new resource out (2.6moz)

Just out, new resource upgrade to 2.6moz including an indicated resource of over 700,000oz.

What is also interesting is that this excludes Gibralter (146000oz) and disregards all the old RAB drilling (over 120,000m) which implies to me that this number is again understated.

Bullabulling is now up with the big deposits in the Eastern Goldfields and every corporate will be looking it and the low valuation of the GGB/AZX stocks.

The market is currently valuing this sort of project in the goldfields at about $50-$70/oz in resource and over $150/oz in indicated ounces. The fact that Snowdons say there is up to a 2moz reserve here is also very significant as you can start to build up feasibility studies quickly which means the company should attract a better valuation.

AZX market cap currently is about $42m incl $6m of cash and shares in GGG giving an enterprise value of about $37m.

GGG has a market cap of approximately $58m incl $21m of cash giving an enterprise value of $37m.

Using these numbers of $74m for the resource, the market currently values the combined entity at $26/oz which is at the extreme low end of the markets valuation for real projects.

This is a discount of at least 50% from its market peer group and this is squarely because of this corporate fight.

Both management groups need to get on and fix this as the economic benefits of doing it are plain to see.

Alacer just updated its resource base which is now over 20m oz - for it to make an acquisition now it would have to be on something meaningful (Bullabulling is one example of what would actually make a difference to their balance sheet). Given its mkt cap/oz is now $130/oz (actually quite cheap!) it would be an easy takeover for them. Regis Resources is also not going to stand still and their management is well known for picking up cheap projects.

I would love to see both sets of managements just fix this nonsense, dress the project up for sale by building ounces as fast as possible (and Bullabulling could easily be a 5moz system in time), and sell it to a hungry midcap - thats the way to make serious money in this sector.

I have been soaking the stock up while it is cheap - feel strongly this is going to rebound even if the management remain as stubborn as they have been.

Could be an easy trade back to 70c.