Assuming the 188 million options are exercised we would have 732 million shares on issue come Jan 2012 Market Cap @ 17.5 cents = $128 million Using the figures on page 10 of the 27th July announcement, and allowing for current Gold and silver prices of $1627 and $40, I come up with these figures.
GOLD: Over 6.5 year project life, 294,000 ounces to be sold at spot prices with presentation allowing $1250/oz Current price $377 above this, so allow extra $110 million. SILVER: Over 6.5 year project life, 3.8 million ounces silver to be sold at spot prices with presentation allowing $31/oz. Current price $9 above this, so allow extra $35 million.
Total extra revenue of $145 million added to total revenue at no extra cost to the company. $145 less 3.2 % royalty ($4.6 million) $140.4 less 14.6% profit share ($20.5 million) $120 less 29% Comp tax ($34.8 million) EXTRA Profit after tax (6.5 years) $85 million on top of stated $201.8 million $287 million
So pretty much as Muppet is saying and I stand to be corrected on my figures and interpretation. The current market cap is 44.5% of possible net profit after tax over the next 6.5 years.
Also a little unreasonable of us to apportion the entire market cap to just the Las Lagunas project, especially when you consider the exploration upside and the address of the exploration areas. So even though we would have preferred the Dominican Govt not to have lifted the tax rate, and we would have preferred a profit upgrade, the figures still stack up exceptionally well.
Some other figures: Market Cap allowing 77,000 ounces annual Production (Gold Equivalent) valued at 2500/ounce = $192 million Market Cap allowing 500,000 ounce Reserve (Gold Equivalent) valued at $250/ounce = $125 million
Current market Cap (not allowing for the conversion of options) is $95 million.
Makes no allowance for the very considerable exploration potential, the low cost of production, the ease and certainty of the extraction process, the fact that the figure I used as Reserves is the actual projected production figure, the distinct possibility that Las Lagunas will continue on beyond 6.5 years or the distinct possibility of higher spot prices. Also the figures of 2500/ounce and 250/ounce are figures that were throw around when bullion was selling for around $800/ounce.
So which ever way you slice it EVG has a lot of potential.
These are just my thoughts, I dont know anything for sure.
I wish I did.
EVG Price at posting:
17.5¢ Sentiment: None Disclosure: Held
