$ABBRF : AbraPlata — Updated Independent Economic Analysis

Base Case$24/oz. Ag
Flagship ProjectDiablillos
Mineral Resources (Indicated)147,367,559 ozs. AgEq
Fully-Diluted Shares102,000,000
Fully-Diluted Market Cap$3,060,000
Average Annual Production9.8 Mozs. AgEq
Payable Product78,400,000 ozs. AgEq
LoM8 years
True All-in Costs$17.08/oz.
Gross Revenue$1,881,600,000
Net Revenue$1,862,784,000
Total Operating Costs ($486,500,000)
Operating Cash Flow$1,376,284,000
Total Capital Costs($311,000,000)
Corporate Taxes($522,987,920)
Net Income$542,296,080
True Value (Base Case)$5.32/sh.

Notes: All Values in U.S. Dollars

According to our calculations, the AbraPlata story gets interesting above $17/oz. Ag. If Aethon has a breakthrough and is able to demonstrate that recoveries above 80% may be achieved, the AbraPlata story could get interesting below $17/oz. It’s a wait-see.

$GVXXF : GoviEx Uranium — 2019 DFS Assumptions + A Molybdenum Credit

Firstly, in GoviEx’s upcoming DFS, we expect a Molybdenum byproduct credit of approximately U.S. $340 M, which may lower Direct Operating Costs.* Secondly, we previously calculated estimated All-in Costs of ~$50/lb. We have since raised our estimated True All-in Costs by 7% to $53.37/lb. Finally, until the official release of the DFS, for our investment purposes, the results below supersede former results.

Long-Term Price Case$70/lb. U308 & $12.38/lb. MoO2
Flagship ProjectMadaouela
GoviEx Stake80%
Madaouela Mineral Resources (M&I, + Agaliouk)116,720,000 lbs.
Madaouela Probable Mineral Reserves60,540,000 lbs.
Fully-Diluted Shares640,051,000
Fully-Diluted Market Cap$70,405,610
Average Annual Production2,690,000 lbs.
True All-in Costs (FCM Estimate)$53.37/lb.
Gross Revenue$3,954,300,000
Direct Operating Costs($1,686,000,000)
Molybdenum Credit$339,930,406
Royalty (12%)($433,798,871)
Operating Profit$2,174,431,535
Corporate Taxes (30%)($559,139,538)
Niger Working Interest (10%)($93,929,200)
Niger Carried Interest (10%)($84,536,280)
Net Income (GoviEx Stake, LoM)$761,436,720
Projected Book Value per Share$1.19/sh.
PMCV10 (Projected Market Cap Valuation at 10%)$1.28/sh.
Cost to Acquire$0.45/lb.
Total Cost to Build & Operate$53.37/lb.
Total Acquisition Cost$829,150,920 ($1.30/sh.)
Miscellaneous Metrics
Deep Value GradeA
Market Cap Valuation per Resource Lb.$0.45
Share Price Valuation by Resources in the Ground .24 lbs. ($5.87)
Value of Resources (M&I) $3,759,064,000
Resource Valuation as a Percentage of Market Cap2%
Theoretical Market Cap Valuation$375,906,400
Theoretical Future Market Cap$1,078,420,000
Theoretical Market Cap Growth1,432% ($1.68/sh.)

Notes: All Values in U.S. Dollars

GoviEx Uranium remains a Deep Value Proposition, as its present Market Cap is valued at roughly an 80% discount to what we consider fair value (~$376 M).

*We have some concerns about whether or not processing Molybdenum is a net positive, however; we think that byproduct credits that result from two additional stripping steps may come at an unnecessary cost. We also are not convinced that implementing Black Range Minerals’ (Western Uranium) Ablation Technology is the wisest approach to mineral processing.

What would we do differently? A lot. It may happen that some of our concerns are addressed in the DFS, but we’re going to very quickly describe what we believe is a cheaper and more effective milling & processing approach, albeit less sophisticated. We believe a well engineered milling & processing plan could substantially lower Operating Costs, perhaps by as much as a third.

  • Crushed underground ore needs to be crushed still further to between 0 and 250 mm.
  • Reduce crushed ore to between 0-550 μm in an autogeneous mill.
  • Feed leaching tank at a rate of up to 100 t/h.
  • Add sulfuric acid, nitric acid, sodium nitrate and water (Ditch Cyanex 600 extractant).
  • Recycle nitric acid from absorption tower to leaching tank to provide 85% of oxidant requirement.
  • Cure pugged ore for 3 hours on conveyor system.
  • Repulp with water in 5 successive tanks at 149 degrees F.
  • Wash pulp and filter on series of two-filter bands.
  • Send pregnant solution from filter Series 1 for clarification.
  • Extract solvent and uranium from pregnant solution with 5-stage Mixer-Settler System A.
  • Solvent stripping in Mixer-Settler System B.
  • Send uranium solution to Uranium Precipitation.
  • Add sodium carbonate to remaining stripped solvent in order to eliminate molybdenum and impurities.
  • Magnesia milk added to uranium solution.
  • Thickening, filtration, drying, and packaging of 75% MgU2O7.

This process will result in recoveries of ~93%. It’s not sophisticated, but it will lower the LoM operating costs in an impactful way.


Our overriding fear is that mine-plan sophistry usurps simplicity in the upcoming DFS. Consequently, until our fears have been assuaged, our expectations for GoviEx have been tempered. There’s no reason to get cute, which was the case in the 2015 PFS. Our hope is that there is a zealous dedication to developing an engaged and competent workforce committed to quality, thrift and minimal downtime, as opposed to hiring a dispassionate workforce that is soon alienated by a process that is undercut by hidden breakpoints.

$UUUU : What is Energy Fuels Worth Today (and Tomorrow)?

Near-Term Price Case$8.30/lb. V205 & $24.90/lb. U308
Resource Base (M&I)91,821,000 U308Eq lbs.
Fully-Diluted Shares93,500,000
Fully-Diluted Market Cap$287,045,000
Market Cap Valuation per Resource Pound$3.13
Share Price Valuation by Resources in the Ground.98 ($24.45)
Resource Valuation as a Percentage of Market Cap13%
Market Cap Valuation$342,951,435
Future Market Cap ($65/lb.)$895,254,750
Future Market Cap Growth212%
PMCV15 (Projected Market Cap Valuation at 15%) Price Case= $65/lb. U308$9.57/sh.
PMCV15 (Projected Market Cap Valuation at 15%) Price Case= $55/lb. U308 $8.10/sh.
PMCV15 (Projected Market Cap Valuation at 15%) Price Case= $45/lb. U308 $6.63/sh.
PMCV15 (Projected Market Cap Valuation at 15%) Price Case= $35/lb. U308 $5.16/sh.
PMCV15 (Projected Market Cap Valuation at 15%) Price Case= $25/lb. U308 $3.68/sh.

Notes: All Values in U.S. Dollars

By Market Cap, each U308Eq lb. in the ground is presently valued $3.13, which is ~13% of spot. The low valuation is a reflection of the persistent bear market in which U.S. producers find themselves. On the other hand, Energy Fuel’s Share Price Valuation by Resources in the Ground reflects the substantial underlying value of the company’s shares, which is a function of a tight share structure: each share represents a peer-beating .98 lbs. of resources, or $24.45 of U308Eq in the ground. That alone is an indication of true value.

Energy Fuel’s Market Cap is presently valued at ~13% of the resources in the ground. This is fairly good and suggests considerable Market Cap appreciation is possible at higher spot prices. This factor has risen in recent months as a result of both speculation about the outcome of Section 232 and slightly higher uranium spot prices.

Finally, Energy Fuels is trading at ~80% of a Market Cap that we consider a full representation of the company’s fundamental value relative to today’s spot uranium price. This is unique, in that, as a consequence of a share structure with a roughly 1:1 ratio with its U308 Equivalent resource base, the company sports a fluid Market Cap that very closely tracks spot uranium movements. Consequently, one can get a good sense of the Market Cap at which the company will be trading at a handful of escalating spot prices, absent significant dilution and/or resource depletion (See Table Above).

$TSRMF : Updated Treasury Metals Notes

Long-Term Price Case$1,500/oz. Au & $20/oz. Ag
Flagship ProjectGoliath
Resource Base (M&I)1,247,920 AuEq ozs.
Fully-Diluted Shares192,845,004
Fully-Diluted Market Cap$36,640,551
LoM13 Years
Average Annual Production90,000 AuEq ozs.
Theoretical Cash Flow ($1,333/oz.)$64,980,000
Future Cash Flow ($1,500/oz.)$80,000,000
Market Cap Valuation per Resource Ounce$29
Share Price Valuation by Resources in the Ground.006 ozs. ($8.62)
Resource Valuation as a Percentage of Market Cap2%
Market Cap Valuation$245,021,604
Cash Flow Multiple.5x
Future Market Cap Valuation$280,782,000
Future Market Cap Growth666%
PMCV10 (Projected Market Cap Valuation at 10%)$0.97/sh.

Notes: All Values in U.S. Dollars

$BNNLF : Bannerman Resources, by the Numbers…

Long-Term Price Case$65/lb. U308
Flagship ProjectEtango
Fully-Diluted Shares1,135,000,000
Fully-Diluted Market Cap$34,050,000
Ore Reserve Estimate130,100,000 lbs.
Sustaining Capital$282M
AISC (FCM Estimate)$47/lb.
Average Annual Production7.2Mlbs.
Mine Life15.7 Years
Market Cap Valuation per Resource Ounce$0.26
Share Price Valuation by Resources in the Ground.11 lbs. ($2.71)
Resource Valuation as a Percentage of Market Cap1%
Market Cap Valuation$320,046,000
Future Cash Flow$129,600,000
After-Tax Net Cash Flow (LoM)$1,526,040,000
Future Market Cap$845,650,000
Future Market Cap Growth2,384%
PMCV10 (Projected Market Cap Valuation at 10%)$0.75/sh.

Notes: All Values in U.S. Dollars. Fahy Capital Management has had occasion to trade in and out of Bannerman, but we ceased to be long-term investors following last year’s massive dilution. Moving on…

We think we have developed an accurate AISC for the project that enables one to fairly value Bannerman as a future producer. As you can see, the numbers clearly show that Etango is an economic project at $65/lb. U308.

One worrisome metric, though not of exceeding importance by itself, is Share Price Valuation by Resources in the Ground. At present, each share of Bannerman represents a mere $2.71 of uranium in the ground. By way of comparison, each share of peer Forsys Metals represents $13.78 of uranium in the ground.

In a word, don’t you want the shares you own to be of substantial intrinsic worth? Thanks to rampant dilution, each share of Bannerman isn’t worth much of the payable uranium they purport to represent.

$ALO : Alio Gold Notes

Long-Term Price Case$1,500/oz. Au & $20/oz. Ag
Flagship ProjectFlorida Canyon
Pipeline AssetAna Paula
Global Resource Base (M&I)4,700,584 AuEq ozs.
Fully-Diluted Shares97,500,000
Fully-Diluted Market Cap61,425,000
Market Cap Valuation per Resource Ounce$13.07
Share Price Valuation by Resources in the Ground.05 ozs. ($64.46)
Resource Valuation as a Percentage of Market Cap1%
Market Cap Valuation$942,702,121
Cash Flow$16,740,000
Cash Flow Multiple4x
Future Cash Flow$148,480,742
Future Market Cap$1,057,631,400
Future Market Cap Growth$1,622%
PMCV15 (Projected Market Cap Valuation at 15%)$10.85/sh.

Notes: All Values in U.S. Dollars. Alio remains deeply undervalued. On the back of ramped up production at Florida Canyon and future production at Ana Paula at $1,500/oz. Au and above, the company will be generating a lot of cash flow. For many investors, of which there are a host that are disillusioned, healthy future cash flows at Alio are hard to imagine, but mark my words, they are coming. Meanwhile, shares continue to trade at a hefty discount.

$SBGL : Shrewd Moves from Froneman

Sibanye-Stillwater to mothball, close four gold shafts, but limits job cuts to 3,450…

Shafts that didn’t escape the cull were Beatrix 1 shaft in the Free State, which will be placed on care and maintenance, and plant facilities at Beatrix 2 which will be closed. The Driefontein shafts 6 and 7 will also be closed, while Driefontein 2 shaft will be placed on care and maintenance. [LINK]

See Fahy Capital Management’s Notes and Recommendations for Driefontein and Beatrix from 22 June 2018 for more details: If We Had an Audience with Froneman, This is What We Would Say

$SSPXF : Sandspring Resources — Updated Valuation

Sandspring has released an updated PEA. Consequently, we have issued a set of updated valuation models that better reflect the re-scoped Project and updated September 2018 Mineral Resource Estimate. We have been Sandspring shareholders for 18 mos. and we maintain a U.S. $3.92/sh. target based upon our in-house Projected Market Cap Valuation Model, which is calculated utilizing $1,500/oz. Au, $20/oz. Ag and $3/lb. Cu spot prices and 8,251,800 AuEq ozs. (Inclusive of Reserves), per our own estimates..

Realized Gold & Silver Prices$1,500/oz. Au & $20/oz. Ag
Flagship ProjectToroparu
Resource Base (M&I)8,251,800 AuEq ozs.
Fully-Diluted Shares315,544,790
Fully-Diluted Market Cap$40,421,288
Average Annual Production (Au, Ag, Cu)199,872 AuEq ozs.
LoM24 Years
Cost Structure62%
Market Cap Valuation Per Resource Ounce$4.90
Share Price Valuation by Resources in the Ground.03 ozs. ($35)
Resource Valuation as a Percentage of Market Cap.3%
Market Cap Valuation$1,099,964,940
Cash Flow$101,335,104
Future Cash Flow$134,713,728
Cash Flow Multiple.4x
Future Market Cap$1,237,770,000
Future Market Cap Growth2,962%
PMCV10 (Projected Market Cap Valuation at 10%)$3.92

Notes: All Values in U.S. Dollars

The Toroparu Gold Deposit has a unique value-add feature: The Kurupung Hydro River Project, which would enable Sandspring to not only someday self-generate, but to interconnect with the Guyana National Grid… (Sandspring Power & Light ?)

Fission Uranium | PLS Project | PFS Investment Case Update

Updated 19 June 2019

Long-Term Price Case$50/lb. U308
Flagship ProjectTriple R
Forsys Metals Stake100%
Mineral Resources (M&I)103,768,000 Mlbs.
Mineral Reserves90.5 Mlbs.
Fully-Diluted Shares516,414,642
Fully-Diluted Market Cap$175,580,978
Average Annual Production10,937,500 lbs.
Payable Product87.5 Mlbs.
LoM8 years
True All-in Costs$34.91/lb.
Gross Revenue$4,372,122,150
Provincial Revenue Royalties($316,944,210)
Net Revenue$4,055,177,940
Total Operating Costs ($591,938,820)
Operating Cash Flow$3,463,239,120
Capital Costs($‭1,283,208,300)
Provincial Profit Royalties($351,028,260)
Provincial Taxes (12%)($227,202,030)
Federal Taxes (15%)($283,983,810)
Net Income (LoM)$1,317,816,720
Projected Book Value per Share$2.55/sh.
PMCV10 (Projected Market Cap Valuation at 10%)$1.00/sh.
TAC10 (Payable Product Model)
Cost to Acquire$2.01/lb.
Total Cost to Build & Operate$34.91/lb.
Total Acquisition Cost$323,020,598 ($0.63/sh.)
Miscellaneous Metrics
Deep Value GradeB+
Market Cap Valuation per Resource Lb.$1.69
Share Price Valuation by Resources in the Ground .20 lbs. ($4.90)
Value of Resources (M&I) $2,531,939,200
Resource Valuation as a Percentage of Market Cap7%
Theoretical Market Cap Valuation$253,193,920
Theoretical Future Market Cap$518,840,000
Theoretical Market Cap Growth195%

Deep Yellow Limited | Reptile Project, Namibia | Hybrid Model Investment Case Update: or, FCM 5-Level Valuation Analysis (Strict)

TAC15 & TAC10 are discrete proprietary price-value points at which an acquirer might consider Deep Yellow. PMCV15 & PMCV10 are proprietary price-value point models that are supplementary to Projected Book Value per Share. If there are broad discrepancies between PMCV Variants & Projected Book, it typically signals erroneous bankable data or miscalculations on the part of FCM. In the case of Deep Yellow, the numbers do not reconcile very well, which likely stems from an underestimation of CapEx and/or AISC. Needless to say, Reptile is a Project without a PEA, so many assumptions were made in an effort to complete this valuation series.