Coventry (CVY) IS the lowest cost gold company and best valued.
Resource of 2mn Oz of gold should be firmed up in Canada. Comparable mkt cap company a $400mn AUD mkt cap company. CVY mkt cap $25mn WITH $10mn cash (assets valued at $15mn) and gold results due.
Many times a multibagger from here.
PLEASE SEE POST NO 5153258 (search in 'advanced search') FOR FULL COMPREHENSIVE VALUATION:
EV/Oz Discount
Coventry has a resource of 1.005Moz of gold with a great degree of upside. Based on the capital raise price of $0.22, CVY has an enterprise value of $19.3M and an EV/Oz of $19.20. This represents a discount of 76.9% to the EV/Oz of other emerging producers, which is $83.
Capital Structure & Valuation Target
Based on the market valuation of comparable gold companies with a similar degree of sovereign risk, I have devised a valuation target of $0.76 to $1.60 per share, dependent upon the size, continuity and grade of resource that Coventry ultimately certifies.
The valuation does not incorporate dilution for any further financing arrangements for a processing plant. I would expect a mix of debt and equity to be employed should studies indicate that mining at Cameron Lake and/or Ardeen is economic.
Assumptions:
Capital Raise approved by shareholders. Capital raise issuance of 45.45m shares at 22cps and 6% + GST Corporate Fee. AUD/CDN exchange rate 1:1.
Assumptions:
$EV/oz from research 'Precious Metals Sector Update' Dec 2009 Argonaut Securities. Median Ev/oz for 'Emerging Producers'.
