Geologix Explorations Inc GIXEF

Sulliden vs Geologix: GIX 4,300% from a fair valution?

[ataguld]

Geologix: 4,300% from a fair valution?

Posted onJune 10, 2014bygoldtothemoon

Sulliden Gold Corporation is in the process of merging with Rio Alto and today their market cap is at $370 m fully diluted. They are still not through the permitting process and they have not secured financing for construction. At the same time Geologix market cap is only $8,5 m despite having higher NPV than Sulliden. I find this extreme difference in valution of comparable companies quite extraordinarily, here are the numbers:

Sulliden Gold Corporation

Location: Peru
Resources: 4 moz gold, 80 moz silver
Production profile: 90,000 oz/year
All-in cash cost: $826/oz
IRR after tax: 41,3% (at $1500/oz au)
NPV afeter tax: $248 m (at $1415/oz au)
Capex: $131,8 m
LOM: 10 years
Payback after tax: 2.2 years
Cash: $49 m
Market cap: 370 m
Market cap per oz: $74

Geologix Explorations

Location: Mexico
Resources: 4,5 moz au eq (1,8 moz gold, 809 Mlbs koppar)
Capex: $354 m
Production capacity: 116,000 oz au (243,000 with copper & silver)
Start of production: 2017
LOM: 11,5 år
IRR: 34% after tax at $1518/oz gold & $3,71/lb copper
NPV: $568 m after tax at $1518/oz 5% discount rate
Payback: 2,9 years
Cash cost: $191 net of copper after tax all-in sustaining
Market cap: $8,5 m
Market cap per eq oz: $2

To reach Sullidens market cap Geologix has to rise 4,300% from here, absolutely amazing.

[StocksLynx]

Hi Ataguld, thanks for your very interesting articles which put the spot right on. I think the main reason why there is so little interest to buy it is that the share price went lower and lower. If Peter Grandich was the seller who drove this down, who knows. Another reason could be the their 50% copper exposure. For gold we can pretty much say it won't get lower midterm due to the high cost