My understanding is that we are always awaiting some exploration drilling at Boda/Kaiser this quarter. Will be very interesting to see if they also then move to update the scoping study if some juicy new hits are found.
Revising the scoping study it estimated an NPV of A$1.808 billion. The study also indicates a pre-tax Internal Rate of Return (IRR) of 24% and an undiscounted free cash flow of A$5.7 billion over a projected 17-year mine life. Now all this was done at an AUD gold price of $3500 when we now now it is well over $AUD5000 and looks like it is solidifying its run over this critical point.
NPV is very sensitive to gold price fluctuations and i have seen instances where a 50% increase in gold price can boost pre-tax NPV by 40–60%. I appreciate that this is an over simplification and there are many other things to consider. However, the point is that the Boda metrics are moving into a good place and this will even be better when and if they find another shallow good grade deposit in some further drilling. Big if on that last one, but it doesn't appear to me that any value in ALK's share price is attributed to Boda/Kaiser at all
What are people's thoughts here? Do companies tend to update scoping studies when there has been a drastic shift in input prices like we have seen in gold? Or is it something that they do when the further define the resource?
ALK Price at posting:
82.5¢ Sentiment: Buy Disclosure: Held
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