@Sellier This puppy would need a 10x sp increase... rather than...

@Sellier

This puppy would need a 10x sp increase... rather than USD 1500, think along the lines of what is required to obtain a $50m surplus at end of mine life.

(10x because that is the amount this company has lost in converting a o.6 million oz gold resources with 3.8 million oz of contained silver of rough total value USD 800m, or USD 550m after expected recovery but about USD 400m after actual recovery. In other words gold + shareholder funds initially ~USD 630m finishes up at a few tens of million value. Holy cow- what a performance, but thank goodness none of the team suffered any financial loss, unless silly enough to own PGI shares).

$50m/(x-1400)/70,000 :: x needs to be an average of USD 2,100/oz over the next 18 months to get a 10x sp.

POG would need to linearly advance from now, until all time record high of USD 3,000 by Sept 2019. (USD 1,100 higher than previous high)

I assume everything under 1400 pays for outstanding loans, admin, site clean up and wastage chasing Unicorns and Holy Grails.

What's the chances?

Also note: the China and Iberian opportunities are only to build a tolling facility. PGI will not have $50m surplus for developing a mine (as above)

The big question is how much slice of any POG upside PGI takes?

Based on 50,000 oz/a, to pay for opg and capital PGI historically needed at least $1,000/oz roughly so $50m p.a revenue

With 40z concentrate and say 80%recovery, call it a 150,000 oz/a operation. (PGI talk about 200,000 oz/a but you need the mines around able to do that and just being super conservative as PGI have a pot-holed, dirt track record of being able to successfully implement anything in my opinion)

The increase in oz produced will not hit opg costs much, for now call it nil impact, as the two main things are
a. gold recovery is increased
b. on greater gold throughput

The miner will need a minimum of roughly $450/oz. (As indicated by PGI for Chinese operationsin reports)

$50m/(150,000 oz x POG) : then POG = 333, + miners 450, call it minimum POG 800/oz to run the whole show.

I can see no reason why a 50:50 split after each party meets their standard EBITDA with some escalators for inflation and adjustment for some defined external costs (power for example).

The conclusion is that at USD 1400/oz PGI 50% would have extra EBITDA after covering all costs of $350 x 150,000 oz/a = USD 50m pre-tax (as would the miner). At POG USD 2,000 ~$90m pre-tax.

However, the CAUTION..DYOR.

The 2015AR provides insight to chances of success and track record. FYI

an updated Financial Model for the life of the project has been prepared that shows Net Present Value (“NPV”) of US$48.3 million at a discount rate of 10% as at 31 December 2014, which is US$28.7 million less than the depreciated value of the process plant, predevelopment expenditure, and the resource.

...should be able to be reversed, along with an adjustment of past depreciation of the process plant, when the Company is able to demonstrate continuity of operations for a further 10 to 15 years. This is expected to occur by December 2016.

In the above announcement, the answer to "what is the chance?", was zero. What has changed that suggest the team is any better?