RE:RE:Back Filling
stephangold wrote: My numbers are a little different Eric Sprott said your value accompany at 20% of the value of the metals in the ground Take 35 million Ounces 20% of that is 7 million ounces now multiply that times 1800 and that's the value Market cap It's in the billions do the math yourself
I know I have heard that 20% of in the ground metal value used a lot by people but it's not as simple as that because there are a lot of other factors that enter into the equation. Factors such as the location and available infrastructure. Having to build a road, power and a remote camp add a lot of expense and that is a negative with this one and enters into the equation with any possible buyout.
Metallurgy and mining methods is another one and luckily that is a major positive in this case. These type of deposits are well understood and have great metallurgy for extracting the gold. I look at past deals and existing market valuations in the region to get a sense of possible valuations for SGD. So Newmont's Coffee deposit (4 million ounces) was bought out in 2016 for $520 million when gold was about $1300 an ounce but costs were much lower (don't forget inflation) so the higher gold price would help a bit today with gold at $1750.
And right now Victoria Gold has the Eagle mine producing gold which is a similar size deposit to the Coffee deposit with about 3 to 4 million ounces and VGCX has a market valuation of around $700 million but this is a producing mine now so that is a bit different but should be taken into consideration.
So my best guesstimate is a major gold company would pay somewhere around $125 to $150 an ounce for an undeveloped gold deposit similar to this one that SGD has discovered. I think Quinton Hennigh's numbers are very optimistic, possible but probably a best case scenario. I am a conservative type of guy because I don't think they will prove up a billion tones with an average grade of 1.25 g/t because the grade will fall off drastically outside of the sweet spot. Although the sweet spot does appear rather large with this one.
What I think is very possible is in the 10 to 15 million ounces with an average grade of around 1.25 g/t so using my $125 to $150 an ounce figure that would put a possible buyout in the $1.25 billion to $3 billion dollar range or thereabouts given my ranges. Still a lot of unknowns and I might be a little conservative but looking at past deals, operating mines in the area and because of where it is that is how I came to my numbers.
So that would put SGD's share price at around $10 on my lowest estimates and around $25 on the high side if they prove up 15 million ounces. These are very rough estimates (depends how many outstanding shares you use as well) and I just don't think any major gold company would pay more than 3 billion for any deposit up there in the Yukon no matter how big it is. I think SGD will end up with a market valuation somewhere between 1.25 billion and 3 billion dollars. So my upside for SGD is anywhere from 3 times to 8 times the current market price.