I'll make a few [almost certainly incorrect] assumptions for the sake of simplicity. A) Issues will get sorted out with Quasar/Heathgate and there is no significant win either way, B) their cash in bank is enough to pay the remaining 25% capital costs for the B4M mine, and C) no other AGS assets have value. This should leave them, in most simple terms, as a 25% stakeholder in an operating uranium mine.
As a base case, Quasar expect to mine 3Mlb pa at a cost of $39/lb. This is generally believed (on this forum and by AGS at least) to be extremely pessimistic. At the current uranium price of about $50/lb, that's a mine profit of $33m pa, or about $8M pa to AGS. Put them on a PE of 8 (conservative given the long mine life), and that makes the market cap about $64m or a SP of about 19 cents.
Then I'll go to the other end of the scale. The AGS study estimated they could mine $5Mlb pa at a cost of $21/lb. Also, most projections are for uranium prices to trend upwards in the next few years given the deficit between global production and demand. So I'll arbritrarily choose $80/lb for this "best case" scenario. That's a mine profit of $300m pa and $75m pa to AGS. Now through my rose-tinted glasses I'll put them on a PE of 12, giving them a market cap of $900m and a SP of $2.64.
So there you go folks: my back of envelope valuation for AGS, as a hypothetical uranium producer, is somewhere between $0.19 and $2.64 :)
AGS Price at posting:
20.0¢ Sentiment: Buy Disclosure: Held
