As the old saying goes: “if my Aunt had balls she’d be my Uncle.”
Lots of ifs but the $20M is always a possibility. I’d put the odds of achieving 30gpt average ore over any sustainable period at less than 5%. But a 10-15gpt is probably over 50% so, somewhere in the middle.
Beyond the grade is the cost. Even if you assume another crew, additional equipment, I don’t think I’ve ever seen a mining operation of this minute scale able to achieve an ASIC below $1300oz. Yes, the higher grade helps considerably but this is still a blast and mine operation which is barely mechanized and then requires the additional, expensive, steps of transport and toll milling.
If they can mine with a $400-$500 per ounce margin it would be commendable.
Lastly, if they overcome all the odds that I’ve laid out, and are able to achieve $20M in profits in a year, the question becomes: can they do it again? BB references this 30 P/E average valuation (which is way too high by the way) but any P/E in AUMC’s case is not relevant. Forward multiples can only apply to mines that have a mine-life (estimated to varying degrees). Without resources or reserves every year becomes a “can we chase the vein successfully” exercise. While TheMiningPlay participants might be doing cartwheels, the actual market (more of my focus) isn’t willing to assign value by making a bet on that exercise each year.
This being said, there are a lot of pseudo “mom and pop” operators who never develop a mine plan and do just fine by allocating a portion of profits to their pockets and the balance to continuing operations.
I think there is a considerable window for the company to execute, prove the naysayers wrong (or right) while investors looking to establish or add to their position can do so at these levels. Maybe until the next or next or next binary event. We’ll see.