I had run some numbers and a risk free valuation just prior to the Chinese offer but was abruptly put off from considering any investment at that time not just because of the nature of the Chinese offer but also because management were actually considering it for a while there.
Revisiting it now on yesterday’s announcement, I’ve a risk free valuation and sensitivity analysis on the first stage development as below;
I wouldn’t contemplate buying into a junior gold mine start-up with greater than a five or six year payback and thus I have no focus or interest in second stage development economics at this time, each to their own risk management approach within this sector.
NTL Stage 1 Risk Free Valuation |
Gold Price |
$1,000 |
$1,100 |
$1,200 |
$1,300 |
$1,400 |
$1,500 |
$1,600 |
$1,700 |
Valuation |
0.5c |
0.8c |
1.2c |
1.6c |
2c |
2.4c |
2.8c |
3.1c |
Basis: WACC 13%, PG at FY20 3%, 32,000ounces extracted over five years at US$750/ounce.
Risk aside, it seems priced to perfection about here ?
If anyone has alternate analysis I’d be interested in comparing notes with others as usual, online or offline ?.
many regards, Mac