John, i have certain numbers that i am crunching based on their drill results and trying to decipher the mineralisation at Anthill and Goongarrie. To me, its not the size of their resources but the cost of extraction, turnaround time and the accessibility of infrastructure that is making this a huge near term opportunity. Mine, Truck, Treat operations [MTT] are fantastic profit making operations for junior firms and really boost the firm's bottom-line.
Let's look at a hypothetical resource number of 80,000 - 100,000 ounces of gold at Anthill. There is no need for much infrastructure as this would be a simple open cut extraction operation. I would estimate a total cash cost of $250/ounce of gold for the MTT operation. Management would also, of course, be unhedged to the underlying physicals...As such;
Current gold prices of $1450/ounce will give a profit of?
[$1450-$250] X 80,000 ounces = $96 million [$1450-$250] X 100,000 ounces = $120 million
This is just a conservative number but one can understand why James Searle is working towards 2 MTT operations at Anthill and Goongarrie in the near term while exploring for the mother lode at Bullabulling and Windanya.
MKO's Enterprise Value is just 9 million?!!
I seriously think that this will be the next AUC for 2011.
MKO Price at posting:
24.0¢ Sentiment: Buy Disclosure: Held
