AYN's resource upgrade released on 29th. March was "69% increase...

AYN's resource upgrade released on 29th. March was "69% increase in the Twin Hills Mineral Resource to 9.5Mt @ 53.8g/t Ag for 16.4Moz of contained silver, using a revised cut-off grade of 26.5g/t Ag and net of mining depletion to date."

In addition, AYN told us that "The reserves and mine plan will now be reviewed with a likely increase in both reserves and mine life based on a forecast production rate of 1.2-1.5Moz per annum."

Because it is easy to get carried away by the millions of ounces of silver and the much higher grades, I always like to look at silver companies in current gold equivalent terms.

So I will do that with AYN.

Gold closed at US$1669 and silver at US$32.28. That means 51.7 ounces of silver equals one ounce of gold.

So in gold equivalent terms the Twin Hills Mineral Resource becomes 9.5Mt & 1.04g/t gold for 317,214 ounces of contained gold using a revised cut-off grade of 0.51g/t gold.

The forecast production rate of 1.2-1.5Moz per annum silver in gold equivalent terms is approximately 23,000 ounces to 29,000 ounces per annum.

In gold equivalent terms this becomes quite sobering, and dare I say a serious reality check imo.

Can anyone let us know of a gold miner with its major resource just being 317,214 ounces grading 1.04 g/t gold that has a market cap of over $100 million?

I doubt it.

With silver around its current price, imo this is a small, low grade mining operation.

We need to see what the cash costs are once steady state production is announced. I'll be surprised if they are significantly below A$20.00. So being conservative,
at A$20.00 in gold equivalent terms we are looking at cash costs of A$1034.00. Now add the other expenses that are not part of cash costs plus exploration and AYN imo is hardly making a cash bonanza.

Now I'll add Mt Gunyan to the equation.

AYN told us that the company "also intends to revise the Mineral Resource estimate for the Mt Gunyan deposit (currently 2.35Mt @ 69g/t Ag for 5.19 Moz), which is located 4km north-east of the Twin Hills Mine, using a similar approach. This review of the Mt Gunyan resource is not expected to lead to a similar quantum of increase in contained silver ounces to Twin Hills due to different hosting conditions in this deposit."

So I'll increase the resource by about 30% to 6.7 million ounces silver, or in gold equivalent terms 129,500 ounces of gold.

This means AYN has 23.1 million ounces of silver or in gold equivalent terms 447,000 ounces of gold.

At 7.7 cents AYN's market cap is $103.34 million.

Can anyone let us know of a gold miner with 447,000 ounces of gold grading just above 1 g/t gold that has a market cap of over $100 million?

I very much doubt it. I don't know of any.

The wildcard of course is the silver price. Last year when silver was approaching US$50 there were calls that silver would trade at US$75 to US$100 in the December half.

As we all know, that did not eventuate. Get silver rising strongly though US$50 and AYN should become a whole new ball game.

But I think it is fair to say that on the figures above, assuming steady state, successful silver production, that at current prices AYN is fully valued imo.