Many thanks for your post. MSR is an interesting idea - many thanks for bringing it to my attention. I will certainly do more work on it. My only real concern, and you have covered this already, is that it's in Krgyzstan, which is not a place with a long mining history or respect for property rights, although as you fairly state, there is reason to believe that this could be changing. The underlying economics of the project certainly appear attractive, and will provide the company with a great deal of cash flow to explore if the project can get up and running.
On the issue of Atlantic Gold. As you mention, they have a 60% interest in their primary project (Touquoy Gold mine in Nova Scotia), but if you look closely you'll see that they are able to claw back all of their costs incurred in bringing the project to development stage (with interest) from the cash flows the project will produce. So in reality, ATV will likely have a 70-75% share of the cash flows from the project..and this project will be producing ~85Koz pa at a cash cost of less than $600/oz from 2014.
ATV's second project, (Cochrane Hill) is owned 100%. As you rightly say, the impending court case to do with Cochrane Hill is an issue, but if one looks closely at the detail, one will see that the dispute is principally between Steeple Hill and Scorpio Mining (the previous owner), rather than with ATV. This looks very much like a frivolous case that is designed to extract from 'go away' dollars. Anyways, it looks like in the worst case scenario, even if it were to progress to court, and if Steeple Hill were to win, that Scorpio would have to pay some compensation to Steeple. The likelihood of this having any impact on ATV's ownership of or development of the Cochrane Hill deposit appears very slim. And it must be remembered that this is a fully owned ~450koz deposit, that is planned to produce >80Koz pa after Touquoy is producing. This issue should be put to rest within the next month or so.
On the final issue of funding the project. You are correct, it is a reasonable sum that is needed. The DFS released last Thursday details the economics of the Touquoy project, and its cost of development. The figure is C$140m, or ~A$130m. It must be remembered that this figure assumes all new equipment is purchased - significant money could be saved for some second hand equipment for the plant. Also, it appears that the banks are willing to lend a substantial sum given the favourable jurisdiction, economics, and geology of the project - with payback expected well within 18 months. So, in the final calculations, it is possible that some equity may have to be raised to fund the development of Touquoy, but it is likely to be in the order of $10m to at most $30m, imo. And if the gold price continues to rise over the next few months, we could arrive at a very favourable scenario where no equity is needed.
The most interesting thing with ATV is the valuation. Here is gold company with A class management, and two attractive deposits in Nova Scotia, Canada that will be producing an average of ~75Koz pa (ATV's share) for a combined 10 years. At the current gold price, the projects will be generating ~C$80m pa (b/t) over the period. The combined NPV of the projects is greater than $400m. And what do you suppose the company is worth? $150m? $100m? Nope - currently <$25m. It's truly a bargain. DFS released Thursday has shone a real light on it - rose >20% on Friday! People are starting to wake up..
Anyways, i get excited when i talk about ATV. Thank you very much for your MSR idea. It certainly has merit, and i will look at it further.
If anyone has a QUALITY gold company idea that meets the criteria in my original post, please give it a whirl. I can understand not publicising a really good idea too soon, if you have not as yet fully built you position, but if you are satisfied with your holding (as i am with ATV), then there is no harm in sharing an idea.
