PRX 16.7% 0.3¢ prodigy gold nl

I agree with FMX;You need to look at OP/GH separately to...

  1. 13,852 Posts.
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    I agree with FMX;

    You need to look at OP/GH separately to Buccaneer and value each on its own for now and add to get a total valuation.
    I still don't place a value on Buccaneer as I don't expect to be accurate on it especially when we still do not know what process will be used for recovery of the gold.
    Are lower grade zones suitable for heap leach?
    Are the high grade zones suitable to be fed through the OP gravity plant?
    For now I see Buccaneer as strong upside potential for ABU for when (not if) gold is revalued higher without a corresponding increase in capex/cash costs. I can't be 100% sure of that, but that's my expectation for now and it comes for free considering the ABU market cap relative to OP valuation based on the scoping study.
    Regardless of POG upside or not, OP/GH are much easier to value thanks to the very high grades and metallurgical test work and thanks recently to the scoping study which gives us a valuation of 7c based on last years resources (no GH or East vein or OP south extensions) and ignoring our cash (worth around 1c/share).
    We know we have added significant upside this year but need to wait for drill results to confirm exactly how much. My best estimate assuming similar continuity to maximum open pit depths as the jorc veins gives me a value between 10-13c for now but with GH it may end up being higher.
    Then there is good exploration upside near surface and very strong further upside potential at depth from u/g mining.

    I never compare companies by looking at resources even when average grades are similar because there are too many other variables. E.g.;

    Political risk,
    Open pit or deep u/g?,
    Both open pit but one in a single low strip ratio pit while the other company has multiple deposits which might be high strip or too far apart from each other to share the same processing plant,
    Different metallurgical processes with differing cash cost resulting in one being high margin and the other marginal despite similar grades,
    Different metallurgy resulting in very high capex for one possibly making it non viable or resulting in a low NPV while the other can use a very low capex plant and has a NPV multiples higher,
    Distance to roads/power/other infrastructure/towns for workforce.
    The list goes on which is why I never use an EV/resource or even per reserve ounce comparison. I consider that type of comparison either useless or extremely misleading unless all the variables are similar.
    If you want to compare Buccaneer to another project, first you need to wait for metallurgical results and an optimized processing method, and then compare to other projects with similar processing, economies of scale and grades.
    Then adjust for variations in labour costs/political risk if different countries, etc,.
 
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