Great Basin Gold Ltd. (fka GBGLF)

[OriginalFred]

My favorites: RNO, AUY, GLE (and GBN, of course)

I mentioned these stocks earlier, and I think it is only fair that I explain why I think these stocks represent excellent value.

RNO - Rio Narcea
Price: $1.89
Shares: 198 million
Market cap: $374 million
Aguablanca nickel mine producing 14 million pounds per year at a cash cost of $2.86 per pound including credits for other metals.
Nickel is currently around $12 per pound.
http://www.kitcometals.com/charts/nickel_historical.html
14 million pounds x $9 /lb = $126 million profit.
Overhead is around $23 million for a net profit of $103 million per year.
The catch is their copper hedge that counts against their earnings every quarter that copper goes up. Copper was up from $2.46 at the end of Q1 to $3.35 at the end of Q2. There should be a derivative loss of (3.35-2.46) x 21.5 = $19 million. I expect this will cancel out all their nickel profits for the quarter. The company delivers 2.5 million pounds on the hedge per quarter, so the hedge will not be completely gone for 2.5 years.
They also have the Tasiast gold mine coming on line in 2008. They expect 105,000 oz/yr at cost of $240 per ounce.

AUY - Yamana
Price: $9.70
Shares: 294 million
Market cap: $2852 million
They expect 800,000 ounces of gold in 2008 at a cash cost of $35 including credit for copper production.
800,000 x $600/oz = $480 million. Subtract around $30 million for overhead for a net profit of $450 million. Note that this needs to be discounted somewhat for the 2 year time frame, development costs, and probably some dilution.

GLE - Glencairn
Price: $.55
Shares: 228 million (could use a reverse split)
Market cap: $125 million
They have already entered production and expect 100,000 ounces per year at a cost of around $327 per ounce.
100,000 x $300/oz = $30 million. Subtract around $15 million for overhead for a net profit of $15 million.
This does not include the mines recently acquired from Yamana.