RE:RE:RE:RE:RE:RE:RE:RE:Top insider for junior miners
Hey Smitty64,
Not DAM or Lambo, and wasn't goig to reply till my daughter gave me a math problem and it kind of fit. TLDR; I don’t know the answer, but I know the cap.
The cap is the cost of a gold ounce times the number of ounces.
I follow four gold companies. I am invested in three. Much has been written on this forum about the Greenstone so I wont repeat it.
Laurion. Property of Merit, ON, One project. Good assays.
I don’t know the number of ounces. But really no mining company does until all the gold is extracted from a mine so let’s make that a variable and call it a.
The cost of an ounce of gold, today is $2675 USD.
So a mining company is valued at $2675 times a. 2675(a) Using 5 million for no other sake, but it makes the math easier, and it falls inside the range of the Property of Merit, Laurion is worth 13,375,000,000 dollars.
My dad would tell a financial story. It was long, I will spare you but his point was you buy a house, you sell a home.
Thirteen billion but of course there are costs. In mining, the all-in-sustaining cost (AISC) is a good metric as it is defined costs. When gold was $1600 - $1900, AISC costs for the companies I followed were $600-$1300.
Barrick had the lowest. CEO is a cheapskate. Old school. If he’s looking to acquire a compony, it will be a merger or a Tier One asset.
Equinox had the highest AISC. Too high to stay in business long term. They took a risk on the Greenstone when they acquired it three of four years ago. With gold hitting all-time highs just as the Greenstone is hitting production it’s a huge win for the company. The Greenstone was projected to have an $800 AISC cost and a production of 400,000 ounces per year. On the TSX, Equinox is valued at 3.7 billion CAD, a valuation that is held down by its other assets. This is a Tier One asset I think Barrick would be targeting.
I think Barrick could buy Equinox for around 5 billion USD, around $16/share, an 80% from where it is now and just shy of it’s all-time high. Just from the Greenstone, they would be adding 400k ounces at $2675 that’s 1 billion dollars in earnings, and with the current P/E 24 billion to their market cap. Barrick could figure out why the AISCs are so high on the other properties or get rid of them.
The increase in market cap covers the cost in a year.
The math, as it turns out, is not as simple as $2676 x a. The market, interest rates and the government all have something to say about it.
Market caps are important. It is the value of each share, I was a loser on Barrick for a long time but while I waited for the turnaround, the dividend was nice, and the turnaround has been good.
The Greenstone is around 5 million ounces from what I remember of their PRs. So Barrick essentially pays $1000/ounce.
I think Equinox makes a good target for Barrick, Agnico Eagle, Newmont etc.. I just used Barrick as the example as I know most about them.
It’s a Tier One acquisition.
Artemis Gold
One Project. One Focus. In BC, a safe mining jurisdiction, 11 million ounces gold, 122 million silver ounces. Open pit. Set to open this year with a production 321,000 ounces of gold/year at an AISC of C$732/oz. Their market cap 2.91 billion. Share price of $13.50.
The people on the Artemis boards are calling for a buyout at $30/share. This is not investment advice. Tier One.
ILaurion is not a Tier One is because it doesn’t add anything to this year or next but losses. I expect a few upcoming acquisitions but I expect them to be with Tier One producers who can add to the earnings right away.
Laurion is Tier 2. Those other two things, interest rates and government?
Laurion is an expense for a good while. How long to build a mine and at what cost? And most importantly, would anyone do it on a Property of Merit??
The Ishkoday is a promising project, not a Tier One Asset.
But it’s private equity… yes, but it’s not stupid money.
I am okay with letting Laurion go as a Tier Two asset. It would take a minimum of three years and ~1.2 billion dollars to turn it into a Tier One. A Tier Two asset in a friendly jurisdiction, with the market around gold and 5 million ounces…500m - 1 billion in a hot market.
So if there is an AGM, my question is what are you selling? Is it a Tier One? What is the plan to get there? Is it a Tier Two? Why has it not been successful?