Buyout vs Mining
posted on
Aug 10, 2012 02:56PM
(Edit this Message from the "Fast Facts" Section)
What's attractive to me about this play is the difference between SFMI and all the other junior exploration plays. Of course the absolute key here is positive drill results and the ability to fund activities through harvesting the dumps. If we can produce some sexy drill results from inside the mountain, the entire gold universe will be deadly focused on our little mountain. Majors will be drooling to buy us out or JV with us. But at that point, why on earth would we sell? Why has SF built out the mill and the surrounding infrastructure?
A buyout, in the best of circumstances would pay us $1000 an ounce in the ground, but only for the ounces we could prove: as in the Andean buyout in Argentina by GG. They paid $1000 because they knew there was more than what had already been proven.
But at the point of discovery, all SF will have to do is to truck the ore to the mill and harvest the gold and silver at market prices. We'll be a cash volcano. SFMI is not your typical explorer. We are virtually a producer already. A few good drill holes and the market will realize the difference between a geologist out in some "Moose Pasture" (as Sinbob likes to call it) and a bonified mine and mill operation ready to ramp up with some ultra high grade ore pouring through it's wholly owned mill.
It's hard for me to imagine what kind of frenzy will occur in our shares. The infrastructure we have in place would be worth a quarter billion, conservatively, if we had to start from scratch. The marketplace will take care of the share price, I am sure. I don't understand why we would build out the mill, just to sell it to a major that would probably knock it down and start all over anyway. My thinking is that the Q's want to mine this themselves and reap the full reward of this beautiful mountain.
Of course, money talks, and every man has his price. But to my way of thinking, that price is way higher that $7 or $8. Especially if WEM can give us some juicy drill holes. We're looking at a turn-key operation in a mine friendly district. Nothing like that anywhere else in the world, as far as I know.
But what do I know?
See you at the show,
Ag