At the bare minimum (NOT my preferred scenario by the way), I would base the valuation of the Goulamina deposit ,which is within the Bougouni project area, on :
No JV
0.72 AUD/USD exchange rate
125tph concentrator
No additional reserve upgrades on top of existing 15Mt
114 M USD capex
338 USD/t conc. opex
905 USD/t conc.
If taken to production the above scenario delivers 653 M USD over 17 years (discounted cash flow)!!
Annual revenue equates to 172 M USD/y.
Say the company returns 80% of net cash flow per year as dividends to shareholders, that equates to about 48 M AUD per year or 0.22 AUD per share (on a fully diluted basis) per year, which if you use 5% dividend yield extrapolates, eventually I would hope, to a share price of 4.39 AUD/share.
Compared to 0.4 M USD plus 17M USD/y or 24 M AUD/y based on 10% of sales and exchange rate of 0.72 AUD/USD which delivers 153 M USD over 17 years.
So, I reckon, and it is only my opinion, based on my assumptions, that you would be selling the deposit way too cheap.
By the way my preferred option is to value the deposit based on at least a 250 tph concentrator with capability (power, volumes and footprint) to upgrade to 520 tph as the reserve is expanded. I would also JV with Mali govt. and 1 or 2 other partners but keep 70-80% for BGS, this would negate need to raise capital IMO, and if the issue price to JV partners reflected real value of the deposit and their stake then dilution would be minimal.
Happy New Year!
BGS Price at posting:
33.0¢ Sentiment: Buy Disclosure: Held
