Hmm...so let’s suppose i’m sitting here, managing a $200m gold fund, or am just filthy rich...and am looking to allocate some dosh (say $1m a piece) across a few top notch gold exposures.
Atlantic’s come to my attention because of all of the boxes it ticks, but the question of dilution has until now kept me away. But what of now, has anything changed?
Yes. Whereas 12 months ago i did not know how long it will take to gain titles and all of the approvals to secure financing (and thus did not know how many more capital raisings will occur to fund ongoing operations), that’s now clear. I know there’s likely to be one more capital raising, and then that’s it.
So the financing/dilution question is to be resolved. But when and at what price do i buy? What’s my strategy...or to put it another way, how greedy do i want to be? At what big of a discount to net asset value will i bite? 10%? 20%? 50%?
Let’s do some rough math using ATV’s figures:
Atlantic’s Touquoy’s project has an NPV of $200m. Let’s reduce it by 60% (ATV’s share), and then discount it by a further 20% because we don’t trust their figures, and discount it by another 50% because we are greed and want to buy this thing cheap! The NPV reduces to $48m, let’s round it to $50m.
Atlantic’s Cochrane Hill project has an estimated NPV of $200m. Let’s discount it by 30% because there’s still some risk in proving it up, and by 50% to bring its NPV to today, and by a further 50% because we are greedy. The NPV reduces to $35m.
Let’s take ATV’s large strategic exploration portfolio that in my view has scope to hold millions of ounces and attribute zero value to it, and let’s offset this with ATV's capitalised corporate costs. So $0 NPV here.
Sum of the parts (super discounted, greedy version)? 50 + 35 + 0 = $85m.
Now Atlantic Gold currently has ~700m shares on issue on a fully diluted basis. Let’s do some maths to see the market cap post raising (i.e., no further dilution risk) under a few share price scenarios:
$15m raising @ 5cps >> 300m shares issued. Market cap post raising (fully funded) >> $50m
$15m raising @ 10cps >> 150m shares issued. MC post raising >> $85m - this is the super conservative, greedy investor’s price point.
$15m raising @ 20cps >> 775m shares issued. MC post raising >> $155m (close to fair value after still heavily discounting ATV’s NPV numbers).
...and we could go on.
The point being, it will only take a couple of serious investors running their numbers...for this thing to “pop” in a big way. We're getting to the business end of things folks. GLTA
Disclaimer: I am extremely bullish about ATV, and biased too. Please do your own research and consult a finance professional before buying or selling ATV or any other stock mentioned by me or others on this forum. You can lose the lot on any investment, so be careful!
ATV Price at posting:
4.0¢ Sentiment: Buy Disclosure: Held
