Check out this press release issued back on June 26, 2017 by IDM Mining a company that NIA's #1 overall stock suggestion for 2020, Ascot Resources (TSX: AOT), acquired earlier this year in a stock deal: https://www.globenewswire.com/news-release/2017/06/26/1119620/0/en/IDM-Mining-Announces-Positive-Feasibility-Study-Results-for-its-Red-Mountain-Gold-Project.html
Back on June 26, 2017, a feasibility study released by IDM Mining gave their Red Mountain project an after tax net present value (NPV) with a 5% discount rate of CAD$104 million and it was based on a gold price of USD$1,250 per oz. This same feasibility study said that if gold rose to $1,450 per oz, Red Mountain's after tax net present value (NPV) with a 5% discount rate would rise to CAD$156 million. Since acquiring IDM Mining, AOT has increased Red Mountain's measured & indicated resource by 34.1% to 782,600 oz, up from 583,700 oz at the time of IDM Mining's feasibility study! Therefore, it is likely that AOT's feasibility study will have an after tax net present value (NPV) with a 5% discount rate of well over CAD$200 million from Red Mountain alone and we're not even factoring in synergies that will greatly reduce the initial CAPEX of Red Mountain! (AOT already owns the Premier Mill located 20km away!)
When Pure Gold Mining (TSXV: PGM) released its feasibility study in February 2019 and showed an after tax net present value (NPV) with a 5% discount rate of CAD$247 million based on a gold price of USD$1,275 per oz, PGM quickly raised all of its project financing within months. PGM's feasibility study showed a probable reserve of 1,013,000 oz. NIA expects AOT's 1Q 2020 feasibility study to show a proven & probable reserve of over 600,000 oz from Red Mountain alone. Including Premier/Northern Lights, Big Missouri, and Silver Coin, AOT's 1Q 2020 feasibility study could show a total proven & probable reserve in the 1,500,000-1,800,000 oz range, in NIA's opinion!
Considering that PGM currently has an enterprise value of CAD$190 million with a probable reserve of 1 million oz, by AOT's 1Q 2020 feasibility study showing a 1.5-1.8 million oz proven & probable reserve, AOT will immediately deserve to trade with an enterprise value that is 50%-80% higher than PGM. This would give AOT an enterprise value in the CAD$285-$342 million range, which would value AOT between $1.23 and $1.47 per share! Even with a sideways gold price in the upcoming months, we expect AOT to rise between 92.19% and 129.69% from its current extremely undervalued share price of $0.64 per share!
If gold surpasses $1,600 per oz in early 2020, we believe AOT could reach a valuation in early 2020 of between USD$200-$250 per oz of its post feasibility study proven & probable reserve. If gold breaks $1,600 per oz while AOT's feasibility study shows an economically viable reserve of between 1.5-1.8 million oz, AOT could easily reach a valuation in early 2020 of USD$300-$450 million (CAD$395.7-$593.55 million) for a price of between $1.70 and $2.55 per share!
NIA's President has purchased 150,000 shares of AOT in the open market. Past performance is not an indicator of future returns. NIA is not an investment advisor and does not provide investment advice. Always do your own research and make your own investment decisions. This message is not a solicitation or recommendation to buy, sell, or hold securities. Never make investment decisions based on anything NIA says. This message is meant for informational and educational purposes only and does not provide investment advice.