Guys, while out for my walk this morning I got to thinking about what Lihir is really worth to somebody else. Back of the envelope calcs tell me that with close to 2 billion shares on offer around the World and a designated resource base of around 25m ounces of gold, even at a price of $US1000/oz and costs of, say, $US300/oz to mine the stuff you get a gross margin of about $8.75 per share. Include the necessary capex; sales and admin charges and you'll probably get down to $5 per share.
My point is .....what's the incentive to takeover Lihir if the island resource is fully delineated? Now, I don't know if it is, and there may be heaps of upside in Ballarats proven reserves.....I don't know. All I'm pondering (in the simplest of terms) is why would I takeover a gold company for $5 to $6/share in todays dollars when it's already priced at $4 when gold is trading at $US730?
Anybody got an opinion?
LGL Price at posting:
0.0¢ Sentiment: Buy Disclosure: Held
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