It should be noted that much of that estimated gold production comes from a mill that we do not yet have. The heap leach should always be the bread and butter of the operation but high grade ore, of which Mexus has a considerable amount, needs to be milled for optimal recovery. According to old PRs the current mill has a capacity of around 80t, probably half that is a comfortable running rate.
So even if they stack 15k a day on the heap, the mill capacity will be below what I suggested might be possible in that particular scenario.
These updated numbers are slightly lower (and higher) than my napkin. Yet overall this is excellent news because 15k on the heap produces almost as much gold as the previous combined numbers. If you add a decent 150t-300t mill on top of that we could potentially do 6-800 oz a day, making Mexus holders absurdly wealthy. No matter how conservative I attempt to be I always seem to end up at that last statement.
Current Conservative "full" production rate:
15kt/ day 80% ore 12k to leach at 1.75 gr/ 1.25 recovered 482 oz
40t/d mill at .5 oz/t 20 oz/day
500 oz/day x 340 days = 170k ounces/ year.
The start up rate might be closer to 50% cost but all the project merits make this unlikely to persist in the long term imo especially as the crew becomes more familiar with the operation and make optimizations over time.
-50% cost 250 oz leaves another 125 each which gives us 42500 oz x $1330 for $56,525,000 x P/E of 10 is $1.05 at 530m o/s. For many mines to make a 42.5k oz profit they would have to mine and process several times the amount of material, lots would do 5-10x the amount of work that Mexus has to in order to earn a similiar amount but much lower % margin. Even lowering the expected ore grade to 1.5 gr/1.05 rec this is still over a 100 oz a day in profit - which is mighty similiar to the 300 oz/day number that gets us into the realm of six figure gold production and more "fun" valuations, ie the GORO round billion/100k in a bull.
As soon as Mexus makes its first profitable ounce you can now apply an additional calculation to our fair value. A profitable producer should be worth at least 10% of its measured and indicated resources, 5% of inferred, and 15% of its proven and probable reserves. Mexus has no 43-101 (yet) but they will one day once they have the cash to more concretely outline what they have and expand it via drilling. If you believe as I do that Mexus has 2-3 million ounces of high grade ore at the minimum then what will an additional 300 million in potential market cap do for our valuation? That is almost .60/share alone just for a modest 1 year program to prove up what we already know is there. I left this out originally because we were already getting into the realm of what would appear to be fantastical. [Side note: A company like LODE that touts 3.2 million oz gold yet lost money on production has proven their deposit (at least at current prices) to be non economic. This means 3.2 million oz (gross value, billions, millions spent on drilling) is worth exactly zero until gold rises.] The 110k oz Mexus acquired today is worth maybe 1-3%, depending on the amount of data, but at the minimum Mexus appears to have gained several million in value just from that resource alone and production and further drilling will only multiply and compound this value over time (if successful).
One other thing that I would like to mention is about the P/Es I used earlier. Where we sit within a cycle will determine how much of that fair value we actually reap. In a bear market bottom some mining companies will trade at very low P/Es, often less than 1 (which is more than a tad ludicrous). A P/E of 10 is very fair and conservative and should be attainable in both a bear and a bull. By the end of a bull that P/E could easily expand to 15-25 or more without becoming overheated. I think that is reasonable as well for a mid tier producer. My point is that Mexus could begin 6 figure gold production and no one outside this circle will care... until they generate too much cash for the market to ignore. Mexus will probably begin at a low P/E and steadily increase that ratio over time. In the last couple bulls it was not uncommon to see juniors in the 100-1000 P/E levels by the end. Most juniors steadily spend money for their entire lifecycle until they either get bought out, go BK, dillute into billions of shares, or much more rarely, enter production themselves. So since most will never have earnings this makes any minor income comparatively valuable because this allows a company to self grow or at least not be wholly dependent on 3rd parties and captial markets that they have no control over.
There is a lot going on here, especially with recent updates. So draw your own conclusions, do your own DD, and maybe you will like what you see.
"I was seldom able see an opportunity until it had ceased to be one."
"A gold mine is a hole in the ground with a liar standing on top of it." -Sam Clemens (Twain)
So let's find some honest men and seize the golden opportunities that are glittering in front of our faces. Sometimes it is fool's gold but other times we would be fools to ignore that much gold!
