Hey Gang, a mate put me onto BGL a few weeks back, and after a quick deposit valuation based on inferred it was a no brainer. We are genuinely miles off a reasonable valuation for the asset and potential earnings based on todays gold price.
Using the most recently published all in sustaining cost standard (AISC) i could find, the average for large producers is USD 900 per ounce (end of 2019). This includes capital outlay and running the office. With todays gold price of ~USD 1700 per ounce, this leads to a profit of ~USD 800 per ounce, or AUD 1200 per ounce. Assuming 95% recoveries, this leads to AUD $2.5B profit on the 2.2Moz resource, even accounting for capital and opex. Assuming a 10yr mine life and average thorughput, that is $250m per annum profit.
At a P/E ratio of 10 this would equate to $3.70 per share, at a P/E of 15 it is $5.50.
I think this is a conservative AISC given the previous development/roads etc into the area, and costs are likely declining further given current deflationary inputs such as wages/oil etc, and the inflationary pressure on gold from stimulus.
Furthermore no accounting for increased resource which is likely, and no allowance for M&A to expand with all that free cashflow.
Seriously considering selling my children.
Please challenge/counter/correct, just a 10min conservative valuation here. What are your thoughts?
References below:
https://www.spglobal.com/marketintelligence/en/news-insights/latest-news-headlines/large-gold-miners-saw-declining-costs-in-q4-19-lifting-profit-margins-57672395
https://s23.q4cdn.com/685814098/files/doc_presentations/2020/05/08/marketingMay82020.pdf
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Last
$2.03 |
Change
0.030(1.50%) |
Mkt cap ! $2.390B |
Open | High | Low | Value | Volume |
$2.03 | $2.06 | $2.01 | $7.893M | 3.882M |
Buyers (Bids)
No. | Vol. | Price($) |
---|---|---|
10 | 178236 | $2.02 |
Sellers (Offers)
Price($) | Vol. | No. |
---|---|---|
$2.04 | 77587 | 9 |
View Market Depth
No. | Vol. | Price($) |
---|---|---|
2 | 14318 | 2.010 |
4 | 19668 | 2.000 |
1 | 4318 | 1.995 |
2 | 19318 | 1.990 |
2 | 6818 | 1.985 |
Price($) | Vol. | No. |
---|---|---|
2.040 | 23430 | 4 |
2.050 | 11651 | 5 |
2.060 | 46952 | 4 |
2.070 | 45195 | 6 |
2.080 | 80602 | 8 |
Last trade - 16.10pm 12/07/2024 (20 minute delay) ? |
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