WWI versus PEERS, page-2

WWI versus PDI (Predictive Discovery Ltd)


PDI
- Main project: Bankan Gold Project in Guinea.
- Resource : 5.5mil oz
- Resource average grade: 1.66 g/t
- Time to mine development: probably 2 years (guestimate)
- Target production: 250k oz per annum
- Capex requirements: USD $463mil
- AISC = USD $1057/oz
- MC = USD $1.127bil






WWI

- Main project: WBP, 15km from Johannesburg, South Africa
- Resource : 5mil oz
- Resource average grade: 4.66 g/t (2.8 times or 180% higher grade than Bankan's resource average grade)
- Time to mine development: ongoing. Now.
- Production target:
> Stage#1: 70k oz per annum
> Stage#2: 200k oz per annum
- Capex for stage#1: based on peak funding requirements of USD $43mil at gold price of USD $2200/oz and is expected to be significantly lower, probably USD $25mil-$30mil under the revised DFS due out next few weeks.
- Capex for stage#2 production of 200k oz: funded by cashflow from stage#1 production + existing banks.


My thoughts:

- Sovereign risk: South Africa versus Guinea. Day versus night comparison when it comes to sovereign risk. I am sure many investors are aware of coups, civil wars, conflicts,...that have been going on in Guinea over the last few years.

- WBP's resource is 5mil oz at 4.66 g/t while PDI's Bankan project's resource is 5.5mil oz but at much lower average grade of 1.66 g/t. If WWI was to reduce its cut-off grade to such a level so that its average grade becomes 1.66 g/t like Bankan, I think WWI's WBP resource could easily be in the range of 10mil oz - 15mil oz. Of course WWI won't need to reduce cut-off grade too low to chase the number. All it needs to do is to bring the average grade down to 3 g/t from current 4.66 g/t and its resource can become 7mil oz. So, in short if WBP was matching with Bankan's average resource grade of 1.66 g/t, WBP can have at least 10mil oz compared to PDI's Bankan of 5.5mil oz.

- Capex: USD $430mil (and could well be over USD $500mil in 2-3 years time) is way way more challenging than WWI's 2 stages of production with such a tiny estimated USD under-$30mil peak funding requirements in the revised DFS and stage#2 production mainly funded from stage#1 cashflow. Much easier to do for WWI to target 200k oz. WWI's major advantage is having historical mine shaft and all the main infrastructures in place and only need 2-3 months of minor refurbishment work at tiny costs to get to mining instead of 1-2 years mining construction for Bankan to get into actual mining.

- Time to mining: 2 years for PDI if lucky. It can potentially take 3-4 years. Bank funding, CR, mining permit, enviromental permit, contractors for so many bits and pieces including water, energy, roads, trucking,...can take a long time before all can be locked in. 2-3 months for WWI to get to mining as work on site has commenced.

- NPV: yesterday or the day before i showed my work that WBP whole project should have a NPV of around USD $2.94bil at gold price of USD $2900/oz at 7.5% discount.

PDI gave the market a NPV of USD $2.9bil at superficial low discount rate of 5% (WTF!) and at gold price of USD $3300/oz. Wow, wow, wow. 5% discount rate is just simply ridiculous and out of whack. Most projects use 8%-10% discount rate. If we applied 5% discount rate to WBP's NPV and use gold price of USD $3300, I think think WBP's NPV would be more than USD $4bil.

So, PDI is currently valued at $1.127bil and WWI is valued at $66mil. I think WWI's MC should be higher than PDI's MC especially given WWI is commencing construction/refurbishment now and is ready for mining in just 2-3 months and also especially its CAPEX is so low to start off due to historical mine shaft and infrastructures already in place, while technically WWI's resource is double that of PDI's Bankan project's resource. In fact every aspect of WWI's project is better than PDI's Bankan project in my opinion.