assure ourselves we are making correct investment decisions.
2) The Kinross acquisition of Great Bear. GB didn't even have a resource and performing an NPV calculation was impossible to do. Kinross was basing their decision on assumed size of the project and grade if a PEA had been published given what they knew about the drill holes. Granted GB's project is higher grade, but the assumed size was only about 1/3rd of Casino's. Plus the back half of Casino that isn't even recognized in the headline NPV only makes the respective sizes of the projects that much different. What I am driving at is if a suitor is willing to shell out $1.42 for an unknown that is probably only worth about 1/3rd of what a known is worth, how much is the known (Casino) worth?
Remember the old addage that a bird in hand is worth two in the bush? Let's gross up GB's project and adjust the adage: 3 birds in hand are worth 6 in the bush. Triple the $1.42 billion and you are getting close to my $4.5 billion figure mentioned earlier.
What if you split the difference between $1.42 billion and $4.5 billion? You are left with about $3 billion........wait for it..........divided by the WRN shares outstanding and you get $20 a share.
Just keep coming back to that $15 to $20 dollar range. If it is too hard to believe, then consider how crazy shelling out $1.42 billion by Kinross for a complete unknown is. We are a known, a world class project and any uncertanties are fading month by month.