gold value

12 months ago I did a post on the gold value scenario for Maximus. With the current focus on drilling in the historic gold province in South Australia I thought it might be an interesting time to review the MXR gold valuation scenario, gold was $38 a gram ($1,080 an oz) back then....... now it's $44.50 a gram ($1,343/oz). I discussed the capex etc with the General Manager at the time who said I was in the ball park with the scenario figures. The current price of gold is now higher than the $1,300/oz I mention in the post! In fact, it's more than $6 a gram higher than the net profit scenario's in the following MXR post 12 months ago.

The post....
"With the price of gold having settled for the moment around US$1,080 an oz and looking like continuing up to $1,100 and higher in the near term, I have tried to get my head around what the increased value of MXR's gold might be at current prices.
Not knowing the capex or production costs I have taken a stab using a gold price of AUS1,200 an oz( current), a production cost of AUS$600 an oz and a net profit of AUS$600 an oz.

I have used the lower figure of grade and quantity for the exploration targets and the actuals currently known where they have a JORC (inferred or indicated).

There are several other gold projects but not enough known about them at the moment ( eg, Eromanga, Narndee, and maybe some of the other projects the subject of joint ventures)

The gold projects where information exists are...

Selheim
Ironstone Well and
Adelaide Hills

I have not included any potential value for the 7,500,000 lb inferred Uranium project or the Nickel,copper, platinum group metals at the large Milgoo prospect or the PGM, Au or Pb Zn large Narndee Project.
Also have not included the Joint Ventures or major shareholding in Eromanga Uranium (ERO).

Using a guesstimate of one third of the net profit after capex and production ( using two thirds of the net profit from production for capex) the selected gold projects have potential to generate the following revenue for MXR....

At Ironstone Well in W.A. (refer page 21 of recent Annual Report), MXR owns 73,000oz of gold (indicated and inferred) 73,000 oz ........$15m

At Adelaide Hills in S.A., (refer page 12 of recent Annual Report) with an exploration target of 1.9m t to 2.4mt @ 10 to 15 grams of gold per tonne and using the lower target of 1.9m t and the lower grade of 10 grams per tonne for 19m grams at AUS$38 per gram (current AUS$ price per gram) for a gross value of $722m or $361m after production costs less two thirds for capex.....$120m

At Selheim in QLD,(refer page 10 of annual report) with an exploration target from Dr Russell of 9.7m bcm ( bank cubic metres) to 13.2m bcm at a grade of between .3 to .5g/bcm and using the lower target of 9.7m bcm and the lower grade of .3 g/bcm for 2,910,000 grams of gold at AUS$38 per gram for a gross value of $110,580,000 or $56m after production costs less two thirds for capex ( probably a lot less capex as it's a different capex than the Adelaide Hills)....$18.6m

An estimate of forward potential net profit is AUS $150m from the three gold projects.

Of course the gold price can be higher or lower, the targets could end up being higher or lower and the production and capex costs are an unknown but using the lower grades and target estimates gives something to think about in terms of forward value per share for just the gold projects.

With the Indian purchase of 200m t of gold reported last night at market rates, the bullish sentiment for gold could realise higher net profit or sale prices for MXR's gold projects.

What might be the value of the MXR gold projects at a gold price of AUS$1,300 an oz? They are certainly higher than when gold was at AUS$900 an oz.

As Maximus resources progresses the gold projects through the various stages of JORC announcements, the share price will become increasingly sensitive to movements in the price of gold."