This is another way to look at BEZ's comparative value.
Over the last few weeks i have diversified away lithium stocks and into gold stocks as i have been worried about the world geopolitics and felt gold is a safe place to be during world's chaotic problems including Russia-Ukraine war, Israeli-Hamas and the potential conflict spreading out the whole Arab world, high inflation and world economy on the brink of recession.,...
My current holdings of gold stocks are BEZ and SXG.
As we can see from the latest SOI updates from the 2 companies:
SXG has 204mil shares on issue (fully diluted). All of its options are in the money as of today. Current sp = 97c, giving the company a MC = $200mil.
SXG is currently in drilling stage. It has hit some spectacular gold interception. However it is still very far from 1st MRE and has not done any Enviromental studies, Metallurgical studies, Feasibility studies, BFS/DFS, no mining permit, no off-take agreements, no funding deals,...
It has approximately $9mil ($11.75mil at the end of August) cash on hand and I think it will need to do 2-3 rounds of CR in the next 2 years to further carry out more drillings and all of those above activities (Metallurgical, Enviromental, PS, MRE, DFS/BFS,...) before it can move onto off-takes and financing activities.
So, i strongly believe its total shares on issue will be at least 50% more or even 100% more before it can go to construction in 2026 and production in 2027.
50% more shares through 2-3 rounds of CRs is the best scenario. It could even end up 150%-200% more dilution if it does not get a similar kind of financing deal like BEZ has with Quantum and that means it has to go to market for a big chunk of $500mil for construction and many other activities, plus working capital.
Its maiden MRE statement sometime in Q1 2024 is anyone's guess but people having speculating 1.5mil ounces to 3 mil ounces of gold. I personally think it will be around 2mil ounces of gold for its maiden MRE, at depth of 150m-500m underground.
So, SXG shareholders are basically valuing SXG at at least $300mil today because they fully know the company will need to do many rounds of CRs in 2024 and 2025. There is no doubt about it.
The stock has a very good chance of going to $1.50 by mid-2024 i believe, effectively valuing the company at around $450mil (based on 50% more share dilution).
BEZ's fully diluted SOI is around 443mil as you can see from the above table. There will be no CRs needed as USD $300mil = AUD $475mil as of today's FX rate.
BEZ is at least 2 years ahead of SXG into production, with off-take agreement locked in, with AUD $475mil funding deal locked and ready to go to construction/production next year.
BEZ has around twice as much resource as SXG (3mil ounces of gold with next MRE update surely takes it to more than 4mil ounces. The company has stated they expected resource to be 5mil ounces to 9mil ounces of gold. Let's take 4mil ounces of gold to be conservative).
So, how much should be worth? You do your maths.
I think BEZ should be valued at least 2 times to 3 times as much as SXG is valued.
I have no doubt BEZ'sp will move to $1-$2 in the months ahead as it get more of USD $10mil deposited each month by Quantum into the drawdown facility and as the company updates us more about drillings, resource update, construction,....
BEZ should be at least valued at double SXG's MC today or $400mil right now at sp of around 90c. The market will see this great opportunity of BEZ being mispriced in the days and weeks ahead.
Notes: I am not downramping SXG at all. I think SXG deserves a lot more and that's why I said above I believed SXG will see a sp of $1.50 or more in 2024.
If we talk about the chance (and the risk) of both companies being able to move to production, I think BEZ has 10 times better chance and 2 years ahead of SXG.
(NOT FINANCIAL ADVICE. DYOR).
BEZ Price at posting:
14.5¢ Sentiment: Buy Disclosure: Held
