Flagship Property: Toroparu Gold Deposit = 100% Ownership … 1 Point
Resource Base = 7,100,000 ozs. … 1 Point
F/D Share Structure = 236,479,684 … -1 Point
Recent Price = US $0.19
F/D Market Cap = US $44,931,139
Valuation Case Gold Price = $1,400/oz Au
All valuations incorporate the Wheaton Precious Metals Gold Stream Framework.
After-tax IRR = 28.7% … 1 Point
NPV/CapEx = 203% … 1 Point
F/D Market Cap per Resource Ounce = $6.33 … 1 Point
In other words, each ounce in the ground is valued at $6.33 by market cap.
Share Price Valuation by Resources in the Ground
Each share is worth 0.03 ounces in the ground. In other words, each share is worth $42 @ US $1,400/oz Au. This is pretty good.
Cost Structure = 56% … -1 Point
Cost Structure is not exorbitant, but it exceeds FCM’s ideal < 50% level. Opportunities to reduce costs wherever they emerge must be seized. With average grades > .5%, opportunities WILL present themselves.
Resource Valuation as a Percentage of Market Cap
Value of Resources @ $1,285/oz Au = US $9,123,500,000
In other words, the market cap is valued at .5% of the value of the resources in the ground. This is mindbogglingly low, and leaves room for substantial market cap growth.
Near-Term Cash Flow = US $138,470,000 … Unrated
Near-Term Cash Flow Multiple = .3x … -1 Point
Sandspring Resources is trading with a market cap that is ~30% of future cash flow. Shares are cheap.
Future Cash Flow @ $2,000/oz Au = US$274,670,000 … Unrated
Debt Coverage = 0 Debt … 1 Point
Projected Future Market Cap = US $2,130,000,000 … Unrated
Projected Future Market Cap Growth Percentage = 4,641% … 1 Point
Location: Upper Puruni River Region … 1 Point
First things first: we own Sandspring Resources and we have a target of $9 a share. It’s a company poised for growth in an excellent jurisdiction with a phenomenal resource base at a decent grade. Sandspring anticipates recovery at ~91%. The Toroparu Gold Deposit also has a unique value-add feature: The Kurupung Hydro River Project, which would enable Sandspring to not only self-generate, but to interconnect with the Guyana National Grid… One might even assume the eventual creation of a small, lightly-regulated frontier utility — Sandspring Power & Light.
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 … 1 Point
Future Cash Flow = Unrated
Future Cash Flow Multiple = > 5x … 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