The project NPV is ~$110M, Capex ~$70M, Market Cap ~$25M, working capital to get to production $?M.
8% is also a pretty low discount rate for this.
Then there is the usual project development risk, narrow vein underground mining, etc, etc.
Anyway, issue is, like most micro caps in this equity market the amount of equity needing to be raised by the company to fund the mine's development is large relative to the market cap of the company even taking into account some project debt finance (50% of Capex?).
Basically it becomes a circular argument - no-one is going to pile into the stock knowing that there could be a large raising to fund project development.
One or more of the major shareholders (Ausdrill) could take a slab of project development funding and increase its stake in the company - but that might come with hooks to - attractive contracts?
Something needs to change fundamentally to the get the share price up for ordinary punters - exploration success? - more open pit ounces? Are they better off for the next raising to get money to make the project bigger to make it a really attractive proposition? Given the small scale of the operation it wouldn't take a big change in annual production rate to make a big impact on the economics.
Going by the D&D presentation the last 35,000 metres of drilling picked up around 350,000 resource ounces - 10 ounces for every metre drilled. Could be an easily justifiable strategy. Just throwing it out there.
MYG Price at posting:
3.7¢ Sentiment: None Disclosure: Not Held
