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Can you see a merger with GCY ? Does the calculation adds up...

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ellimb

4,808 Posts.

196

06/06/23

21:39

Post #: 68162878
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Originally posted by RoyE ↑

Personally, I'd be surprised if today's WGX offer is the first and only offer for MGV. I say this because:

- MGV has a high grade resource of 327k ounces at 10 grams per tonne. This resource is highly desirable - high grade, near surface, excellent metallurgy and excellent location in a mining friendly jurisdiction with well-established infrastructure.
- The Stage 1 Prefeasibility study released 17 April 2023 showed a pre tax NPV of AUD 235 mio at a gold price of AUD 2,600/oz and a pre tax NPV of AUD 326 mio at a gold price of AUD 2,950/oz. Today's gold price is around AUD 2,940/oz (and has recently been over AUD 3,000/oz) so it's currently close to the AUD 326 mio pre tax NPV number. Now remember that this NPV includes MGV building their own processing plant at a cost of approx $100 mio (as per Prefeasibility study). WGX will not have this $100 mio capital cost, although they would have trucking costs to truck ore to their established mills. If we add back 50% of this capital cost (and assume that the other 50% is incurred in ore trucking costs), we then compute a NPV (pre tax) of AUD 376 mio (AUD 326 mio as per Study plus AUD 50 mio capital cost addback) for just the Stage 1 Prefeasibility. $376 mio (pre tax) equates to a post tax NPV of AUD 263 mio (70% of the pre tax NPV).

So based on these calcs, MGV is worth AUD $263 mio to WGX - well above their current offer of around AUD 177 mio.

- However, note that the above calcs are just the Stage 1 Prefeasibility scenario. They do not include the remaining balance of MGV's already identified resources of approx 600k ounces. Nor do they include the huge prospectivity of MGV's leases - practically every time MGV drills a hole they hit gold.

In summary, if WGX secures MGV with the current offer it will be very, very favourable to WGX and IMO this one has a way to go yet.

GLTA & DYOR

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Can you see a merger with GCY ? Does the calculation adds up compare with the WGX t/o.

MGV Price at posting: 30.0¢ Sentiment: Hold Disclosure: Held
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0 Great analysis

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