Post by
68Charger1 on Aug 31, 2024 9:21pm
FDR and the Reunion per-oz valuation
Guess I was wrong regarding Buese news landing last week. Serves me right for being too much of a cheerleader. But judging from the overall tone of the bullboards (and FDR’s stock price behavior), not too many people were disappointed.
Meanwhile thanks to JuniorResourceInvesting’s timely timeline for Reunion Gold’s takeout reminding us of a highly relevant comparable, I am prompted to do a pre-emptive upgrade to my FDR buy-out valuation. Let me review the history.
In February 2024, when last I addressed the question of a per-ounce price for a Founders end-game deal, I upgraded my model’s earlier arbitrary CAD$75 per ounce to a higher estimate of US$85 per ounce. This was prompted by hearing Colin Padget predict a US$80-90 range for the value of FDR’s ounces.
Not sure whether the ounces he contemplated were proven, inferred, or something in between. But given Reunion’s deal, inferred may be good enough.
Padget at the time based his range on what he said were a couple of relevant (presumably meaning geographically close-by) recent deals. This would have been prior to Reunion’s merger announcement, however. With its CAD$143/oz implied valuation. On a resource size - 5.9 million oz - that FDR could well surpass over the next 12 months.
So, if February saw me upsizing to CAD$116/oz, I think I can now add at least half of the new difference. Meaning ($143+$116)/2. Meaning CAD $130/oz now. Conservatively. Which is at least another 11% over my previous share price target. Or another $1.65 per share.
Once we have the first Buese results, I can adjust my year-old estimates for that zone, add in something for Lawa and do a complete overhaul of calculations. But even now, it looks like my model is getting more and more comfortable with a buy-out target north of CAD$20.
All of this is before any additional wildcards still in the deck turn up. And I’m not talking more new Antino target zones to be explored, though those may come too.