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To estimate Laurion Mineral Exploration’s valuation in a go-private transaction with mineral resources, several factors must be considered, including the gold price, the value of indicated and inferred resources, and the discount rates typically applied to such valuations.
1. Gold Resource Valuation Framework
• Indicated Resources: Generally valued at 50–70% of the spot gold price per ounce.
• Inferred Resources: Valued at 5–30% of the spot gold price due to the higher uncertainty.
2. Assumptions
• Gold Price: Assume $2,000 USD/oz (recent average).
• Discounts:
• 60% for indicated resources.
• A range of 10% to 30% for inferred resources, depending on the quality and likelihood of conversion to higher categories.
• Exchange Rate: Assume USD to CAD = 1.35 (if prices are converted to CAD).
3. Valuation by Resource Estimates
Indicated Resources (3 million ounces):
Inferred Resources (Range of 5–20 million ounces):
• 5 million ounces:
• At 30%, value rises to 3.0 billion USD.
• 10 million ounces:
• At 30%, value rises to 6.0 billion USD.
• 15 million ounces:
• At 30%, value rises to 9.0 billion USD.
• 20 million ounces:
• At 30%, value rises to 12.0 billion USD.
4. Total Valuation Ranges
• Low Case (10% on inferred):
• 5 million inferred: $4.6B USD.
• 20 million inferred: $7.6B USD.
• High Case (30% on inferred):
• 5 million inferred: $6.6B USD.
• 20 million inferred: $15.6B USD.
5. Go-Private Premium
• A typical go-private transaction might include a premium of 20–30% on the calculated valuation.
6. Valuation in CAD
Convert USD to CAD:
• Low case: $6.2B CAD to $10.3B CAD.
• High case: $8.9B CAD to $21.1B CAD.
Conclusion
Laurion’s valuation in a go-private deal ranges widely from $6.2 billion CAD to over $21 billion CAD, depending on the quality of inferred resources and market conditions. This range will also depend on Laurion’s ability to secure a premium and reduce risks associated with inferred resources.