stoxclimber from asf

This posts was placed on ASF by Stoxclimber....

It does make some assumptions...but like my assumptions it all looks forward to a huge short termprice gain for NGF (huge in percent terms I mean)

Stocclimer's post reads:

"Sorry guys, one thing I just thought of is that the company is going to have to raise some funds to pay 25MM to construct the plant...and some/most of that would probably be through an equity issue which would dilute the value of the existing shares quite heavily.

However I was also thinking that the $354US/oz cost may be inclusive of fixed costs (for a plant producing 180Koz/yr) - in which, case, on the companies assumptions and with a 600USD gold price, 80c AUD, tax paid at 30%, 12% discount rate (say 6% rf and 6% market premium, beta=1) assuming the company produces the full 180Koz for 4 years (it will need to get some gold from a place other than the 500Koz deposit for this), at a 12% discount rate the project has an NPV of 91.3M!!

If we allow the company to raise say, $20M of the 25M from an equity issue at 12c per share thats ~170M shares issued, brinign the total number of shares to ~210MM. Then say they get a 5M financing from a bank a la INL, lets factor in say 500K interest cost per year..giving an NPV of roughly 90M.

At 210MM shares on issue this equates to a share price of 43c..! not including the expansion options

NB: Project is also subject to due dilligence and QLD Govt approval.

I'd love for someone to check over these figures... e.g., does one think the $350US/oz includes the fixed costs of the plant?


NB: Guys, please don't buy on this analysis...I'm figuring that there has to be something wrong with my analysis for the company to be so undervalued.."

Whatever NPV you look at.....they are all at multiples of Friday's close.

EB