Message: Longriders Must Read Message {Repost}
This is a very accurate, informative, Repost of Longriders view of the real path to the "pot of gold"
For those of us who understand the game of value creation and the merger game to expand your p/e multiple and therefore your share price![]()
here are some numbers to consider:
Eldorado Gold: MKT CAP $3,560 million, PP ounces 7.5 mil M&I 11.7mil, Production 330,000, Cash Cost $300 P/E 19.29
Alamos Gold: MKT CAP $935 million, PP ounces 2 mil M&I 1.6 mil, Production 160,000, Cash Cost $350
P/E 22.83
Gammon Gold: MKT CAP $936million, PP ounces 3 mil M&I 0.5 mil, Production 240,000, Cash Cost $390
P/E 33.67
Minefinders Corp: MKT CAP $491million, PP ounces 4.5 mil M&I 5.6 mil, Production 150,000, Cash Cost $297
Not profitable enough yet
Capital Gold: MKT CAP $133million, PP ounces 1mil M&I 0.4 mil, Production 70,000, Cash Cost $305
Not profitable enough yet
Castle Gold: MKT CAP $53million, PP ounces 0.77mil M&I 1.5 mil, Production 50,000, Cash Cost $370 (I feel that Guatemala is good for 15,000 ounces a year to us, 30,000 total for at least another 5 years if the mess is ever fixed and the mine is run efficiently again. still 220,000 ounces at sastre and arenal combined if this is not the case why did they build a second leach pad?) Thus our production could be 65,000 annually with cash cost of @$350
If we examine this chart we see that Minefinders seems to be undervalued compared to Gammon/Alamos as it has far larger reserves, lower costs and similiar production profile. This could be because it is not pure gold but a gold/silver combo play or because the market is waiting to see the cash show up as cash flow/earnings. None the less it seems to be short $500 million in MKT CAP when put up against Alamos and Gammon.
Similiarly if we compare Capital to Castle we seem to have equals. We have larger reserves but they are slightly ahead on production. If we can do a deal where they recognize we r in fact virtually the same u could start making money![]()
. We have 80 million shares fully diluted, they have 200 million. If we do a merger where we get one share in the new entity and they get 1/2 share then we end up with 44.4% of the newco and they get 55.6%. I think this is fair as they will complain about giving up tooooo much ahould we ask for an exact 50/50 split. Thus we end up with newco having 180 million shares outstanding. Lets compare this new company to our list.
Newco: MKT CAP ?, PP ounces 1.77 mil M&I 1.9mil, Production 120-135,000, Cash Costs@$325 with growth potential to 200,000 in a 12-18month period very realistic Hmmm this company seems to look alot like Alamos/Gammon yet its existing combined KMT CAP is only $186 million (133+53) I think the market might reward it with a much higher cap of say $500million minimum and a $3 share price And if one was to merge Newco with Minefinders one would end up with a company that looked alot like Eldorado. They have 60 million shares outstanding so lets say Newco does a 3 for 1 roll back and we merge as equals. This new "eldorado" clone would have 120 million shares outstanding and if given a market cap of even 2/3 of Eldorado's $3.6 billion would give a share price of $20.
And how would everyone do: Minefinders shares at $8.33 so they see @150% increase, Capital Gold at 69cents so they have 1/2 share rolled back by three for a 1/6 share times $20 equals $3.33 for a gain of almost 400%, and the ever suffering Castle shareholder ends up with 1/3 of a $20 stock for a return of close to 900%. This is not dreamland but the world of mergers done in a market where size does matter and is usually rewarded handsomely. Can Mark Plaxton convince the other players in this game to go for the big leagues, who knows? But i would sure love to be holding a 1/3 of a share in that new "eldorado" clone in 6-12 months instead of one share in Castle Gold, no insult meant just the facts of life when it comes to the equities market and gold stocks!
Just my humble opinion boys, u can go back to squabbling over pennies and pride whenever u like.
Eldorado Gold: MKT CAP $3,560 million, PP ounces 7.5 mil M&I 11.7mil, Production 330,000, Cash Cost $300 P/E 19.29
Alamos Gold: MKT CAP $935 million, PP ounces 2 mil M&I 1.6 mil, Production 160,000, Cash Cost $350
P/E 22.83
Gammon Gold: MKT CAP $936million, PP ounces 3 mil M&I 0.5 mil, Production 240,000, Cash Cost $390
P/E 33.67
Minefinders Corp: MKT CAP $491million, PP ounces 4.5 mil M&I 5.6 mil, Production 150,000, Cash Cost $297
Not profitable enough yet
Capital Gold: MKT CAP $133million, PP ounces 1mil M&I 0.4 mil, Production 70,000, Cash Cost $305
Not profitable enough yet
Castle Gold: MKT CAP $53million, PP ounces 0.77mil M&I 1.5 mil, Production 50,000, Cash Cost $370 (I feel that Guatemala is good for 15,000 ounces a year to us, 30,000 total for at least another 5 years if the mess is ever fixed and the mine is run efficiently again. still 220,000 ounces at sastre and arenal combined if this is not the case why did they build a second leach pad?) Thus our production could be 65,000 annually with cash cost of @$350
If we examine this chart we see that Minefinders seems to be undervalued compared to Gammon/Alamos as it has far larger reserves, lower costs and similiar production profile. This could be because it is not pure gold but a gold/silver combo play or because the market is waiting to see the cash show up as cash flow/earnings. None the less it seems to be short $500 million in MKT CAP when put up against Alamos and Gammon.
Similiarly if we compare Capital to Castle we seem to have equals. We have larger reserves but they are slightly ahead on production. If we can do a deal where they recognize we r in fact virtually the same u could start making money
Newco: MKT CAP ?, PP ounces 1.77 mil M&I 1.9mil, Production 120-135,000, Cash Costs@$325 with growth potential to 200,000 in a 12-18month period very realistic Hmmm this company seems to look alot like Alamos/Gammon yet its existing combined KMT CAP is only $186 million (133+53) I think the market might reward it with a much higher cap of say $500million minimum and a $3 share price And if one was to merge Newco with Minefinders one would end up with a company that looked alot like Eldorado. They have 60 million shares outstanding so lets say Newco does a 3 for 1 roll back and we merge as equals. This new "eldorado" clone would have 120 million shares outstanding and if given a market cap of even 2/3 of Eldorado's $3.6 billion would give a share price of $20.
And how would everyone do: Minefinders shares at $8.33 so they see @150% increase, Capital Gold at 69cents so they have 1/2 share rolled back by three for a 1/6 share times $20 equals $3.33 for a gain of almost 400%, and the ever suffering Castle shareholder ends up with 1/3 of a $20 stock for a return of close to 900%. This is not dreamland but the world of mergers done in a market where size does matter and is usually rewarded handsomely. Can Mark Plaxton convince the other players in this game to go for the big leagues, who knows? But i would sure love to be holding a 1/3 of a share in that new "eldorado" clone in 6-12 months instead of one share in Castle Gold, no insult meant just the facts of life when it comes to the equities market and gold stocks!
Just my humble opinion boys, u can go back to squabbling over pennies and pride whenever u like.
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