With the updated estimate for Four Mile northeast I thought I'd throw some figures out there for people who may have just noticed AGS due to the recent move.
AGS are the 25%* owners of the Four Mile mining lease. *this is decreasing to 15% over 2015 on the basis that AGS are no longer contributing to operating costs. There has been some discussion on HC that this decrease may not happen if they win the current court action (because it was stated by one of the legal representatives in court), but this hasn't been confirmed by the company. On the other hand they have indicated that they are in disagreement with Quasar over what portion of the lease is involved as well - i.e. is it the original resource, or the whole lease? So bear this in mind for the following, where I will use 25% as AGS's share for simplicity.
The JORC resource for Four Mile East and Four Mile West is 71 million pounds. AGS have just released an 'exploration target' for Four Mile Northeasy of 70-80 million pounds. This isn't currently JORC compliant, but the FMNE resource is pretty much continuous with FME and FMW with similar grades and depths, so there's no reason to think it won't be similarly economic.
If you assume a total resource (and this is excluding any of the massive exploration potential of FM) of 150 million pounds of uranium, then AGS's share is 37.5 million pounds. At a spot price of US$38.5/lb, this has an in-ground value of $1.85 billion, and at a long-term price of US$49.5/lb, it has an in-ground value of $2.38 billion. This gives a bit of an idea of the values we're working with, although the in-ground value is of little relevance to the company price.
In a very recent example (a couple of weeks ago) Vane Minerals sold its 50% stake in the Wate breccia pipe uranium project for US$1.75 million. Given that their share was 0.55 million pounds, this equates to $4.08/lb. I happen to think that economies of scale would make Four Mile much more valuable (total project of 150 million compared to 1.1 million), but even at this low price, AGS's share would be worth 37.5m x $4.08 = $153 million, or about 40 cents per share.
Or take Paladin as another example. They sold 25% of their operation early last year for about $6.5-8.5/lb, depending on what numbers you believe. So that would value AGS at $243m-$318m, or 65-85 cents per share.
It's an older example, but in late 2011 Hathor Exploration sold their uranium resource of 58 million pounds to Rio Tinto for US$578m, or about AUS$12.8/lb at current rates. This would put AGS's share of Four Mile at $480m, or $1.28 per share.
Food for thought eh!? I'm not surprised the offer was rejected outright by the board, and wonder why AGS's current market cap is under $40 million.
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