Hi estate09, My long held view is that gold in the ground is a...

Hi estate09,

My long held view is that gold in the ground is a liability for mining companies until such a time that they are able to economically recover it from the ground. In essence they can hold it as an asset as non-written down exploration expenses but those assets can and often result in non-cash losses when accounting rules force companies to assess how likely those assets are to be developed.

Insitu in ground values can only be calculated based on reliable data. The data can either be market based, ie based on reasonable estimates of the values of peer resources, accounting for all other factors that come into making up the MC/EVs of the companies the data is based on or the data can be based on the the transactional values of similar peer resources, ie the value of those resources based on an arms length transactions that also take into acount the other company factors.

I recently posted on this subject on the RSG thread with some numbers.

https://hotcopper.com.au/threads/rsg-valuation.3487365/page-156?post_id=25605555#.WW10bZHCahA

It might be safe to use my watered down numbers as a guide to value remembering they are in USD if you do. You can see my previous post where I calculated the value of the SLR Murchison resources at A$9/ t. The value was probably low in this case as a large percentage of the resource is probably sub-economic UG ore.

The value however in the final analysis is based on what a FS determines or what an acquirer is prepared to pay.

The valie of the Moyagee resources IMO will ultimately be determined by its mineabilty and or the ambitions or need for feed from the surrounding mills. Tuckabianna does not exactly have abundant feed stock (I wonder if they'll go back to trying to treat those tailings from Fingall)......and Checkers will do OK for the next 3 or 4 years but thereafter it dendends on exploration success. The Andy Well plant is anyone's guess. GCY are building a big hungry mill that could need feed in 6 years or earlier if things go pear shaped.

That's why this game is so hard to figure out. Who to believe and who not to believe.

Buying the remaining 20% makes MGV far more believable now IMO. Whether than can deliver from here though will still depend on keeping those drills spinning wisely IMO and that's something I can't predict. Esh