The gold is worth quite a lot, if you do the maths by simply...

The gold is worth quite a lot, if you do the maths by simply multiplying the supposed volume by the current gold price. The issue is the cost of getting it out of the ground and processing it. The AISC (all-in sustaining cost) is one figure to go on because it provides the estimated cost per ounce of current operations, which can then be measured alongside the price per ounce of gold. It doesn’t include the cost of building a mine and treatment plant, which is AZY’s stated goal. At the moment – the figures are very rubbery – the stated AISC is USD$1062 per ounce. That’s just a rough guide, and shouldn't be viewed as a promise. Throw in the $300 million cost of building a mine and plant, and you get a different AISC.

As with all massive infrastructure investments, there’s plenty of room for blowouts. Any house builder or government agency will tell you, it's a good idea to add at least 20% to your costs. It's also a good idea to deduct at least 20% from your projected income. Just safer that way. Building in a buffer never hurt anyone, and it's better to be prepared for the worst while hoping for the best. (Not a great analogy but the Snowy 2.0 project was budgeted at $2 billion in 2017, and is now forecast to cost $12 billion, which will also blow out over the time it takes to build it.)

No one knows the price of gold by the time a mine is built, if it ever is. No one knows the price of gold next week. Personally, I think gold's heyday is over and, while I don't see a collapse, I do think we'll see more hovering and declines than rises. I recall so many predictions about gold shooting the lights out that I don't pay any attention to them now. They're all based on the belief that gold is a safe haven in troubled times. It's pretty outdated thinking, based largely on notions that gold has enjoyed for thousands of years. Yes, it's still beautiful and it's still rare. But it is not used as the basis for any currencies, which used to underpin its value.

So, I think any company buying AZY will not want to pay more than current market value for it, maybe +20% to ease their bid. They're not buying AZY's potential, they're buying the reality as it stands when they lob the bid. The reality as it stands now is pretty ordinary. Not bad, but certainly not brilliant and nowhere near the volume needed to even send the share price up, let alone prompt a takeover. Hence the high downside risk, by my reckoning.