Proposed Sandong Acquisition and implied Valuation
See below extracted from HKEX doc .
Note that MJS will acquire 51% for $45 million US which values the ore in the ground prior to production of about $90 million US or about $125 US per ounce.
Apply that to 2.55 m ounces currently defined at Songi and the valuation is about $320 million US.
Once producing, valiuation ...typically then derisked .. will double
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We would consider acquisition targets that fulfil criteria including, among others, (i) within Shandong Province; (ii) either open-pit or underground mines with potential gold resources of at least 10 tonnes, ( about 715,000 ounces ) and a depth of less than 1,000 metres for better economic benefits; (iii) has LoM of over five years after commencement of operations (excluding mine construction period); and (iv) has a payback period of less than ten years. For acquisition target that is a mine near commencement of commercial operations, we expect the acquisition cost for the mining right to be high as we expect such mining asset would have a valid mining licence of over two years, valid land-use- right and related mining infrastructure (including an ore processing plant) ready for us
In the event that we were able to identify gold mining assets fulfilling the abovementioned selection criteria, the overall budget for the mining asset will be approximately RMB300 million ( $45 million US ) largely comprises the costs of acquiring the mining asset with a mining licence for an appraised value of approximately RMB260 million and additional investment for the construction of additional mining infrastructure to optimise and expand the production for approximately RMB40 million