Chocks away...............

Well everything is humming - engines roaring - time to point the plane down the runway.

The MRE will be out in the week commencing 12th December.
What to expect and how to value the stock?
In gold exploration it is good to have a benchmark on how to value a company based on gold in the ground.
The difficulty arises because the cost of extraction varies widely.
Obviously a low cost ounce is more valuable than a high cost ounce.
Similarly a high grade ounce is more valuable than a low grade ounce.
In WA the grades are higher and the deposits range in size considerably - but they are rarely multi-million ounce deposits - and Hemi is more of an exception than the norm.
In Ecuador, the mineralisation is predominantly porphyry - and its low grade (compared to say WA).
If you have followed me so far, then keep reading.........
A small porphyry of say 2.0 Million OZ will have a much lower value per ounce than say a 5 million ounce deposit.
Logic dictates that the larger the deposit, the greater the economies of scale.
So, if an ounce in the ground varies with the size, grade and mining cost, can we estimate what Sunstone might be worth based on its capacity to increase the scale of a future operation?

Here is my thinking:

A 2 million ounce deposit with a grade of 0.6G/t gold equivalent might be worth say $20 per Ounce in the ground.
A 3 million ounce deposit with same grade might be worth $30 per ounce in the ground;
and a 5 million ounce deposit may be worth $50 an ounce in the ground.

So there could be a parabolic increase in the share price as the size of the project grows over the next 12 months from our initial MRE.

And the bigger the resource and higher the grade, the more attractive it is to the Tier 1 miners like Barrick, Newcrest, BHP, Lundin etc

The question for us and the company is how big are Bramaderos and El Palma?
If they have combined gold resources heading for say 8-10 million in the not too distant future, then you do the maths.
But be careful, the economies of scale apply at the project level - not so much the company level.
I am currently thinking that a target market cap north of $250m within 6-12 months is not unreasonable if these figures are even roughly close.
Perhaps the upside is more than I think - but I would rather stay conservative.
I can do the maths too, and this is a company that still offers great leverage to exploration success.

Looking forward to a Happy Christmas.

Todays Proactive interview with Malcolm Norris from Ecuador was encouraging looking at his body language and facial expressions.

GLTA
DDD