Can't deny all of your optimism but there is some glaring issues in the BFS that I can see...
a) A 7 year mine life with gold price at $1700? That's pretty steep, can anyone show me a long term forecast from any of the major banks that keeps prices this high for this long?
A forward curve is not justification for using $1700 unless you are fully hedged against the curve and therefore can guarantee prices will never go down.
b) 8% NPV? What bank is going to lend these guys money at 8%? (thats effectively what that rate is saying their cost of funds is 8%) if they are BHP I might be more comfortable but its a little low.. something more realistic would be 10-12%.
Having a downward sloping price curve and slightly higher cost of funds and perhaps we are getting more realistic. If we like it or not no company can secure 100% debt over their projects... generally 60% is the upper limit so there will still need to be a cap raise for something up around $20-$25-$30m (which is close to the market cap right now).
I'm not saying the number's arent good I am just saying that you need to look at the detail more as the banks that offer to lend them the $$$ certainly will.
MYG Price at posting:
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