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Re: TEFFY post# 30677

Monday, 10/07/2013 8:43:26 AM

Monday, October 07, 2013 8:43:26 AM

Post# of 91706
Sure ....

What is your "ideal stock"?

Obviously it would have a rediculously cheap price. A conservative valuation of the company would be 10x higher than the current price.

It would probably also have huge upside potential (20x upside or more).

Perhaps it would be backed by a billonaire, renowned for his investment acumen.

Maybe it would also be backed by a leading merchant bank who specialize in the industry.

In case you haven't guessed, I'm not just dreaming. I'm talking about: Bullfrog Gold (BFGC)!

I believe BFGC is the most undervalued gem on the market today. Bar none.

Here's why:

1) One of Bullfrog's key financial backers is Philip Frost (http://en.wikipedia.org/wiki/Phillip_Frost)

Phil Frost is a legend among smallcap investors, known for his ability to get in very early on big growth stories.

Oh, and he's worth about $5bn (Forbes estimate).

Ask yourself: Why would such a big player get involved in a company with a $14m market cap.

Mr Frost makes charitable donations bigger than this entire company.

I believe he's involved because he sees the same huge upside I see...


2) Bullfrog is backed by Rand Merchant Bank.

Unless you're in the mining industry you've probably never heard of Rand Merchant Bank.

But believe me, they're the Goldman Sachs of the mining industry. And having them back your company is like having Goldman Sachs do your IPO... It's a major stamp of approval from the industry experts.

In December, Rick Winters (President of Rand) led a deal team through a substantial amount of due diligence on Bullfrog resulting in a $4.2m credit facility to fund Bullfrog Gold’s Newsboy project.

This was a huge de-risking event that was largely ignored by the market.


3) Bullfrog's Newsboy project worth $70m?

In a recent interview, Mr. Winters stated that he believes the Newsboy project could be worth up to $90m.

It appears that RMB think that the Newsboy project alone could eventually be worth close to $2/share. To better understand the $90m NPV figure, I developed my own financial model for the project, effectively backing into RMB’s prospective valuation.

Then, I risked that valuation by incorporating a lower gold price assumption and a 7% discount factor instead of 5%. With these changes, my calculated NPV is approximately $70m.

Rough Value: $70m


4) Big upside comes from exploration projects:

The way I see it, the big upside in BFGC is from their exploration properties.

Bullfrog Gold Corp owns two key exploration projects: The Bullfrog Project (BF Project) and the Klondike Project.

Valuing the company’s Bullfrog and Klondike projects is admittedly more art than science.

Here’s what Bullfrog CEO Dave Beling had to say about the Bullfrog, “BF,” project,

“While the Bullfrog Project does not have drilled resources, it is strategically located adjacent to Barrick Gold’s mine from the mid-1980s to late-1990s. In total, roughly 2.3 million ounces of gold at an estimated grade of 0.081 opt was mined. As the mineral trends and structures mined by Barrick are striking to the North East on to Bullfrog Gold’s property, the value of this project has the potential to be substantial.”

In other words, the BF project is elephant hunting. If they strike here, it's likely to be a big, big win.

Gold Prices Today are 6x Higher Than in 1999!

What's the value of the exploration projects?

Corvus Gold’s "North Bullfrog Project" is quite close to Bullfrog Gold’s BF project.

Conservatively assuming that Corvus Gold’s North Bullfrog project is three times the size and three years ahead of Bullfrog Gold’s BF project, the BF project has substantial potential value. Corvus Gold’s North Bullfrog NPV (7.5%) is $186m. Dividing that figure by 3 equals $62m. $62m discounted back three years at a conservative 15% discount factor is $41m.

Rough Value: $41m


Valuation Summary:

So how much might BFGC's basket of projects be worth?

Simply ascribing an arbitrary but not crazy valuation of $40m for the combined Bullfrog and Klondike projects and $80m (midpoint of mine and RMB’s NPVs) for Newsboy, that equates to $3/share.

It’s difficult to say what the appropriate discount to my $3 figure should be.

Needless to say, at $0.32 there’s tremendous room for upside and a price north of $1 by year end seems very reasonable.

Do your own research on BFGC. This company stands on its own, go search Google or SeekingAlpha or Youtube. There is plenty of stuff out there.
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400k budget.

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