I like EVG much more in terms of a ST re-rating in SP relative you a company you are very familiar with, INT.
As plough has said, EVG is a small near term producing goldie with lowest 10% cost of production globally and, to-date, four well defined and geographically/ politically diverse locations, along with some cutting edge licensed technology.
ST macro indicators for gold are good and with low costs of production they are also well placed for the tough times.
On each of the four projects there are significant upside prospects from surrounding opportunities (ie small mines for third party or JV processing).
You can easily do an NPV analysis on EVG's first project, the Las Lagonus project in Dom Republic: Total identified cash back to EVG will be around $130 mill over 6.7 years from first production (Q1 2011). This comprises $105m profit and $25m capital return. NPV at 12% discount gives you a present value of $79 mill @ USD $900 per oz. And what is the market cap of EVG? $26m.
Within four years it is probable/ possible that EVG will be producing 340k oz per year (Las Lagonus will produce 65k oz gold per year + 600k oz silver).
It is likely that EVG will continue to add further upside as they identify new opportunities for their constructed Albion Plants (licenced from Xtrata) from surrounding small gold operators and find new locations to build more plants.
The business model is great. Apply a new technology to an existing resource (sound familiar to INT?).
The ST kicker for the SP is three fold:
1) EVG has not yet been "discovered". Compare EVG metrics to both EXM and SLR and you'll get my drift.
2) Company specific announcements relating to the hitting of milestones with Las Lagonus and their other three existing projects. Then add new project announcements to the list. Then add the POG.
3) If shareholders buy prior to 18/12/09 (provided shareholders vote in favour in Nov 09 AGM) then they will receive one Dec/2011 Option (strike price 15c) for 0.1c - effectively free - for every two shares (or two 31/12/09 Options) that they hold.
If you believe in this little company; their projects, sector focus, management, project progress to-date, ability to grow the number of projects, deal making ability (i. number of projects growing, ii Share register starting to include insto's, e.g Mac Bank) then there is no reason to delay buying into this company as there are many ST catalysts for the SP to continue north.
I am a top 20 holder.
Cheers John
EVG Price at posting:
9.5¢ Sentiment: Buy Disclosure: Held
