I can think of several reasons why MGV went into limbo land.
- the price got over-hyped when high grades were announced at Starlight etc at a time when the POG was rocketing up to US$2050.
- The Resources announced subsequently did not match the hype and reflect the shallow nature of the high grade link lodes at Starlight and nearby.
- The POG went downwards after August through to recent weeks.
- MGV makes progress slowly and has done so for a long time. Lately it has been picking up the pace of announcements and long may that be the case.
- Not much progress has been announced at Lake Alice under the JV with EVN. Exploration is definitely continuing but nothing announced to excite people.
Even now, MGV is on a high valuation based on the only significant metric to date, which is the JORC resource of 659 Koz. That gives an EV to Resource of nearly $320/oz at oday's closing price of 44c. That is extremely high for an explorer and so I conclude that investors are expecting a big jump in resources going forward based on the high grades being presented from White Heat and other nearby targets. If this does not happen then we can expect another fallback in price even if the POG keeps rising.
In order to give people a reference for valuation (using today's closing SPs),
- TIE, an advanced stage explorer in West Africa has an EV to Resource of $38.7/oz with 3,020 Koz of resources and expected to rise with high grade drill results continuing to come in.
- AZY in the Paterson Province of Western Australia has an EV to Resource of $64.4/oz with over 1670 Koz of resources and plenty of expectation for more from JVs with RIO, IGO, NCM and its own 100% tenements
- KAI has an EV to Resource of $54.3/oz with 873 Koz of resources
- WC8 has an EV to Resource of $14.3/oz with 770 Koz of resources
- BRB has an EV to Resource of $33.8/oz with 1,370 Koz of resources and plenty more expected
MGV these days is all about potential. The shallow results are great and so what will they find underneath? New mineralisation corridors have been identified that extend possibilities.
Is the very high valuation justified? I have my reservations because it is so high.
Will MGV match BGL that showed a similar profile as the result of high grade drilling results but became subdued once its PFS was produced. MGV has a lot further to go to reach the PFS stage and so will it be a trader's dream and an investor's caution?
Wish I knew the answer.
