Post by
Goaweigh on Dec 12, 2019 12:56pm
What is a 50 to 60 year legacy asset that spins off
$ 600,000,000 per year, worth today ?
Malartic estimates it's 2019 production to be 660,000 Oz. at costs of $ 576 per Oz. so at a gold price of $ 1500 it nets $ 924 per Oz. X 660,000 Oz. =
$ 609,840,000 net cash to the partnership.
If it had a 50 year mine life that would equate to $ 30,492,000,000 net cash generated over it's life time.
So what would a major mining Co. be prepared to invest to generate a net a
$ 600,000,000 per year for 50 years ?
With interest rates at or below 1 % if it had $ 6,000,000,000 in a war chest it would only generate $ 60,000,000 per year however for large borrowers a major mining Co. could borrow $ 6,000,000,000 @ a 1 % interest rate from a major bank and invest that money in a Malarctic and after debt service it would have
$ 540,000,000 net for debt repayment, paying off the loan in 11 years with another 39 years of huge net cash flow.
That's a hell of a return in my view.
I'm no banker nor do I know how major mining Co.'s determine what they should pay to generate a profit of $ 30,000,000,000 over 50 years but $ 6,000,000,000 doesn't seem out of the question to me.
That would be $ 120 per share for GBR.
Of course if we prove to be a high grade Hemlo type with a higher profit margin and a 50 year life span then those numbers may be low but who knows.
Does anyone know ?
Comment by
IvanHoe86 on Dec 12, 2019 1:54pm
they would obviously inflate the value of their costs vs the projects of revenues ascerttained also inflated over that same time period. Minus projected costs and plus/minus value of gold at that time in the future... that being said "agreed"
Comment by
shav3 on Dec 12, 2019 1:57pm
$30.5 billion discounted at 4% annually over 50 years has a present value of $4.3 billion, or $86 per share. Using a 5% discount rate equates to $52 per share.