Is CDV undervalued?, page-2

Most gold acquisitions are determined on a per ounce multiple.

At the macro level and mid tier and major players assess by their internal minimum parameters eg say 3m ounce resource, 250K oz pa, lowest quartile costs etc:

1. Sovereign risk
2. Project risk
3. Economics

Ghana - long, long history of mining and in particular gold mining.....probably the most preferred jurisdiction for an acquirer.

Project risk:
Infrastructure eg power, water, labour - seems a big tick here.

Metallurgy - the 'cause' of the crash last year but the issue seemingly now put to bed given the increasing recoveries and that Goldfields and various instos have come on board since the initial issues were announced.

On the plus side - scale, strip ratio, very quick flotation and location - all good.

From the August ppt:

• Treatment cost expected to be low due to very low volumes of flotation concentrate to be processed - ~5% of total throughput requires processing to produce gold doré bars on site
• Moderate SAG & Ball mill comminution characteristics - (BWI: 14.9 kWh/t, SPI: 8.8-9.6 kWh/t)


Economics - Archie was quoted quoting the analysts (Hartleys and Clarus) that AISC estimated at sub 800, presumably USD.

CAPEX - not much said of late and I haven't seen the latest Hartleys report but one would expect no real surprises here....

I recall one Hartleys report suggested a 8mtpa plant, cost USD400m.

8mtpa in rough terms say 1.3 g/t, 85% recovery.....280k oz per annum.....

Maybe they'll increase the plant size if they get 6m oz+ in M & I category?

So, in summation, what is a fair multiple with gold at 1250 odd....

I still say 150/oz minimum given this appears to be a Tier 1 asset.

For sake of the exercise, let's use 6m oz ie 900m USD - 350m shares - AUD 3.25 a share.....