VGCX vs. WDO (Wesdome) Book Value ComparisonA few months back VGCX and WDO (Wesdome) were listed in a US banking firm report (Citigroup I believe) as likely takeover candidates and so since WDO has been included in past VGCX corporate presentations (as a comparison company) I believe these are good companies to do a shareprice and book value comparison on.
VGCX - Balance sheet as of Jun 30th, 2022:
- Total Equity/Net asset value $540,215,000 divided by 64,457,680 shares O/S = Book value of $8.38.
- Share price low today $6.56
- Total Debt $228,516,000 CAD
- Morningstar Analyst report fair value today $18.10
- Gold (value) on leach pad ~ 110,000 ounces Not included in book value.
- Recent Eagle drill results (about 1.1 million additional ounces not included in net asset value)
- Recent and ongoing Raven drill results not yet included in net asset value but grades are so far indicating impressive results
- Updated Technical Report expected by year end to include Eagle and Raven results which I suspect should tajke them to over 5 million ounces in reserves.
WDO - Balance Sheet as of Jun 30th, 2022:
- Total Equity/Net asset value $391,656,000 divided by 142,486,530 shares O/S = Book value of $2.75.
- Share price low today $7.43
- Total Debt $12,407,000 CAD
- Morningstar Analyst report fair value today $10.86
Revenue between these two seems to be similar. Both have similar cash positions. Both have had production ramp up / target issues in the recent past.
VGCX has much higher debt but that is already factored into the book value. VGCX also has considerable ounces value sitting on the HLP that once produced offsets their debt.
The technicals for both are indicating they should be very near a bottom here (if the US dollar finally tops out and the gold price stabilizes between $1500 and $1650). The US dollar at 20 year highs can't continue to rise forever. The high interest rates and surging dollar both have their limits and I'm looking for the US dollar to top out at about 1.40 1.41 CAD within a couple of weeks and then the gold price can stabalize.
VGCX has to get over a few key hurdles in the short term (Yukon Waterboard - Supreme Court Decision ...expected any day now, meeting Q3 production/earnings expectations, and class action settlement $1 million dollar payout in November) and then we should see this stock at a more reasonable price. The short sellers that managed to drag the VGCX share price to these levels took advantage of the situation but will soon be covering their shorts and loading up on these cheap shares once visibilty improves.
I'm sure many readers own WDO as well as VGCX but based on book value alone, which I realize is only one metric, I prefer to buy a stock below book value than one overpriced by about $5 bucks. SPROTT ETF owns them both and according to VGCX recent corporate presentation SPROTT increased their postion to about 4.5 million VGCX shares (looks like they picked up about 4 million shares at $10.90 that Coeur sold in June). From what I can tell, it appears that Sprott may have loaned out a sizeable chunk of the 4 million VGCX shares around June to a dealer who then used them to short the stock., hence the heavy shorting these past couple of months. Sprott only shows 441,000 shares in their ETF with no record of the 4 million shares purchased from Coeur so I suspect the loaned shares will show up in Sprott's Q3 reporting records once the loaned shares are returned. I sent Sprott an e-mail over a week ago inquiring about this but so far no response...imagine that LOL.
If VGCX Q3 and Q4 production levels meet or exceed guidance and they can get the other previously mentioned issues behind them, then I suspect VGCX share price will return to a more respectable level. In the meantime VGCX share price and market cap seem considerably undervalued....by ~ 61% according to today's Morningstar Analayst report. At these prices, I can't imagine that some company isn't lurking in the background just waiting for the right moment to make a hostile takeover bid and has likely been working with a dealer to get VGCX's share price as low as they can. Most analysts have a $15 to $20 price target on VGCX yet here we are below $7. I'd be nervous shorting this stock at these levels. DYODD