RE:RE:RE:RE:RE:RE:RE:RE:RE:Alamos
Haven't posted in awhile here and I am seeing all the bullish prognostications, so I figured seeing how the current price seems to suggest something different I would chime in. As someone posted here earlier, like to see the "facts", so here goes based on documentation found on the Argonaut website, more specifically the 43-101 filed in March 2022:
The after tax NPV discounted at 5% of the Magino project is $421M US (pg 305).
The highest cash flow year for the project is 2025 where based on the graph provided the company is expected to generate about $100M US (pg 304).
On the same graph, 2023 shows a small positive cash flow and 2024 shows about $75M US.
The assumptions used by the company to arrive at these figures are set out on pg 21.
Amongst the ones listed, I will highlight just a few here below:
• Gold Price of US$ 1600/oz;
• No inflation;
• Exclusion of all development and sunk costs up to the end of 2021. This amounted to US$ 273.3 million.
The one that stands out the most is the one where management magically makes all Magino costs before 2022 disappear from the analysis like they never happened or better yet, it wasn't out fault so the project metrics should not include them.
In previous posts, I've more than shared my thoughts of what I thought and continue to think about the BoD of this company so judge for yourselves when AR excludes those costs from any financial analysis.
Do your homework people and don't listen to valuations that peg this project at billions when the true value of what is projected to be built and commissioned per the 43-101 is a net present value of $421M US less $273M US (pre 2022 Magino construction costs) or basically $150M US over the cost to build Magino. This information is based on assumptions made by the company as at March 2022.
Draw your own conclusions as to how much this project is worth in its current form based on the "facts". As Clive Johnson from B2Gold has said many times, we don't pay for potential, we pay for what's there.
If people view this as bashing then so be it. For those questioning why I'm posting, it is because I drank the kool aid and had to reevaluate my holding. I posted here that I would be out at a dollar and then did my homework and concluded that may be a long time coming so I decided to average down in the low 40s/high 30s and sell in the low 50s. I've been able to do it twice and need the price to go there one more time to be out with my capital intact. Also, I firmly believe that nothing I write here will influence the price in the least.
Now hedging impacts the analysis, inflation impacts the analysis, royalty agreements entered into after March 2022 impact the analysis, delays in the mine start up impact the analysis, the future gold price impacts the analysis, future development of the underground resource, etc. These are all post March 2022 factors that influence value and are therefore not quantified in the 43-101. But they are factors that make a market and Mr. Market right now is siding with the Bears.
GLTA as these are the "facts" based on the 43-101 issued in March 2022.