Of course no one knows in advance what company is going to be a 10 bagger or not. I do however prefer to invest in companies that have the potential to achieve that goal with their current line of projects rather than have to acquire other assets or hope that they increase production at an existing mine.
On CRC's current stated intentions (and at current gold prices) this will not be a 10 bagger. However, they could come out tomorrow and say they plan on lifting production to 75koz in year 3 and 100k oz in yr 5 and it would be a whole other board game.
Dilution will happen with CRC there is no way around that and the figures I quoted above are very conservative IMO as they show funds being raised at 15c (as opposed to the 14c close) and raise less than the minimum amount of working capital I think they need (11m v 15m).
This will reduce the NPV of the project on a per share basis and makes any gains over and above 100% solely based on drilling, expansion or the price of gold.
That doesnt fit my investment approach, however, I understand that it is perfectly acceptable to others.
I also understand my investment approach is very intense compared to others and sometimes it can come across as being negative towards the stock. This is simply not the case as I believe CRC has the potential to increase in value, it does just not fit my investment criteria.
I have arrived at this decision after reviewing (and taking detailed notes) on every announcement put out by the company since they acquired Dargues Reef, followed by the development of DCF models and "what if scenarios".
I will continue to follow the stock to see how it plays out.
CRC Price at posting:
14.0¢ Sentiment: None Disclosure: Not Held
