The Brains Trust, page-3156

Hi CG,

It was kind of a snap decision. I saw GOR hit 68.5 and thought that'll do for now.

The comparative metric I use for producers is EV/free cashflow. With the developers it's a little bit problematic and requires a few more assumptions. What I try to do is estimate how the balance sheet will look at the start of production and their production costs (based on FS numbers). Basically on my numbers GOR is more fully valued at EV/FCF of about 5 versus DCN at 3. GOR has a good EV at the moment but they are still up for a good chunk of the mine construction costs (but do have the overrun protection, which I like). DCN however also have overrun protection due to the fixed price ceiling on their contract with GR.

In their last presentation GOR did comparisons with DCN and GCY (another I'm bullish on). They choose to compare on a resource or reserve basis as they have done significantly more drilling out than DCN. Mine construction costs for DCN are less given proximity of infrastructure