Page 12 of the Sydney Resources Round-Up states, "EVN JV to fund lake exploration". Page 13 also states, "If entire $18M not spent MGV retains 100%". Page 16 states, "EVN JV -diamond drilling continuing". If one believes the JV will likely find more gold, one can easily imagine EVN will be satisfied to spend into more of the $18 million total. Of course, if the expected results as setout below are no good EVN may walkaway. EVN will never be keen to talk up MGV in fear of increasing a possible purchasep rice should they wish to take MGV over.
The EVN 22 April 2021 Quarterly Report states, "Australian Greenfields Exploration Diamond drilling commenced at the Cue Project (EVN earning 75% from Musgrave Minerals Ltd, ASX:MGV) in Western Australia with three holes completed for 1,142m. The holes are targeting bedrock origins of mineralisation underneath the five-kilometre-long gold-in-air core anomaly delineated in previously reported results from Lake Austin. Full results from the seven-hole diamond program are expected to be reported in the June 2021 quarter."
So, proceeding on the basis that they are spending more money in the short term, and there is more gold going to be found, if you were EVN would you prefer to buy MGV sooner before proving up the ground further having spent $15 million more? Why not use say $6 million to buy MGV shares than spend a further total $15 million in exploration, and increase MGV's value and then be compelled to pay more for the MGV shares? Who knows? MGV is in a nice position! But a takeover is no certainty, big companies don't give away money.
The chart suggests little attention- low volume, the MACD Oscillator is flat and close to the zero line, RSI is 54.274, 200 day moving average is 45.525c. With $23 million in the bank and 660koz in gold resources plus some copper, management will be keen to get to the fabled 1 million oz mark to dress themselves right up.
They tell EVN that they are not the only suitor in town writing on pg 13-
Surrounded by significant gold producers (Ramelius, Westgold, Silver Lake) •High-grade gold ore can be trucked a long distance using existing road infrastructure •eg. RMS trucking ore 300km @ ~6.5g/t Au from Vivien mine
Strategic and Corporate Appeal •Striving for standalone operation .... multiple processing facilities in district
The MGV market capitalisation is approx. $203 million- providing an in ground ounce value of $308 (660koz). The in ground gold value is $1.5billion (at $2,300 per oz). I think your $250 million valuation at current levels is about right, that ascribes a per ounce price of $380.
GLTAH
MGV Price at posting:
37.5¢ Sentiment: Buy Disclosure: Held
