Ann: New Targets and Growth from Discovery Drilling, page-15

Pete11.
I wont be able to answer your question directly, but i hope this paints some sort of picture.
BC8 has got a resource of approx 1.3m ounces now, but the reserves are yet to be announced. That's coming soon judging from the time table.
The reserves attract a higher valuation. Your numbers are based on operating mines. The key with BC8 is that there will be a longer term conversion of resource across to reserves but i dont expect a majority of the resource to be converted across to reserves straight up. If we get a quick 4 plus years reserves in the first reserve number, that should get us funded as its obviously going to be many more years than that. People within the business know how this works even if the ASX have their own versions of reality. What ever the number is, you can be sure its probably super conservative and much higher in the real world imo. A company like Silverlake and BC8 wont really have a large reserve but rather they will add to reserves as they mine. They just extend and infill drill as they go. We wont be running out of gold. They should add reserves quicker than they mine consumes for many years to come. I can see that BC8 has been spending money trying to expand the resources rather than just going for reserves. You can always come back and drill those out to JORC. They would want an initial bankable number and go from there. They just made another discovery and none of this stuff is drilled out. This all means more mine life as far as my eyes can see.


If we just take a rough reasonable in ground per ounce value (on the entire 1.3m ounces) of $125 - $150 just to be super conservative (other companies are attracting this at lower grades without plants) and multiply that by 1.3m ounces, you can see a current value of $1.16 - $1.40 per share right now. If someone had a swing at bc8 today, they would need to pay over $1 share as a base case. The buyer would have the advantage of the mill, licenses, proximity to Kal, open resources and a massive land package with gold everywhere. That would compensate for having several pits over just having one large pit imo. I doubt the management would sell at $1 now since the next uplift after funding will only keep rising even allowing for dilution/debt.
BC8 could increase production from 50k pa to over 100k pa if they incorporate the second plant and hit their magic resource number they think is required. That may come from proving up Fingals as a much larger single pit. That looks very possible at the moment with extensions and rich hits at depth. Finglas may only just be getting started with any luck. This is when your valuation comes into play. The company seems to be looking for that with the exploration and deeper drilling right now. It wont cost a lot of money out of stage 1 cash flow to strap on stage 2. They would have designed everything to be quickly and cheaply upgraded. The wild cards are the gold price, new discoveries etc.
In short, if BC8 decides to ramp up to 100k oz pa down the track, your figure looks reasonable to me. The day to day price is more a reflection of sentiment to the sector rather than a reflection of the assets value. That is where i see the real value. Risk is always about but the numbers look good. Large global investment firms like Templeton punched money in at 68c with far less than what we have today, so they must see something obvious. dyor