Hi all,I've just written up an overview and emailed a few...

Hi all,

I've just written up an overview and emailed a few friends about this company, i thought id share:

GDO - Gold One International (Share Price $0.47, Market Capital $380m)

GDO currently hold a huge resource and based on its resource alone should be worth a whole lot more, and with the new takeover of Rand Uranium, it has effectively doubled its gold resource and added a substantial amount of Uranium to its resource base.

Currently (Pre-Takeover) GDO has no debt and was producing Gold at a rate which would see the 2011 production figures of 120,000 ounces with operating costs of production (OPEX) sitting at $420/ounce pre royalties, depreciation and financing costs, and $620 post royalties, depreciation and financing costs, with the current price of gold over $1500/ounce there is a huge margin of profit:

On a conservative $1250 price of gold (though in the last quarter the average price per ounce recieved was $1384/ounce), GDO has a margin of $600/ounce, at 120,000 ounces gives GDO profit of $72 million. Giving GDO a P/E of 5.3 (industry averages between 10-20 depending on scale of operation) this should technically give GDO a share price of $0.89 (P/E of 10). Operation due to scale up to 160,000 ounces in 2012 --> 270,000 ounces by 2016

Assuming gold remains at $1500/ounce (thought current signs show gold heading over and above $2000 in the medium term (1 year)) GDO should be producing 160,000 ounces at a margin of $900 in 2012 which would give a nifty little profit of $144m, with a P/E of 10, the share price should reflect $1.78, and further in 2016 at 270,000 at $900 margin gives a profit of $243m and P/E10 gives a share price to reflect $3.00.

Currently have a few projects going through their Feasibility stages and each coming into production over the next few years, which will get them to that 270,000 ounces per year production.
Gold (measured, indicated and reserved) currently sits at a HUGE 21m ounces! While the majority of this sits in the indicated and inferred resource, the measured will soon be confirmed and allow these production figures to prosper.

Goliath Gold is a spin off company that GDO has created with its Magmine assets, GDO holds 71% interest in this new company.

Takeover of Rand Uranium: This is a major step taken by GDO and will have an immediate impact on the company. GDO has entered into a binding agreement to take over Rand Uranium for $250m/US. Of which a $210m US loan facility is currently being set-up, thought pending approval as the financier does their due-dilligence. The remander would either be paid through; a share placement, a capital raising, or profits, the latter would be most friendly to current shareholders.

For $250m, GDO has acquired this GOLD PRODUCING company, who will immediately add about 150,000 ounces per year to GDOs production, giving GDO a production figure of 300,000 ounces in 2012! Along with this, the acquisition includes a further 13.5m ounces of resource and 3m ounces of reserves. Pushing the total gold resource of GDO to over 45m ounces!!!

(Compare this with other gold companies located in this African region - GRY - Gryphoon Minerals 2m ounces for a market cap of $500m; AMX - Ampella Resources 2m ounce for a market cap of $500m, PRU - Perseus Metals 5m ounces for a market cap of $1,200m has planned 150,000 ounce per year production in 2012 and 330,000 in 2013, similar costs as that of GDO currently; none of these companies are currently producing yet are worth more than GDO - Gold One International 45m ounces, $380 market cap, with 120,000ounces 2011, and 300,000 ounces 2012)

Though Rand Uranium does add 150,000 ounces to the production, these ounces seem to have been mismanaged by Rand, effectively costing $1235/ounce to produce (OPEX), GDO has signaled that the infrastructure can support over 500,000 ounce production and that it was 'underutilized' and that they would work to get these costs down. This could be a reason why the market didnt shoot up on the news of the acquisition, though still very much should have. It seems that this extra 150,000 ounces per year would need to be proven to be profitable (decrease current OPEX for that project, before the market can react to the super acquisition). Though on a EV/R scale with 45m ounces currently the company is worth about $7 an ounce (impossible to believe! current spot price is $1500 an ounce)

Lets do some more math! - for 2012, include GDO current production forecast of 160,000 ounces at a cost of $650, gold selling price at $1500 = $136m add on the Rand Uranium project of a further 150,000 ounces at a cost of $1235 = $39.75m which would give GDO a profit of $175.75m profit without decreasing costs at the new project, and using a future gold price of $1500, with a P/E of 10, gives an indicative share price of $2.17 (now consider the effect if 1. Costs decrease, 2. Price of gold further increases)

Back to Rand Uranium's takeover, we are yet to consider the Uranium assets that have been acquired, 90m pounds of Uranium mineral resource and 41 million pounds in mineral ore reserve has been added to GDO's books, including a 70% complete DFS for the uranium project which is expected to produce 2.3m pounds p/a over the first 10 years and then 1.5m pounds p/a over the next 5 years, (current u3o8 price is about $60 a pound, though long term uranium prices seem to be headed up, as more power plans are built despite the recent tragedy in Japan). This will add value to the company allowing it to become a uranium producer and further explore the upside in that field, with this uranium resource, the current Rand Uranium gold mine has gold ore that has significant amounts of uranium within it (this will help decrease the gold production costs at the Rand mine, as costs of extracting uranium will now be offset by being able to sell the uranium)

I'm not sure if i have missed anything, but this is one company to look into, it was a great company last week prior to the takeover, and now is set to do major things!

(p.s. I need to learn how to BOLD some selected text, as the original email had bolded figures/words, here it's all plain text!)

Enjoy!