Things to keep in mind in my math. Us as shareholders will receive $2.05/share for our assets and liabilities. This means that Eike will be paying out our BMO loan, this also means he will be getting the money from the warrants and options being exercised. As well, it sounds like he is funding Vetas and Victorio (for a total of $30,000,000) which is on top of our $2.05/share. With this in mind, the calculation is very simple.
144,276,676 shares outstanding
Total deal for Cali = $295,767,185 ($2.05 * 144,276,676)
Cash invested in new companies = $30,000,000
= $325,767,185 Cash Value
Divided by shares outstanding -----144,276,676
= $2.25 (For our cash only!)
Yes that's right.....$2.25 cash value. That is allocating $0 FOR VETAS (besides the cash injection). If you are selling this for less than $2.25 then you really need a swift kick in the rear. Let's say Victorio is only worth the cash that is invested in it for argument sake and to be conservative. Let me take a crack at a conservative estimate for Vetas....
There will definitely be 1 million ounces at a higher grade than California, based on the following:
"The initial corporate goal was to delineate resources of one million ounces from Vetas by drilling off an area of 500 metres along strike by 500 metres depth below the mine workings. Using an average horizontal mining width of 1.5 metres, a grade of 15 g/t and with a 25-per-cent success ratio over the mine's eight veins would give one million ounces. The actual average horizontal mining width has been exceeded, the success ratio has been exceeded, the depth has been exceeded and the number of veins present is greater than the eight originally thought to exist. As such, Galway intends to issue a robust gold and silver resource estimate for Vetas in the second half of 2013".
Now, let's be conservative here and say we have 1 million ounces today to therefore not worry about the time value of money. Our grade will be greater than California by what Hinchcliffe has reported and we're probably in the ballpark of 8g/tonne average grade. With that in mind, we should not get the average $30/ounce as most juniors are getting (Danny Deadlock's calculations). We should be at least in the $50 range and that is being conservative. Using $50/ounce and 1 million ounces, we come up with an additional $50,000,000 on top of our cash. I'll likely get shot by using that low of a valuation, but I have been conservative all along and continuing down that path. Vetas will go for much,much,much,much more than that, but that's what I am using for now. I would even speculate Rob was offered at least that from Eike and he turned it down. After all, Vetas was being held back for a while as well so you can bet they were in the negotiations.
Add $50,000,000 for Vetas and here is where we are at as a conservative estimate for the whole company.
$325,767,185 Cash Value + $50,000,000 (Vetas)
Divided by Shares outstanding 144,276,676
= $2.60
Now, do we want to discount the Cali transaction back from December? Since we likely need to take into consideration the time value of money for the December Cali Transaction. Let's discount 5% to be again conservative and we're down to $2.50!
And there you have it folks, that's where I got my original $2.50 "you deserve to be shot if you sell it for under that estimate". The upside is much more than that if you are willing to be patient and get a 43-101 out for Vetas, but for now this is where I am at for a conservative price tag.