Replies to post #443 on 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.

[box927]

Hi Gents

Thanks for the posts. Between the news release of July 27 and the news article it seems some info is getting out. Getting the Option Agreement out of the way was a positive thing IMO.
It has been 24 hours since I sent my e-mail and so far no reply. I guess this is not a surprise. If anyone has the time and or the inclination (plus it may not do any good) take a minute and send an e-mail. A little more pushing can't hurt.
[e-mail] I think we all agree that GBN is undervalued compared to its peers. I won't cry a river but I have been in this stock a long time and tend to get a little antsy about that fact.
If you don't mind I will do a summary of some of the points.

Ivanhoe/Hollister
- I assume the feasibility report will still be released Q2 2007.
- Underground drilling is ongoing - Somewhat regular updates should be expected.
- Completion of the decline - unknown but from the map in the June presenation is looks to be about 3/5 complete.
- Mining of 5000t bulk sample - unknown
- Start of production - Q1 2008, 96,500 oz/year to GBN plus sliding royalty

Burnstone
- Permitting is ongoing.
- Construction of exploration decline - unknown
- Agreement with Tanter - unknown but I think they are still waiting on government approval.
- Mining of 26,000T bulk sample - unknown
- Start of production Q3 2009.

General
- Directors Elliott and Kirk options expire on Nov. 30,2006 - Lets see if they get repriced.
- Secondary listing on Joberg stock exchange - I don't think this will do anything for the stock price. Comments???
- 3,333,334 more shares which were purchased at $2.25 will come free trading on Nov. 19, 2006 - I think these people are also long term investors for the moment. lol

The consolidation is the mining sector continues with Barrick making a hostile $1.4 billion offer for NovaGold Resources. This is a good thing and as GBN gets its ducks in a row someone may take a run at them. If that were to happen what would an offer be?? I am guessing north of $5 but I really don't expect it to have a chance of happening until GBN can establish a cash flow. Comments welcome???
Regards