Kirkland Lake fked up by selling out De Grey on the cheap and...

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3,245 Posts.

1597

03/09/21

17:17

Post #: 55819553
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Originally posted by paulgf ↑

A few mistruths there.........this is a cut and paste below from the last earnings call published by Kirkland lake on their Detour mine, and its on the Kirkland website itself. Pays to do your research not listen to people shouting half truths on HC. Price was $3.70 Bn US = $5.0 Bn AUD. That is 3.33 times the DEG current market cap, not twice the value. Also note how when the deal was struck in 2019, by Kirkland's own admission, when US price of Gold was $ 1,457 Oz . If deal was struck today that implies a much higher price, with current price of $ 1811 USD , and implies some 24 % higher. Hence this would have been $ 4.60 Bn USD or $ 6.20 Bn AUD the likely cost to buy equivalent asset.That is 4.13times Deg's current market cap. Deg not looking so overvalued now when you put it in that context.

I will agree DEG needs to firm up a plan to mine and spit out cashflow at good margin to really get the shareprice momentum going again, but its not as over valued as you suggest if one is patient. I used a post a bit of this forum but have been off making money in other areas but kept a big chunk of my deg for the long term as its still way undervalued one where it will be in a few years time . You are right in your general assessment that the feasibility study soon out will be key in quantifying the upside here.

Couple of other things to note about Detour, grams per tonne is less than a gram per tonne in their reserves. Current cash costs to mine are circa $ 1,100 AUD per Oz for Detour, not bad for a low grade resource but as its an older mine they need $ 200 M per year of sustaining capex over the next 5 years as they are going ever deeper to get the low grade resource. We wont have anywhere near that level of sustaining capex per year as being necessary.

With DEG being closer to 2.0 grams per tonne and likely with expansion of Duicon and Eagle, the average head grade will rise , and we are very likely to end up with a resource somewhere in vicinity of 15.0 M Ozs too, the way its shaping up. Our early year costs to mine (0-5) , being much shallower, should see our average cash Costs to mine coming in under Detours.

Still a bit of a question mark over this POx issue but hopefully some of this will be resolved in coming feasibility study outcomes as will some solid numbers be shown on likely mining costs. Even if POX adds $ 300-400 M to capex, amortising that cost over what is looking more and more likely to be a resource well over 10 M ozs, its not going to be a game changer for the project as some have claimed. Detour is spending near a billion dollar alone on just sustaining capex in the next 4-5 years, which will be likely more than what it will cost to bring Deg online into production.

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Kirkland Lake fked up by selling out De Grey on the cheap and overpaid for low grade Detour gold mine with high maintenance costs. LOL

DEG Price at posting: $1.16 Sentiment: Buy Disclosure: Held
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