Hi groundswell, I assume there will be a 10,000,000 investment...

Hi groundswell,

I assume there will be a 10,000,000 investment for a CIL plant in year 0 (current year).

The following year 1 (2019) we will produce an average of 2000oz/month for the year and pocket $800/oz profit. We will also officially start production and thus pay back some of the royalty stream (I assume 8000oz), assume $500,000 working capital for UG equipment

The next year (year 2) the CIL plant is running and we reliable produce 4000 oz/month and pay back 10,000 oz royalty, assume $1,000,000 working capital for more equipment.

Year 3 we debottle neck and produce 5000 oz a month and pay back the last 10,000 oz of royalty (aprox) working capital reflected in no increase in profit margins from economics of scale e.g still only making $800/oz.

Year 4 all royalties are paid off and the same production of year 3 continues.

Year 5 and beyond not included as not enough drilling completed to suggest increased mine life (this may require significant capital)

Discount = 7%
NPV = 90,135,804
IRR = >35% and thus gets a tick
SP = 0.087 (my current fair value)

Key risks
1. Cash to make anything happen
2. Mine life
3. Global currency issues leading to government taking OGX's gold (forcing to sell cheaply to the central bank) as it has stable USD value vs a devaluing BRL

My numbers, my valuation, my opinion. Things can significantly uprate from what is calculated, based on exploration upside. I think I'm beginning to see this side but I won't add value to it YET...

GL