$AAU : Ixtaca Back Under the Microscope

Long-Term Price Case$1,500/oz. Au & $20/oz. Ag
Flagship ProjectIxtaca
Flagship Project Resource Base1,940,400 AuEq ozs. @ 1.0 g/t
Fully-Diluted Shares132,800,000
Fully-Diluted Market Cap$60,928,640
IRR42%
DebtNil
CapEx$174M
LoM11 Years
AISC$850
Average Annual Production172,133 AuEq ozs.
Market Cap Valuation per Resource Ounce$31.41
Share Price Valuation by Resources in the Ground.01 ($13.42)
Resource Valuation as a Percentage of Market Cap2%
Market Cap Valuation$260,401,680
Near-Term Cash Flow ($1,342/oz.)$84,689,436
Future Cash Flow ($1,500/oz.)$111,886,450
Almadex NSR (2%)($24,615,019)
Extraordinary Mining Duty (0.5%)($6,153,755)
Special Mining Duty (7.5%)($92,306,471)
Income Tax (30%)($369,225,285)
After-Tax Net Cash Flow (LoM)$738,450,420
Future Market Cap Valuation$291,060,000
Future Market Cap Growth378%
PMCV10 (Projected Market Cap Valuation at 10%)$2.19/sh.
TAC10 (Total Acquisition Cost at 10%)$171,026,856 ($1.29/sh.)

Notes: All Values in U.S. Dollars. We still like Almaden Minerals. Our position size and target have remained static. Ixtaca is a viable Project at current spot gold prices, but the economics improve markedly at $1,500 and above. Expect a rapid re-rating if gold stays firm and construction begins in 2020.

There is one Red Flag, however: Share Price Valuation by Resources in the Ground ($13.42). This is low and implies that relative to number of fully-diluted shares, Ixtaca has too few overall ozs. Almaden could benefit from growing their resource base, but regrettably, 9 of the 11 mentions of ‘exploration’ in their most recent Corporate Presentation were contained in the Safe Harbour statement.

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