FDR – update to model and target priceToday’s drill update gives me enough to work with. If another set of assays is coming before PDAC on March 3
rd, I will gladly redo my calculations again.
My last model can be found here:
https://stockhouse.com/companies/bullboard?symbol=v.fdr&postid=35800725 It spit out a takeout price target of CAD $11.25, but we can revise that now.
First, the negatives. Dilution looks like it will end up a little worse than I thought. Expect another 5 million shares, for a total of 85 million. Processing the tailings might counteract that, but don’t assume FDR will go that route.
My specific gravity figure for a cubic meter of rock was 2.7 tons, but I’m dropping that to 2.65, as per Colin Padget’s interview answer on the subject.
Also from the same answer, I need to account for the saprolite layer. If we assume the first 30m (on average) of depth is saprolite, with an average weight per m^3 of 1.45 tons, we can adjust the overall ounce estimates per zone.
My use of 1.75 grams per ton for all the zones is also too rich. Let’s back that off to 1.25 for Buese and 1.5 for the other zones. We can leave the connector zone between Upper Antino and Buese at 1.0g/t, as I suspect that estimate will prove to be cautious enough. Given recent assays at Froyo, that puts us back on the conservative side of things.
Finally, my already-downsized footprint estimates were directionally accurate but lacking enough realism. I did cut back the size of the underground “shoeboxes” I was carving out, but the deposit itself probably resembles a football more than a shoebox. And just because a football fits in a given shoebox doesn’t mean its volume is the same as the box. Rather than try to apply some complex math to a deposit whose shape we don’t yet know, I will just cut back the old Buese and Connector Zone footprint dimension estimates by another 10%.
Now for the good news. Padget’s estimate of buyout price per oz Au is much higher than mine. He based it on two recent comparable transactions, which is usually the best valuation technique. The low end of his USD$80-90 range gives us CAD$107 rather than my arbitrary CAD $75.
Froyo is getting deeper. Donut shows gold well below 150m too. With just the initial drill holes to work with, I don’t want to assume the whole deposits are uniformly running down to 250 or 300 meters, but I’m comfortable expanding depth to 200m.
And it looks like we’ll also need to estimate some kind of expansion to the Froyo footprint to take into account the Eclaire and Cupcake sub-zones. The map seems to indicate 1,200 meters of strike will be revealed with pending holes from those two new subzones, but let’s only increase it to 600 for now. Plenty of time to adjust upwards if things go well.
Which brings us to Donut. A new low-grade deposit, of perhaps the same expected 1.25g/t as Buese? With footprint dimensions already anticipated of, say, 200m by 60m? And a depth of 200m, like Froyo?
Let’s put this all together. After my new discounts, the target price barely grows… but with the increased precision inputs it should represent a much more solid floor.
Froyo (partially including Eclaire and Cupcake potential)
[(600m x 175m x 30m x 1.45t x 1.5g/t) + (600m x 175m x 170m x 2.65t x 1.5g/t)] / 31.1g/oz
= 2.29m oz Au
Donut
[(200m x 60m x 30m x 1.45t x 1.25g/t) + (200m x 60m x 170m x 2.65t x 1.25g/t)] / 31.1g/oz
= 0.24 m oz Au
Buese
[(900m x 405m x 30m x 1.45t x 1.25g/t) + (900m x 405m x 120m x 2.65t x 1.25g/t)] / 31.1g/oz
= 5.30m oz Au
Buese – Upper Antino connector
{[(4,500m x 78m x 30m x 1.45t x 1g/t) + (4,500m x 78m x 120m x 2.65t x 1g/t)] x 0.5} / 31.1g/oz
= 2.04m oz Au
Lower Antino + Guanaman (combined) = approx. same as Froyo = 2.29m oz Au
TOTAL = 2.29 + 0.24 + 5.30 + 2.04 + 2.29 = 12.16m oz Au
x Cdn$107 x 75% share = Cdn$0.976B at 85m shares F/D = Cdn$11.48 / share