focus valuation part 2 - acquisition

I've done my personal analysis of the acquisition and posted it here:

http://macrovalueinvestment.blogspot.com/2011/06/focus-minerals-fmlax-valuation-part-2.html

I haven't had time to read any of the posts here yet and will be doing so now.


Conclusion

Optimistic: forecast business value rises from $0.14 to $0.73
Mid-line: forecast business value rises from $0.14 to $0.52
High cost: forecast business value rises from $0.14 to $0.24


Even with very high cost of production and increased other costs involved with the business, this looks like a very attractive investment decision made by Focus.

Even with a very high cost of production at $1,100 per ounce, this works out well as long as you are confident on the future gold price. I don't know about you, but I do not think it will drop away from current prices. However, I will only support this on the basis that they are able to control cost - I do not wish to invest in a high cost producer with cost of production any higher than already experienced by Focus.

The business models for Laverton and Summit are based on a forecast cost of production lower than Focus. As long as Focus has done it's homework and can integrate these additional production lines in to the existing business with good cost control, I believe that it will prove to be a fantastic acquisition. This will be the key factor.