Continental Gold, By the Numbers…

Critical Data

Flagship Property: Buriticá (100% Owned and Fully Permitted)
Fully Diluted Shares = 200,500,000
Stock Price = US $2.66
F/D Market Cap = US $533,330,000
Measured & Indicated Resources = 4,710,000 AuEq ozs
After-Tax IRR = 34.6%
After-Tax NPV = US $1.2 B
CapEx = US $389,200,000

NPV/CapEx = 308%

Base Case Price of Au = $1300
Value of Resources = US $6,123,000,000
Average LOM Production = 253,000 ozs/yr.
AISC = $495/oz

Market Cap Valuation Per Resource Ounce = $113

Each ounce in the ground is valued at $113 by F/D Market Cap.

Share Price Valuation by Resources in the Ground = .02 ozs

Each share represents .02 ozs of resources. Each share, then, is worth $31 of Gold in the ground. This isn’t great. The share count isn’t bad for a near-term producer (though it could be lower), however, the stock could benefit from a larger resource base.

Market Cap Valuation as a Percentage of Resources = 9%

This is a fairly low percentage. There is room for market cap growth. But not much.

Back-of-the-Envelope Market Cap Valuation = $918,450,000

The present Market Cap relative to my back-of-the-envelope valuation is not particularly low.

Near-Future Cash Flow Multiple

Near-Term Cash Flow = US $203,665,000
Multiple = 2.6x

Future Cash Flow = $451,500,000

 

Future Market Cap Growth

Future Market Cap = $942,000,000
Future Market Cap Growth Percentage = 77%

Conclusion

The potential future valuation for Continental Gold indicates a lackluster potential return. We won’t be parking any money in this stock. If resources are boosted to between 5-6 M AuEq ozs, Continental Gold will be worth another look. Were we to plunk down cash, however, we would have a target of US $4.75 a share.

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