|Long-Term Price Case||$1,700/oz. Au & $24/oz. Ag||$1,600/oz. Au & $22/oz. Ag||$1,500/oz. Au & $20/oz. Ag||$1,400/oz. Au & $18/oz. Ag|
|Mineral Resources (Measured & Indicated)||1,174,668 AuEq ozs.||1,173,099 AuEq ozs.||1,171,320 AuEq ozs.||1,169,287 AuEq ozs.|
|Fully-Diluted Market Cap||$34,712,101||$34,712,101||$34,712,101||$34,712,101|
|Average Annual Production||90,100 AuEq ozs.||90,041 AuEq ozs.||89,974 AuEq ozs.||89,898 AuEq ozs.|
|Payable Product||1,171,294 AuEq ozs.||1,170,531 AuEq ozs.||1,169,667 AuEq ozs.||1,168,679 AuEq ozs.|
|LoM||13 years||13 years||13 years||13 years|
|True All-in Cost (TAIC)||$1,006/oz.||$979/oz.||$953/oz.||$927/oz.|
|Smelting & Refining||($5,890,560)||(5,618,549)||(5,263,502)||($4,908,452)|
|Total Operating Costs||($613,751,040)||($613,751,040)||($613,751,040)||($613,751,040)|
|Total Government Taxes and Royalties||($357,983,392)||($325,904,803)||(295,226,349)||($264,547,688)|
|Total Capital Costs||($200,675,520)||($200,675,520)||($200,675,520)||($200,675,520)|
|Net Profit Margin||41%||39%||36%||34%|
|Absolute Cost Structure (ACS)||59%||61%||64%||66%|
Notes: All Values in U.S. Dollars
Were Goliath in production at $1,400/oz. Au, it would earn roughly 34 cents on every dollar it collects. From there, Net Profit Margins improve incrementally as the fundamental gold picture improves. An Absolute Cost Structure (ACS) of 66%* makes this possible. What is more, the ACS declines by ~11% as gold prices move from $1,400 to $1,700. It is this factor which underpins the improvement in Net Profit Margins.
We have learned to shy away from enterprises (catastrophes?) that cannot manage to rein in their ACS, but Treasury Metals is an example of a future gold producer that makes the cut.
*You’ll see plenty of ballyhooed Before-Tax Cost Structures below 50%, but they aren’t an accurate representation of reality. If you can find a gold producer with an ACS under 70%, you may have stumbled upon a real gem, though abiding by non-GAAP in your analysis won’t help you find gems. Which is to say, one must find new methodologies that enable one to push beyond AISC & All-in Costs in pursuit of extended valuation factors such as Absolute Cost Structure.