Henty Mine valuation

So was running some numbers on the weekend trying to work out what’s Henty’s valuation:

CYL paid 20mil for Henty which is about right for the resource

334Koz JORC.

10% in ground value = $20mil (33.4koz * ($2200POG – $1600 AISC) )

*very rough calcs

…but Henty isn’t just a resource, it’s a producing gold mine.

Since the acquisition CYL have added value in 3 ways:

1.Lowering AISC

2.Increasing production volume & recovery rate

3.Adding to the MRE

So whats its worth ?

1.Lowering costs

AISC was $2419 forJan’21 before CYL took over

AISC costs per ounce are $1,875 and $1,515 for February and March 2021 respectively and these costs include the tailings dam expansion capital.

Looking for $1500 AISC to be maintained or improved on

2.Increase production.

Total tonnage went from 11kt in Jan to 28kt

Oz produced went from 454 to 2070 in feb and 2769 in march

Recoveries went form 88 to just shy 95%

Management put outa 2021 production target of 25k oz

334koz MRE @ 25kper year = 13 year LOM

Lets call it 10yrLOM (I like round numbers)

To hit 25koz all they need to average is 2400oz per month = very achievable
*Ive been using $2200 POG average

NPV @ 8% = $118,698,085.56

round down to factor in some risks = $100mil

*obviously lots can go wrong here.
but forecast numbers are already being achieved. all CYL needs to do is maintain the current numbers

3.Henty has a history of declining grades. Theres also the perception that all the easy ore has been mined.

The latest drilling has proved otherwise. High grade, multiple intercepts.
If CYL can expand the MRE then theres significant impact to the balance sheet with ore able to go straight through the plant.

TLDR;
-paid 20mil for a under-utilised, high cost mine
-significant management improvements have added value not factored into the share price
-Henty should be worth around 100mil if CYL can maintain current production figures
-exploration upside should de-risk long term projections