Very simplistic because there's no consideration for discount rate, IRR, mine life, funding, capital structure etc. Very rough guide and my 2/3rds rule only applies to those in the development phase with funding. At the BFS stage it's more tricky as project funding is still to come and the capital structure surrounding the funding will obviously change the eventual target price.
First thing I went for in the EAR DFS was the total cost to make the first $1 of profit, $39m. 40% outlay of total return post tax. I doubt that anyone will fund them the full amount, the route to get the project started will obviously be through dilution and is probably indicative of the current selloff.
Project scale strikes again?
I would have preferred EAR to go hammer and tong at exploration and drive hard at discovering as many ounces as possible to increase scale and all project metrics. Any half decent discovery would drive the share price and eventually force the hand of NST. Now, I fear NST will take them for a song.
(Not about to x-promote, although, kind of am..;-)
BGL recently produced a maiden resource of 500koz @ 8.2gpt and are in trucking distance to Bronzewing. If the two companies were to combing than the product would resemble a mini DCN without the capital requirement of building a mill. Not that I want this to occur as BGL are growing and won't pull the feasibility trigger too early - scale difficency.
Anyhow, just a few simple thoughts without diving too much into it. I still believe NST will chomp, makes sense considering the constraints at Jundee, unfortunately it will probably be at a great discount to what I first imagined (55-60c). If (when) BGL gets to 1moz of high grade, I wonder if NST goes knocking there too? Regional consolidation is their vibe.
EAR Price at posting:
17.5¢ Sentiment: Hold Disclosure: Held
