Ann: Media Interview - Adidi-Kanga Project Acquisition and Update, page-20

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Big Kahuna 101

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08/03/19

16:08

Post #: 37701758
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Originally posted by Coffeebean: ↑

Okay, so I have been trying to cut through the guff today and get my head around the underlying valuation fundamentals. Can someone please scrutinise my high-level logic here;

Total ounces underground = 2,328k
Total ounces in an open pit = 890k
Value in $/ounce fully extracted = $A60 (seems to be the average for takeovers over the past 20 years)
Risk factor for non-completion given stage of process = 20%

Fair market value = 890k x $60 x 80% = $42.7m

Market Cap (once all shares fully issued) = 2.14b x $0.017 = $36.5m

So my conservative estimate post-completion is under valued by $6.2m or $0.002cps (or $0.019).

What I am trying to understand is the difference between the 890k ounces of the open pit, and the 2.328k ounces in the ground. Also, what does any concentration upgrades mean once the DFS is completed? Would that just see my $A60/ounce estimate increase and/or mean my risk discount factor changes?

The other question I have is around the impact of the $A. I would think that on face value that it would hurt any valuations given the cost to extract in $A increases and the immediacy of its impact, but could this potentially be offset by the fact the value of the gold in $A increases higher as a proportion?

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Why are you only including open pit ounces in your valuation?

Your also missing the $8.5 mil of debt so based on you scenario its prob fair value.

VEC Price at posting: 1.7¢ Sentiment: Hold Disclosure: Held
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0 Great analysis

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Ann: Media Interview - Adidi-Kanga Project Acquisition and Update, page-20

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