Cheap bargain share, page-8

BDR is indeed a cheap bargain share.

Here is more evidence that M&A is alive and well in the gold sector. Zijin is China's largest gold producer and purchasing gold mines outside of China:



For context, Porgera produced 493k oz in 2014 at a AISC of US$1,000 and has reserves of 3m oz. Zijin is buying a 47.5% stake of this for US$298m (A$ 384m). Their share of production would equate to 234k oz p.a. and a reserve of 1.4m oz with similar (if not higher) AISC compared to BDR.

The similarities with BDR allow comparison:

BDR:

(1) Production = 170-200k p.a. [vs. Zijin share of Porgera 234k oz]
(2) Reserves = 1.3m* oz [Zijin share of Porgera 1.4m oz]
(3) AISC = US$810-890 oz [Porgera US$1,000 oz]
(4) EV = A$195m [Zijin purchase price A$384m]

[* IMO this will increase at least 300k and possibly up to +500k oz during 2H 2015]

The only difference I see with BDR vs. the other transactions presently is that it would likely be hostile instead of friendly.

In addition, Brazil is a favoured destination for Chinese investment:



PB better hurry up and increase the reserves (Urucum U/G) or else BDR will be eaten too soon for shareholders to realise even 50% of the potential here.

FWIW and following on from my post yesterday about fx hedging on the USD debt, I see the AUD has dropped sufficiently overnight vs. the USD to have paid for the Chairman's salary for an entire year if BDR was hedged as of the time of my post !!! [I know ... simplified and 'one swallow does not a summer make' .. etc]

Cheers
John