Newrange Gold — Early Assumptions

Newrange Gold Early Assumptions

I sought out third-party opinion on the numbers, and there is a sense that the average grade is off by a factor of 101 or more2 (Assumption Graphic Below), which, if true, reduces inferred to ~309,508 ozs. Hence, the more likely optimistic present value of the rock is US $385,337,604 with an acquisition value of US $38,533,760 and a US $0.40 target.

I’m not quite so skeptical (per Above): I envision a long-life, low-cost, open-pit, combination crushed-ore leaching (reusable pad)/run-of-mine ore leaching (dedicated pad) operation.

Newrange Gold Early Assumptions Update

Stay tuned.

1 https://twitter.com/RonStew12139302

2 https://twitter.com/IKN_Mark

The Investment Case for Gold Mining Inc.

F/D Market Cap = US $113,338,301

Resources = 12,370,000 AuEq

Market Cap Valuation by Resource Ounce = $9.16

In other words, each AuEq oz in the ground is valued at US $9.12 by fully-diluted Market Cap.

Share Price Valuation by Resources in the Ground = .08

In other words, each share represents .08 AuEq ozs of resources. Each share represents US $100 worth of AuEq in the ground.

Resource Valuation as a Percentage of Market Cap = .8%

  • Value of Resources = US $15,462,500,000

In other words, Gold Mining’s Market Cap is valued at less than 1% of the value of the AuEq resources in the ground. This is very low. There is room for substantial Market Cap growth.

Future Market Cap @ $1,400/oz = US $1,731,800,000

Future Market Cap Growth = 1,428%

Conclusion

Gold Mining is a unique optionality investment vehicle with which to play a revaluation of both gold and uranium. Its aggregated resource base is large, its grades are fair-to-good, and its Market Cap has dropped into deep value territory.

Gold Mining’s 75% interest in the 125,000 Ha Rea uranium project is a bonus. Rea’s permits surround Orano’s high-grade Maybelle uranium deposit, discovered by Uranerz in 1988 (drill intersections have returned up to 21% U3O8 at Maybelle).

We are buyers of Gold Mining at present levels and intend to make additional purchases should shares experience further weakness.

Corporate Presentation

GoldQuest Mining: Developer in the Doldrums

Flagship Property: Romero Project = 100% Ownership … 1 Point

Resource Base = 2,265,000 AuEq … 1 Point

F/D Share Structure = 291,057,724 … -1 Point

Recent Price = US $0.14

F/D Market Cap = US $40,748,081 … Unrated

After-tax IRR = 28% … 1 Point

NPV/CapEx = 128% … 1 Point

F/D Market Cap Valuation per Resource Ounce = $17.99 … -1 Point

In other words, each AuEq ounce in the ground is valued at $17.99 by market cap. The relatively small resource base relative to number of shares has impacted this factor negatively.

Share Price Valuation by Resources in the Ground @ $1,250/oz

Each share is worth .008 AuEq ounces in the ground. In other words, each share is worth $9.73 AuEq in the ground. This is low. Hence the low market cap.

Cost Structure = 45% … 1 Point

Cost Structure is less than 1/2 spot Au. This is excellent. This future junior producer will have a great deal of leverage to Au at higher prices.

Resource Valuation as a Percentage of Market Cap

Value of Resources @ $1,250/oz Au = US $2,831,250,000

= 1.4%

In other words, the market cap is valued at 1.4% of the value of the Au resources in the ground. This is low. There is room for substantial market cap growth.

Near-Term Cash Flow = US $71,365,000 … Unrated

Near-Term Market Cap/Cash Flow = .6 (60%) … 1 Point

Future Cash Flow @ $2000/oz Au = US $153,115,000 … Unrated

Future Market Cap/Cash Flow = .27 (27%) … Unrated

P/FFCF (Near-Term Market Cap / Future Free Cash Flow) = 0.7

GoldQuest Mining is undervalued. It is cheap in relation to its Future Free Cash Flow. We believe GoldQuest Mining will be progressively revalued as it reaches the following next-level licensing milestones: Exploitation, Environmental

Debt Coverage = 0 Debt … 1 Point

Projected Future Market Cap = US $453,000,000 … Unrated

Projected Future Market Cap Growth Percentage = 1,012% … 1 Point

Location: Dominican Republic … 1 Point

Conclusion

Romero won’t be a large mine, but it will be an efficient, well-managed, forward-thinking mine with large gross profits. It is also one of a handful of development-stage projects that we can think of that has explicitly aimed to incorporate ecological best-practices; management has also proven adept at negotiating Dominican politics. At higher Au prices, we believe GoldQuest Mining will be revalued quickly to better reflect its intrinsic value. At $1,250/oz., we think an acquirer would pay between US $0.97 and $0.75 for the company. Our own target is somewhat more modest.

Score

7/11

The Investment Case for Laramide Resources

Flagship Projects: Churchrock & Westmoreland = 100% Ownership … 1 Point

Resource Base (Westmoreland; Churchrock and ISR Projects; La Jara) = 94,000,000 Mlbs U308 … 1 Point

F/D Share Structure = 147,143,115 … 1 Point

Recent Price = US $0.19

F/D Market Cap = US $27,957,191

After-tax IRR (Westmoreland) = 35.8% … 1 Point

NPV/CapEx (Westmoreland) = 126% … 1 Point

Capital Intensity (Westmoreland) = US $3.37/lb.

F/D Market Cap per Resource Lb.= US $0.30 … 1 Point

In other words, each lb. in the ground is valued at US $0.30 by market cap.

Share Price Valuation by Resources in the Ground @ $22.65/lb. U308

Each share is worth .64 lbs. in the ground. In other words, each share is worth ~US $14.50 worth of U308 lbs. in the ground.

Resource Valuation as a Percentage of Market Cap

Value of Resources @ $22.65/lb. U308 = US $2,129,100,000

= 1.3%

In other words, the market cap is valued at a little over 1% of the value of the aggregated U308 resources in the ground. This is very low. There is room for substantial market cap growth.

Cost Structure = 93% … -1 Point

Cost Structure is > 2/3 spot U308. Production is not economical at this time.

Near Future Cash Flow @ $22.65/lb. = $5,775,000 … Unrated

  • Market Cap / Near Future Cash Flow = 4.8x … 1 Point

Future Cash Flow @ $65/lb. = $154,000,000 … Unrated

  • Market Cap / Future Cash Flow = .18x … Unrated

Debt Coverage = Debt:Cash is negligible relative to Future Cash Flow … 1 Point

Projected Future Market Cap = US $611,000,000 … Unrated

Projected Future Market Cap Growth Percentage = 2,085% … 1 Point

Location: Australia; United States … 1 Point

Conclusion

We think Laramide Resources is worth approximately US $4.15 at $65/lb. U308. Today, an aggressive acquirer might offer as much as US $1.45 for the entire company, if they were as generous with resource estimates as we have been (Laramide needs to convert Churchrock Inferred to M&I). Nonetheless, we included Churchrock in our calculations, as an official Resource Estimate and PEA are forthcoming.

We think Laramide Resources is an interesting development-stage company. The project portfolio has legs and the management team appears interested in bringing one or two of the portfolio projects into production. Westmoreland and Churchrock will be economical at higher uranium prices. Westmoreland’s grade is in-line with peers and the strip ratio is good (2.3:1). The company passes the Debt Coverage test with flying colors, and if financing is sought in the future, Cash Flow from operations will be more than sufficient to service debt.

Finally, Laramide Resources’ present market cap is valued at a little over 1% of the value of the U308 resources in the ground, leaving room for substantial market cap growth.

We think the investment case for Laramide Resources is a good one while the market cap hovers below US $30M. Fahy Capital Management has tentative plans to take a stake at ~US $0.20. Our own target is US $1.76, which assumes Westmoreland enters production and uranium is trading at $65/lb.

Score

9/11

Belo Sun Mining: FCM Advanced Resource Stock Valuation

Flagship Property: Volta Grande Project = 100% Ownership … 1 Point

Resource Base = 4,956,000 Au … 1 Point

F/D Share Structure = 465,589,915 … -1 Point

Recent Price = US $0.17

F/D Market Cap = US $79,150,286

After-tax IRR = 32% … 1 Point

NPV/CapEx = 287% … 1 Point

F/D Market Cap per Resource Ounce = $15.97 … 1 Point

In other words, each ounce in the ground is valued at $15.97 by market cap.

Share Price Valuation by Resources in the Ground

Each share is worth .01 Au ounces in the ground. In other words, each share is worth $13.52 Au in the ground.

Cost Structure = 61% … 1 Point

Cost Structure is less than 2/3 spot Au, so this is okay, but not great. At higher Au prices, this will matter less. Nevertheless, Belo Sun Mining will need to remain mindful of inputs to costs.

Resource Valuation as a Percentage of Market Cap

Value of Resources @ $1,270/oz Au = US $6,294,120,000

= 1.3%

In other words, the market cap is valued at 1.3% of the value of the Au resources in the ground. This is low. There is room for substantial market cap growth.

Near-Term Cash Flow = US $100,655,000 … Unrated

Near-Term Market Cap/Cash Flow = .8 (80%) … 1 Point

Future Cash Flow @ $2000/oz Au = US $376,305,000 … Unrated

Future Market Cap/Cash Flow = .21 (21%) … Unrated

Debt Coverage = 0 Debt … 1 Point

Projected Future Market Cap = US $1,486,800,000 … Unrated

Projected Future Market Cap Growth Percentage = 1,778% … 1 Point

Location: Pará State, Brazil … 1 Point*

*There is an interim suspension order related to Belo Sun Mining’s construction license. We may never know how FUNAI’s feathers got ruffled, but ruffled they got and Belo Sun Mining is paying the price. This has made investors wary of the stock, but not us. We know a bargain when we see one.

Conclusion

As my dad always says, “If you don’t take risks, you can’t get ahead.” We think of an investment in Belo Sun Mining as a calculated risk. At US $0.17, Belo Sun Mining has a Margin for Error that is palatable to us. And with a Projected Future Market Cap Growth Percentage of 1,778%, the opportunity is too great to pass up. While the cash-rich company is in a holding pattern, we want to take advantage of the likelihood that most uncertainty associated with Belo Sun Mining’s construction license has been baked into the shares. Agnico Eagle dumped its stake in the company, and this is an action of which risk-averse investors should be mindful, but it is not enough of a deterrent for Fahy Capital Management’s serious consideration. We think it may be time to deploy some speculative capital into the miner; we are buyers at US $0.17. We have a target of US $1.38 a share. Belo Sun Mining could conceivably be revalued upward at considerably higher Au prices, but we have applied a valuation penalty due to jurisdictional risk.

Score

9/11


Key

Flagship Project: 100% Ownership … 1 Point

After-tax IRR = > 20% … 1 Point

NPV/CapEx = > 1 … 1 Point

EV/Resources = < 1 … 1 Point

Cost Structure = < 50% … 1 Point

Resource Base = > 80 Mlbs. U308, 40M oz Ag or 2M oz Au;  … 1 Point

Future Cash Flow = Unrated

Near-Term Market Cap/Cash Flow = < 1x (100%) is Good; < .5x (50%) is Excellent… … 1 Point

Future Market Cap/Cash Flow = < 1x (100%) is Good; < .5x (50%) is Excellent… 1 Point

Share Structure = < 200 M … 1 Point

Debt Coverage = > 50% (or No Debt) … 1 Point

Projected Future Market Cap = Unrated

Projected Future Market Cap Growth Percentage = > 500% … 1 Point

Location: Friendly = 1 Point