Wack The cross ownership between RND and TBR make things very...

Wack

The cross ownership between RND and TBR make things very difficult to work out, because each company effectively owns shares in itself through the cross ownership.

Firstly start with TBR who own 148,871 ozs directly. With 50M shares on issue, and at $1,545 per oz that is $4.63 per share. So each share is worth $4.63 for the directly held gold, this is the starting point.

Now RND own about 26% of TBR, so if they send a truck over and collect their 13M shares worth of gold from TBR they would remove 38,966 ozs of gold. RND own 40,896 ozs directly so adding the newly delivered gold that amounts to 79,862 ozs available for distribution.

TBR own 44% of RND so are entitled to 44% of the gold they hold, this includes a portion of the gold that was just trucked over to RND from their own vault. So they are entitled to 44% of the total 79,862 ozs, not just the directly held gold. This equates to 35,139 ozs.

So the truck comes back and takes 35,139 ozs back to TBR. All 50M TBR Shareholders are entitled to their share of this, so on a per share basis it would amount to an additional $1.09. Added to the $4.63 of direct gold that is a total of $5.72.

These numbers are June numbers so I have added a further 13k ozs to TBR's gold hoard, adding a further $0.42c of value to each share.

So the current gold value per share is $6.14 against the latest share price of $5.28. The difference of 86c per share over 50M shares is $43m difference in value.

It is best to think of this on a per share basis, because you are trying to determine the gold value of the non-company(TBR/RND) shareholders. This calculation does double count some of the gold, but only because of the complicated cross ownership structure. If you do not do this you are grossly undervaluing the per share value of the gold held by the two companies.

Hope this helps.

Cheers

W