TSXV:MGR.H - Post by User
Comment by
MacRellenon May 24, 2022 12:52pm
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Post# 34704019
RE:Magna Gold Drastically Undervalued
RE:Magna Gold Drastically UndervaluedIt definitely seems very undervalued, especially with the recent drop in price.
If they manage to cut their costs, I think we'll see a revaluation. From numbers posted by Darcyslaw over at ceo.ca, their cash costs for 2021 were at $1131, which is OK. But AISC were at $1662 and over $1800 if general and administrative costs and share-based compensation is included. So they'll be hard pressed to earn $500/oz in 2022 unless costs are cut or the price of gold increases.
A big chunk of their costs seems to be investments for future production ("deferred stripping"), so that may decrease soon bringing AISC down. Q1 financials should come in not too long, so we'll see if costs are moving in the right direction. If I remember correctly, Arturo has said that they'll start releasing NRs along with quarterly results now.
With such high costs, there is of course a risk that they won't be profitable if the price of gold decreases. So with investors being cautious at the moment, I think that's the reason for the recent price drop.
For 2021 they made a GAAP profit of 6 cents per share. With increased production and hopefully lower costs in 2022, that should increase, so I expect at least a doubling in share price over this year, and more to come in the following years.