What I meant was, do you have a price that you consider to be āfair valueā based on an assumed amount of gold that you are expecting them to encounter?
I am asking because without doing calculations, unless you have good knowledge of mining (which you might do) and you can just pinpoint what it roughly should be worth, I donāt see how it would be possible to have a price target.
In my case, I donāt have much idea, so at the time I looked at potential numbers (which is guesswork/speculative in itself) made some assumptions to come up with potential target share price ranges. I was aiming to do this again this weekend now that we have more information but I just didnāt find the time. I found a video from Theinvestmentjorney quite useful to compare and see what a possible AISC could be.
Iām definitely a newbie when it comes to a mining stock (ā¦stocks in general really, 10 months I think now) and Iāve tried to pick up as much as I can. Trying to learn all the time. Every day in fact.
Would it be fair to say that I read a lot rather than look into calculations? I have the passion to learn but unfortunately calculations are not my forte. Although I do try. I have no idea if thatās a good thing or a bad thing in the stock market? Iām not doing horrendously at the moment (maybe my method works for me alone)
Although Iām quite cautious an investor overall.
General census after all my reading still makes me feel the SP has taken a bit of an unfair hit.
Perhaps itās a better way to justify my own shares?
If you do find anything useful - would you possibly mind sharing it?
I am not an expert by any means, I have not been investing in miners for very long (around a year also) but I like to have a price target, so here is my quick attempt at back of the envelope calculations.
My back of the envelope calculations (very rough):
Mineral Resource: 4.2M (including the suggested equivalent amount of copper - see sources at the bottom of the page)
Gold price: 1800 USD per Ounce
AISC: A video calculation mentioned average underground costs of Telfer (infrastructure potentially to be used) as around 1150 USD over the last 5 year window. Note that current Telfer AISC is reported to be over 1500 USD (value assumed to be USD not AUD, as stated at start of article). Lets take it to be 1200 USD per ounce based on video. Possible big assumption.
Number of shares early January: 3.88 billion.
Initial capital costs: Assumed to be 100m USD, but I donāt know. I seem to remember reading something about it but I cannot find the source. There is information on the Newcrest loan.
Proportion owned: 25% or 0.25 (could assume 0.3 as 0.05 is to be acquired at fair value, if Newcrest wants)
GBP to USD conversion: 1.39 (16/02/20)
Calculation: ((1800-1200) x 4.2M equivalent ounce) -100M) / (3.88B shares x 1.39 USD per GBP)) x 0.25 = 0.11 GBP or 11p
Assuming double the MRE we would have 22p which is roughly where it is at currently, considering that the December MRE did not include the whole site and only potentially what in a plan view (map) seems to be about half-ish. Another big assumption.
Someone who I think is more experienced than me with miners recently mentioned to be aware of tonnage (MRE) and grade, but I donāt know how to include the grade in the tonnage. Maybe by reducing the AISC even more?
Other assumptions:
I donāt know how long it could take to mine it. To overcome this I am assuming that the time taken to mine it equals the Price to Earnings Ratio of the producing mine.
Only Havieron is considered, not the additional explorations such as Scallywag.
All in todaysā value of money. Assumes that the price of gold will rise with inflation. No opportunity cost assumed.
Summary:
Considering the other sites, I think the stock still has some up side, hence why I am not selling. I may even consider buying, aiming for 30p. I do think that estimates for 1 GBP are realistic, at least not short term. If they find a similar resource in Scallywag then definitely! ļ
If anyone wants to share their thoughts or calculations, feel free .
Edit:
Two very interesting videos from TheInvestmentJourney. I believe that they have been shared on here previously.
One is the updated calculation/thesis of the other.
He uses Trading212 as well as on FreeTrade. I donāt know whether he is on this community forum though.
Clarification.
This is a typo, I meant:
"I may even consider buying, aiming for 30p. I do NOT think that estimates for 1 GBP are realistic, at least not short term. If they find a similar resource in Scallywag then definitely! "