PMCV15 (Projected Market Cap Valuation at 15%) Price Case= $65/lb. U308
PMCV15 (Projected Market Cap Valuation at 15%) Price Case= $55/lb. U308
PMCV15 (Projected Market Cap Valuation at 15%) Price Case= $45/lb. U308
PMCV15 (Projected Market Cap Valuation at 15%) Price Case= $35/lb. U308
PMCV15 (Projected Market Cap Valuation at 15%) Price Case= $25/lb. U308
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).
We think a would-be acquirer is in a position to drive a hard bargain for McEwen Mining’s Los Azules porphyry copper project in San Juan, Argentina. In order to calculate our estimated offer price, we’ve utilized AuEq ozs. and the following current spot prices: $1,332/oz. Au, $14.70/oz. Ag and $2.66/lb. Cu. Our Total Acquisition Cost at 10% (TAC10) assumes an AISC of ~$1,240/oz Au.
Total Estimated Payable Resources (AuEq)
Treatment and Refining Charges
Net Pre-Tax Cash Flow
Net After-Tax Cash Flow
Los Azules Inc.
Theoretical Market Cap
Cost to Acquire
Cost to Build
Total Acquisition Cost
TAC10 (Total Acquisition Cost at 10%)
Notes: All Values in U.S. Dollars
The Total Acquisition Cost for Los Azules factors in all TCs & RCs, Royalties, Taxes, and Closure Costs, in addition to LoM OpEx.
Guyana Goldfields has a terrible Cost Structure and industry-lagging strip ratio, but is still managing to eek out some cash flow. At higher gold prices, this will improve. The company’s current Market Cap is valued at roughly 2% of its in-ground resources, which suggests shares are considerably undervalued in spite of adversity at Aurora.
The quality of the Eagle Project is presently reflected in its Market Cap. As a producer, we expect a modest re-rating. We also think there is a mounting possibility of a takeover in the next 6 months. We think an acquirer would pay about $600M for the company.
There is a lot to like about Equinox Gold. Each ounce in the ground is presently valued at $72 by Market Cap. This is low and indicates that one may still buy Equinox’s ozs. of gold at a discount. On the flip side, each share is only worth $9.41 of gold, resulting chiefly from share bloat. However, the quality of the ozs. may make this value factor of marginal bearing on the fortunes of the company.
Meanwhile, the present Market Cap is valued at but 5% of the resources in the ground, which suggests Equinox is deeply undervalued. In an ideal world, relative to the value of resources in the ground at 15%, the company would sport a minimum Market Cap of $1.8B at $1,347/oz. Au. Hence, there is a sound case for Market Cap appreciation.
Future Cash Flow at higher gold prices is substantial, reducing present Debt Coverage from a very manageable 85% to the point at which it becomes enviably immaterial.
Fahy Capital Management has been a happy investor in Equinox Gold from U.S. $0.79. We maintain an initial price target of $2.85/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.
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.
Notes: All Values in U.S. Dollars. Hecla is a troubled miner with an unsustainable cost structure and cash flow headwinds. That being said, the company has made some tough decisions that will enable it to slash spending and remain in compliance with the covenants, should it need to borrow under the revolver.
Fire Creek, Midas and Hollister are proving as challenging as expected, but Hecla continues to hang hopes on the Hatter Graben vein system, though full-on development will be curtailed.
Austerity is a response to adversity, and by and large, in light of Hecla’s misfortunes, it is appropriate. That being said, I believe Hecla should, in addition to surface drilling, forge ahead with development efforts at Hatter Graben, and tap the revolver conservatively, if necessary, in order to ensure that the development pipeline is robust when the market turns.
…an unusual combination of complex geochemistry and development of a massive oxidation zone where supergene enrichment created a paradise for collectors and mineralogists. –Phil Persson
“Phil’s Top Ten Mineral Localities of the World,” The Collector’s Edge, 2017
Persson was referring specifically to the prolific Cu-Pb-Zn-Ag-Ge-Cd mine of the same name in the Oshikoto Region of Namibia, a region that will become of greater interest to Fahy Capital Management if a handful of stars align over the next few days.
The question that has been on every earth scientist’s lips is: could there be another Tsumeb deposit lurking undiscovered in the Otavi Mountainland? –Clive King
“An Introduction to the Geology of the Tsumeb Mine, Namibia,” Tsumeb.com
Underground mine Geologist, Clive King, for one, believes the Northern Carbonate Platform still has secrets to reveal.