LSG's cost is less than $800 / oz in 2013 (based on prior posts). Gold is about $1,700 right now, leaving about $900 / oz potential profit. Let's presume it stays there and does not drop to $1,000 again or skyrocket to $2,500. (I would bet on the latter.)
I cannot recall the cost of infrastructure at LSG's mine, but I believe it was $250,000,000. I really cannot recall for sure. That is VERY relevant, whatever it is. I would not expect EXS to build a mine, but it is relevant in terms of how interested a major would be.
1M oz (what we have now) ---------------------------- 1M oz - $900,000,000 in profit (based on $800 cost at $1,700 Au) 10 year LOM (life of mine) - $90M profit a year 20 year LOM - $45M profit a year
1.5M oz (what we soon hope to have) ---------------------------- 1.5M oz - $1,350,000,000 in profit 10 year LOM - $135M profit a year 20 year LOM - $67.5M profit a year
3M oz (what we hope to have by the end of 2013) ---------------------------- 3M oz - $2,700,000,000 in profit 10 year LOM - $270M profit a year 20 year LOM - $135M profit a year
30M oz (believed to be the potential for the deposit) ---------------------------- 30M oz - $27,000,000,000 in profit 10 year LOM - $2.7B profit a year 20 year LOM - $1.35B profit a year
So, with all of that (mostly) utter nonsense said, if CD is right, and we are sitting on top of a 30M oz deposit, what do you think a major would pay for it?
Even $2 seems cheap. $2 * 180M shares = $360M market cap
From a recent interview with Rick Rule, he stated investments in the current market need a 3 year payback to interest him. "We would rather see you do something that generated a 30% IRR with reasonable amounts of capital where you pay back the capital in three years." - Rick Rule, http://www.theaureport.com/pub/na/14773
Let us be modest then and consider a few things. If we look at a 1.5M deposit at approximately $135M in profit a year, that would mean they could possibly pay 3 years of that less the cost to develop the mine. 3 * 135M = $405M. If the mine costs $500M to create, well... that does not paint a rosy picture here. If we are looking at a $250M mine cost, it may be worthwhile. This is why the cost of the LSG mine is very important. (Can anyone help here?)
If we bump it up to a 3M deposit: $270M profit a year * 3 years = $810M $810M - $250M mine cost = $560M purchase $560M / 180M shares = $3.11 / share $3.11 / 0.11 (today's closing price) = 2,827% gain
This is all exclusive of something happening at Kidd Creek, which is what I am really watching. My expectation is that Kidd Creek will steal the show, in the end, but that is all completely speculation.
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