300k producer market cap 400million !!!, page-14

Can you guys just humour me... I don't know if any of this will be right but I'm just thinking out loud please correct any errors i've made:

1) the company we have just bought produced 163,000 ounces last year, with costs of $1222/oz leaving a margin of roughly $250/oz give or take some variation meaning we can expect on current prices roughly 250 x 163,000 = about $40m in profits from rand per year, before any cost savings (which management seem to be very confident of achieving).

2) Production at present from GDO is running at about 25,000 ounces per quarter (guidance for coming quarters are slightly higher at 28k, 34k and 33k respectively but this is a useful conservative estimate). So we can expect roughly 100,000 ounces per year from existing GDO mines. Our costs are much lower, at roughly $614/oz (total costs). Therefore on current prices we are earning about $900/oz and can expect roughly 100,000 x $900 = $90m in profits from GDO mines per year.

So am I right to guess that yearly profits should be around $130m before capital expenditure, exploration and corporate costs?

807m shares in issue + 87 m options. If 40m in equity is issued for the balance of the purchase that adds another 80m shares (at 50c) so we could guess there will be approximately 1000m shares in issue.

1000m shares on issue x 50c SP = $500m + the new $210m debt to fund the deal and we get $710m total ascribed value to the company by the market fully diluted right now.

That would be a p/e of roughly (710/130) = 5.46, compared to the sector average according to comsec of 14.59. Implied SP at fair value to peers = $1.33?

Then there is the 71% stake in Goliath, which has a MC as of last quarterly of $62m so thats worth another $44m. We've got $20m in the bank. Add to that loads of exploration potential, a new uranium asset and chinese buyers circling at no less than 53c.

Have I missed anything? This is obviously pretty crude back of the envelope stuff but its better than a blind guess. It seems to me on these numbers to be a very good bet right now. Winning.