"In terms of the EVN purchase of the TBR stocks that value the acquisition at reserve of $456/oz, this may be overvalued but it may be worth looking at the relative cost of each oz sold to the AISC incurred per oz extracted."
The $456/reserve ounce is more likely an undervaluation based on the EKJV's past contribution/propotion of total production.
When we are talking about reserves as you say not all reserves are equal. For starters the value of resrves in Africa need to be discounted for sovereign risk. What that discount is will depend on the country and I'm sure some analyists out there will have the statistics to show how the markets incorporate this risk, whether the actual discount is fair or not. From an individual investor perspective I see that certian gold mines (as posted before) have operated in Mali undisrupted for 20 years so the anecdotal evidence is that the risks at least as recent history has shown, are small.
You also need to to apply a modifying factor to the value of the reserves based on their potential longevity and likelyhood of being replenished. As I highlighted in the EKJV example the reserves at Syama far exceed those of the EKJV which are also aging. As mining progresses to deeper levels the costs generally rise. When NST acquired the interest in this JV from Barrick the mine was producing at a much lower rate with much higher grades in the range 12g/t to 19g/t. The payoff of higher production is lower grades which are now around 6g/t and higher AISC which for NST's broader Kalgoorlie operations was very high at $1,406/oz in the Dec 2018 quarter (probably largely due to the non-EKJV operations which are in general lower grade and more marginal.
How do you apply a premium or a discount based on longevity, the "direction" of costs, the easy and costs associated with resource to reserve conversion, plus the likelyhood of reource/reserve replenishment. Not easy. That's where you need to apply the subjective part of your brain IMO, which in my experience gives me more insight into things than the pure objective part of the brain which behaves more like a computer, ie junk in junk out.
So in peer comparisons how much do we discount the abilty for RSG to achieve US$746/oz AISC (A$1,043/oz) and how much do we want to pay a premium for believing, say in NST's case they can maintain there costs at their relatively low historical levels?
You are right there is more to these stories than meets the eye and you won't see the story looking backwards. Even forward guidance over 1 year won't tell you the full story. Some stories don't contain growth potential when looked at over years, some stories don't even have truly recognizable reserves stretching for 5 years or less. Other stories might look average when viewed over 12 to 18 months but wondeful when viewed over 10 years. Esh
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