NVA fair value target $0.59 to $0.83 for 5 Moz to 7 Moz, page-94

I have wondered myself whether NVA could reach such a lofty SP – which at $10 would equate to a market capitalisation of between $20 to 25 billion (or about 35% of Barrick and Newmont’s c.USD 50 billion market cap).

So I thought I would “run the numbers”. I see that Wombat has responded to your question, with his usual detailed assumptions and workings.

However, since I have gone about the task from the opposite direction – working back from a $10 SP to what size of operation this would require - I thought it might be helpful to put my calculation out there. Comments welcome – please let me know if you find any flaws in my analysis so I can improve it.

With Wombat’s analysis, a $10 SP is possible at production rate of 500,000 oz per year with a gold price of US$5,000 / oz – potentially justifiable with the current political and economic turmoil in the world, and the likely extended effects of that.

My analysis adopts a lower gold price assumption (US$2,500 / oz), which might be overly conservative given where we find ourselves. As a result, my gold production calculation works out to be higher than assumed by Wombat at 1.1 million oz per year.

My conclusion is that a SP of $10 is possible – but NVA would need to trade at a PER of 35x having established an ore resource of 30 million oz (15 year overall mine life).

A higher gold price (or lower costs) would require a lower production rate and smaller ore resource:

- gold price of US$3,000 / oz = production of 650,000 oz requiring 19 million oz LOM ore resource

- lower AISC (VGold+75%) and Capital Intensity (VGold+25%) cost assumptions = production of 875,000 oz requiring 25 million oz LOM ore resource