Troilus Gold Corp T.TLG

Value implications from darkest Africa

[templetooth2]

Silvercorp recently arranged a cash and shares takeover of Orecorp, an Oz company with a 2.5 million ounce deposit in Tanzania. This Nyanzaga deposit would produce 2.5 million ounces over a 10.7 year mine life. Orecorp owns 84 % and my calcs are based on 100%.

Orecorp has 403 million shares so at 60 c Aus this deal is worth Aus $241.8 or US$157 million. Divide by 2.5 million oz and you get US$62.87 per oz in the ground.  Capex will be US$474 million. Add that to acquisition price and you get US$631 million. Divide by 2.5 million ounces and you get $252 per developed ounce. One should divide these numbers by .84 to account for the govt's interest

If we apply some of these rough metrics to Troilus, you get some interesting numbers. If we assume TLG has 6 million economic ounces out of 8 million+ resources, 6 million X US$ 62.87 = $377 divided by 235 million shares or US$1.60 per share. Impressive, no?

If Troilus tries to develop this  project itself, let's assume the capex is in the same vicinity of $475 million, giving us credit for several hundreds of millions of existing infrastructure. Assume we have to raise US$150 million as the equity component required and a 6% commission to need US$ 160 million gross.  Assume the management moves heaven and earth to boost the stock price to 75 cents Cdn. So, US$160 million divided by 57.7 cents US issue price means an issue of 277 million new shares.  Add to 235 million existing and you get 512 million shares outstanding.

For US$250 per developed ounce X 6 million ounces = $1.5 billion less debt financing of $325 million gives you $1.175 Billion. Divide by 512 million outstanding shares and you get US$2.29 per share. Impressive, no?

So why isn't this stock somewhere in the vicinity of 75 cents? Why is management wasting time and energy with this Catch-22 zone? Why is our company appearing on webcasts with a bunch of no-names nobody has ever heard of?

[pepperino]

Good analysis.  I can only speculate on why management is spending money on X22.  They want to find higher grade deposits, in hopes the share price jumps so raising funds for production doesn't massively dilute the shareholder's equity.  

[VickRoxman2]

Just when I was trying to be positive templetooth. My only question.... is it a fair comparison using Africa?   I get your point though,, hopefully there can be some premium with TLG being in Quebec