Cheers for the update tobyjack. Raises some good info to think...

Cheers for the update tobyjack.

Raises some good info to think about;


"•The increase in resource inventory is a big positive in our view given it has the potential to increase both the scale and mine life of the mine when developed."

I definitely agree there, and if they can find more hematite over the other 55% of the strike it can only be more beneficial. Larger scale production in particular would lead to greater share price.


"•Our team caught up with management in Perth last week and we understand progress is being made on securing a strategic/financial partner to assist with the development of the project. This would likely lead to a sell-down of project equity in exchange for project funding. This would leave EQX with a free carried interest in the Mayoko development and cash of ~$45m which can be deployed to other initiatives"

I found the above very interesting. Progress with the partner search is good news. The million dollar question is, how much project equity would they need to sell in exchange for 100% project funding?

Back of the napkin calculation time. If they were to engage in a 50/50 JV with a strategic partner and the partner covers the CAPEX for a 2mtpa;

EQX share of JV would be 900ktpa taking into account Government 10% free carry on Mining Licence approval. 900ktpa x $60p/t ($100p/t sale price - $40 OPEX) = $54m p/a cash flow.

Apply your own PE from there, I'll go with 6 (would seem more than reasonable with a mine life of 40 years). $54m pa x 6 = $324m. $324m / 120m shares = $2.67 per share.

Now if because of the new resource upgrade the production capacity was expanded to 4mtpa, you could look up to a SP of $4+.

Just basic calculations pre-tax. You'd hope for a sneaky tax holiday clause in the Mining Convention.

This is working from a 50/50 JV scenario and an IO sale price of $100p/t, both of which I would think are pretty realistic.

Re the other initiatives Fosters is talking about deploying the $45m to, that's obviously Badondo. That $45m would make a pretty good dint in drilling and all other works to prove up a monster DSO resource in the North. By the time the $45m starts running low, you'd hope to be seeing significant cash flow from Mayoko.

IMO management will seriously be thinking about ways to piggyback on Core's small scale DSO trucking option. If EQX could squeeze 1-2mt DSO p/a out of Badondo via a trucking operation the effect on the SP would again be significant.

Exciting times, big 12 months coming up.