$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.
PMCV10 (Projected Market Cap Valuation at 10%, Base Case)$353,682,142 ($3.47/sh.)
Cost to Acquire$0.04/oz.
Cost to Build & Operate$17.08/oz.
Total Acquisition Cost$134,213,200 ($1.32/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.

$FCUUF : Fission Uranium — The Reckoning

Long-Term Price Case$50/lb. U308
Flagship ProjectPLS (Triple 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%

Notes: All Value sin U.S. Dollars

Triple R is a big, expensive project with True All-in Costs of ~$35/lb. Nevertheless, at Fission’s long-term price case of $50/lb., the company achieves decent Net Income. This is one name on which I don’t have much color commentary. RPA did a great job on the PFS, so there’s simply not much to say, other than this: When the uranium bear market ends, so will the downtrend in Fission’s shares. We think its Market Cap will quickly appreciate by as much as 200%, although our own target assumes it reaches a Market Cap > $1B.

What About the Income Taxes?

When perusing my posts, you may find All-in Costs numbers that are larger than is stated elsewhere in technical reports and corporate presentations. That’s because I have made an effort to account for royalties and income taxes, as the impact of royalties and income taxes on the overall valuation of a company is enormous, and is very often the factor that determines whether or not a company has a snow ball’s chance in hell of producing Net Income.

Current cost methodologies, including the much-improved All-in Costs methodology, which expands upon AISC, are gravely flawed, in so far as the above mentioned inputs are ignored. I try to remedy that in my valuation scenarios.

In order to differentiate between the traditional All-in Costs methodology and my own costing methodology which incorporates royalties and income taxes, I will hereafter utilize the term, ‘True All-In Costs.’

Once True All-in Costs are calculated, I am able to determine what I refer to as True Value, or Projected Book Value per Share. True All-in Costs are also required for our Total Acquisition Cost (TAC) calculations, but are not required for the less important PMCV10/15 formulas.

Several flavors of our PMCV10/15 formula are common in the industry, but we are quite certain that our True Value methodology and approach to TAC are original, so it is doubtful that we will ever publish the formulas.

The Future of True All-in Costs and True Value

In the future, I would like to incorporate Exploration and Development Capital, Working Capital and Financing into the True All-in Costs methodology formula. Were all of these inputs used regularly when appraising development-stage companies, I believe investors would be better armed when confronting management about the economics of proposed projects.

$FOSYF : Forsys Metals — The Glaring Value Proposition

Long-Term Price Case$65/lb. U308
Flagship ProjectNorasa
Forsys Metals Stake100%
Norasa Mineral Resources (M&I, 197 ppm)115 Mlbs.
Norasa Mineral Reserves (200 ppm)90.7 Mlbs.
Fully-Diluted Shares161,900,000
Fully-Diluted Market Cap$19,428,000
Average Annual Production5.2 Mlbs.
LoM15 years
True All-in Costs (FCM Estimate)$55.16/lb.
Gross Revenue$5,057,000,000
Operating Costs($2,701,216,000)
Royalty (3%)($151,710,000)
Operating Profit$2,204,074,000
Corporate Taxes (37.5%)($826,527,750)
CapEx (Radiometric Sorting Upgrade Included)($‭612,100,000‬)
Net Income (LoM)$765,446,250
Projected Book Value per Share$4.73/sh.
PMCV10 (Projected Market Cap Valuation at 10%)$4.62/sh.
TAC10 (Payable Product Model)
Cost to Acquire$0.25/lb.
Total Cost to Build & Operate$55.16/lb.
Total Acquisition Cost$431,087,600 ($2.66/sh.)
Miscellaneous Metrics
Deep Value GradeA+
Market Cap Valuation per Resource Lb.$0.17
Share Price Valuation by Resources in the Ground .71 lbs. ($17.33)
Value of Resources (M&I) $2,806,000,000
Resource Valuation as a Percentage of Market Cap.7%
Theoretical Market Cap Valuation$280,600,000
Theoretical Future Market Cap$747,500,000
Theoretical Market Cap Growth3,748%

Notes: All Values in U.S. Dollars

Leverage to uranium is, in part, derived from Share Price Valuation by Resources in the Ground. Presently, each share of Forsys Metals represents .71 lbs. of uranium in the ground, which is a direct result of a tight share structure. In this respect, Forsys Metals is peerless among late-stage Southern African developers that have progressed through a DFS.

Forsys Metals also has a Market Cap that not only is trading at a 93% discount to what we consider fair value ($280.6 M), but also represents < 1% of the value of its Measured & Indicated resource base at today’s spot price.


The value proposition for Forsys Metals remains glaring. It is a straight-forward Project with a Mining & Processing Plan that is appropriate for the geology and size of the deposits.

We have performed economic analyses on Forsys Metals before, but not with the sole aim of unseating all of our preconceived notions and dearly-held assumptions about the Project, which was the case today. We have tried hard to produce scenarios that make Norasa an untenable story, but at a spot price above $60/lb., Forsys Metals is fully capable of producing Net Income.

We take it for granted that the merits of the Forsys story have not gone unnoticed and that it is daily becoming more ripe as an acquisition target. Naturally we’d like to witness and profit from Market Cap growth > 3,000%, but we would also be delighted to learn that the Norasa Project had found a good home on a Major’s long-term development schedule.

$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.

$DNN : Denison Mines (Wheeler River Project Annual Checkup)

Long-Term Price Case$65/lb. U308
Flagship ProjectWheeler River
Project Percentage90%
Probable Mineral Reserves (Wheeler River Project)98,460,000 lbs.
Indicated Mineral Resource Estimate (Global)144.1 Mlbs.
Fully-Diluted Shares611,800,000
Fully-Diluted Market Cap$318,136,000
Gross Revenue (LoM)$6,103,581,891
Toll Mining Fees($1,342,791)
Operating Costs($669,157,515)
Operating Costs — Toll Mining Credits$8,728,142
Saskatchewan Revenue Royalties, Surcharges($441,405,242)
Operating Cash Flow (LoM)$5,000,404,485
Capital Costs($759,870,507)
Capital Costs — Project Development($14,323,104)
Saskatchewan Profit Royalties($579,488,916)
Canadian Federal + Provincial Income Taxes($935,626,929)
Net After-Tax Cash Flow (LoM)$2,711,095,029
Projected Book Value per Share$4.43/sh.
PMCV10 (Projected Market Cap Valuation at 10%)$1.53/sh.
Cost to Acquire$2.21/lb.
Total Cost to Build & Operate$23.60/lb.
Total Acquisition Cost$371,967,600 ($0.61/sh.)
Miscellaneous Metrics
Deep Value GradeB
Cost Structure36%
Market Cap Valuation per Resource Lb.$2.21
Share Price Valuation by Resources in the Ground.23 lbs. ($5.75)
Value of Resources (Indicated)$3,516,040,000
Resource Valuation as a Percentage of Market Cap9%
Theoretical Market Cap Valuation$351,604,000
Theoretical Future Market Cap$936,650,000
Theoretical Market Cap Growth194% ($1.53/sh.)

Notes: All Values in U.S. Dollars

Firstly, lest we let this exercise get away from us, at today’s spot prices, Denison is trading within a hair of fair value as a development-stage concern; its discount is approximately 10%. That being said, we are buyers of shares not on the basis of today’s Market Cap, but on the basis of the probability of shares one day enjoying a Market Cap Growth of as much as 194% on the heels of profitable production at higher spot U308 prices.


Denison is a medium-risk value proposition that really begins to shine at higher spot U308 prices. If All-in Costs at Phoenix are not grossly understated, we think the Wheeler River Project will enjoy actual Net Income as a producer at our long-term price case, which is of more importance to Fahy Capital Management than EBITDA or Free Cash Flow.

$POTRF : SOPerior Fertilizer Corp. — The Definitive Analysis

Probable Realized Market Prices$645/t K2SO4 & $147/t H2SO4
Flagship ProjectBlawn Mountain
Fully-Diluted Shares171,900,000
Fully-Diluted Market Cap$8,595,000
Proven & Probable Mineral Reserves, 3% Cut-Off153,330,000 tons
Payable Product (LoM)* 16,096,051 K2SO4Eq tons
Estimated Payable SOP (LoM)10,603,000 tons
Estimated Payable Sulfuric Acid (LoM)24,135,000 tons
Alumina Resources (M&I)19,418,000 tons
Average Annual Production351,261 K2SO4Eq tons
LoM46 Years
Net After-Tax Cash Flow (Annual, Inflated)$125,751,438
Net After-Tax Cash Flow (LoM, Inflated)$5,784,566,148
Gross Value of Payable Product$10,381,952,895
Theoretical Market Cap Valuation$1,038,195,290
Theoretical Market Cap Growth11,979%
PMCV10 (Projected Market Cap Valuation at 10%)$6.04/sh.
Projected Book Value per Share$33.65/sh.
Cost to Acquire$0.53/t
Cost to Build$32/t
OpEx (Millcreek Mining)$87/t
Total Acquisition Cost$192,396,098 ($1.12/sh.)

Notes: All Values in U.S. Dollars

*This analysis hinges on Payable Product tonnages, as opposed to a sum of Proven & Probable Reserves, including: Direct Feed-to-Mill, Medium-Grade Stockpiles and Low-Grade Stockpiles. Analysts will likely be expecting a much larger number (153.3 Mt) for valuation computations. That number isn’t of interest to us in this analysis, today, as our case is predicated on estimated payable product.

In the above calculations, we have elected to utilize K2SO4Eq tons in the stead of deducting sulfuric acid credits from our Direct Operating Cost Matrix. This has the effect of raising our independently-calculated AISC to $287/t, which is an increase of 36% from Millcreek Mining Group’s Cash Cost number ($211/t). It is of importance to keep this detail in mind when appraising SOPerior, as Cash Flow analysis using Millcreek’s Cash Costs look like this:

Net After-Tax Cash Flow (Annual, Inflated) $152,447,274
Net After-Tax Cash Flow (LoM, Inflated) $7,012,574,604

At present, Alumina, which trades for about $472/t, is classified as a waste byproduct of production. However, efforts are being made to develop a pilot plant 12 miles away from Blawn Mountain in Milford at the site of Tamra’s shuttered copper flotation mill to determine whether or not Alumina waste can be economically monetized.

The value proposition for SOPerior Fertilizer Corp. is as clear today as it was when we first started to accumulate a stake. Meanwhile, a handful of derisking events have occurred that lend further credence to the SOPerior story. Nevertheless, in spite of the positive news flow, we have chosen to be more conservative with our analysis than in the past. We have approached our investigation from the standpoint of an acquirer. Consequently, a bright, critical light has been trained on each ton, which no longer are analyzed as if created equal.


Blawn Mountain is economical at today’s SOP and sulfuric acid prices in North America and although we believe several avenues to production are available to SOPerior, we think it would behoove Compass Minerals to make an offer of $200M for the Project.

$PZG : Paramount Gold Geophysical Survey Confirms High Priority Exploration Targets at Frost

It’s early days yet at Frost, but geophysical data indicate that Paramount may have a 2nd Grassy Mountain on their hands.

The CSAMT survey discovered a “magnetic low correlating with a structural corridor hosting high grade drill intercepts.” Additionally, surface mapping “has confirmed the presence of sinter outcrops” that were also key indicators of gold at Grassy.

The permitting process for an initial drill campaign is underway.

Press Release: [LINK]

$ARNGF : Argonaut Gold Notes

Long-Term Price Case$1,500/oz. Au & $20/oz. Ag
Resource Base (M&I, Inclusive of Reserves)8,365,613 AuEq ozs.
Fully-Diluted Shares182,421,413
Fully-Diluted Market Cap$227,114,659
Average Annual Production200,000 ozs.
Cash Flow$58,100,000
Future Cash Flow$117,600,000
Market Cap Valuation per Resource Ounce$27
Share Price Valuation by Resources in the Ground.05 ($61)
Resource Valuation as a Percentage of Market Cap2%
Market Cap Valuation$1,671,449,477
Cash Flow Multiple4x
Future Market Cap$1,882,262,925
Future Market Cap Growth729%
PMCV15 (Projected Market Cap Valuation at 15%)$10.32/sh.

Notes: All Values in U.S. Dollars

$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).