RE:RE:Future profits Andre,
"Agreed, your figures seem reasonable, even conservative as long as current gold prices hold. For gold at $2500, in the latest September presentation, Nextgold reports an estimate of Annualized EBITDA and post-tax FCF of C$264mm and C$195mm in first 5 years of production. Since the two mines have relatively the same potential, if they were to be mined simultaneously (which is not a given), we could expect EBITDA of over 500M and FCF of around 400M CAD for each year. But I doubt that we could finance both projects at the same time, unless at the cost of excessive dilution. What do you think?"
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Could be a lot of dilution. $335 million initial capex.... well any of the companies I follow, the actual price ends up being significantly higher.
Suppose they raise $75 million in equity, the finance the rest. I'm going to say $300 million to finance.
Annualized EBITDA does not include interest on the financing. Perhaps $30 million a year if they can finance it at 10% (which is a pretty good rate these days for exploration companies). It doesn't include taxes. (they probably have some right offs for money already spent), it doesn't included depreciation, nor amortiziation.
It doesn't include expenditures for further drilling and trying to find new resources.
They don't have a Feasibilty study. Those numbers are a good place to start.. but they leave so much out. A company could have $264 million in EBITDA, and still make zero profit at the end of the year.
That's just how I understand it.... but I don't think that mine will be making them $200 million a year in the first 5 years. And it will take years to build a mine. So the initial capex will likely be much higher.
We don't know where the price of gold will be in 5 years. It has been on quite a tear the last year. Even something so simple as the US election, the US economy, could change the price drastically. In either direction.
Good luck.