RE:FDR target price?With the benefit of 4 months of hindsight, today might be a good time to re-assess my first stab at a valuation model for FDR.
In one of his subsequent interviews, I believe Colin Padget made reference to his goal being to find a 5-10 million ounce deposit, or something to that effect. While we shouldn’t hang on his every word, especially as 5-10 million oz is essentially every gold explorer’s stated goal in this sector, it suggests my 5 million ounce assumption was at least comfortably in the ballpark.
Although FDR’s first financing has now been done at $0.40, it was small did not require a warrant. So achieving my estimated [average] financing at $0.75 or better for the balance of required funds should be no problem either, given the progress of our share price.
I tried to research what an ounce of deposit was worth from various historical studies and compilations, but most of those date from 10-20 years ago when gold was much cheaper. Not sure whether simple percent extrapolations of theoretical profit margins can be justified. But again, I think $75 per ounce is reasonable. I’m not sure whether experts consider this a blended average of all classes (proven & probable, indicated, inferred, etc.), but I suspect all classes are each considered and given some kind of an appropriate weighting in a buyout.
In conclusion, $3.70 in Canadian Dollars seems entirely possible, and perhaps even on the low side. As the market is now in the process of acknowledging.