European Gold Share Discussion Threads

[azalea] 24/11/2006 08:31

Who could be selling as the p.o.g. starts to take off as the $ falls?

[azalea] 23/11/2006 16:22

Currently I'm looking for and watching a weakening $ and eventually a correspondingly higher p.o.g., which should give an added boost to most miners actually in production. If, the forecast by OPEC president is born out and a further cut its production is announced, it should give a boost to the p.o.g.

[rambutan2] 23/11/2006 13:33

i don't do price targets, and am a bit of a pessimist, BUT would expect us to go over £3 at some stage next year, and wouldn't be at all surprised to go over £4. whatever, we are heading up.

[maxim1999] 23/11/2006 13:17

Cashflow positive on one mine..I assume with Greek GDP in such poor shape and with some care taken on the Ecological side of production the other 2 mines will be given their licences....therefore seems once that happens £500m market cap does not seem unreasonable my guess is 450p for Q3 07...anyone else want a stab?wassapper, rambutan2?

[azalea] 22/11/2006 16:02

Based on the write up in the recent S.Tel 'buy recc' - the most pessimstic broker giving a tgt price of 220p and most the optimistic 290p, for 2006,I would guesstimate 350p+ for 2007, IF not taken out before hand!

[maxim1999] 22/11/2006 13:41

AZ what is your target for end 07 for EGU?

[azalea] 22/11/2006 13:30

1x250k& 1x270k buys as the $ falls 1.16cts against £ and p.o.g. rises. I'm looking for $1.95 - 2 v £ and p.o.g. $675, by end of year. EGU 225-40p

[willyworm] 22/11/2006 09:35

The USD37Bn is the value of the combined companies = USD26Bn for PD and USD11Bn for Freeport

[wassapper] 22/11/2006 08:31

Other stories I have read show the bid as $26bn as opposed to the $37bn as reported by Minesite. That gives a per tonne value of $1,040.

For EGU that would translate to $1.24bn - for the copper alone.

Good news, more sales. Had a chat with David Reading yesterday, he is buoyed up and "quietly determined".

[azalea] 21/11/2006 14:46

Gold up @ $626.5.

[mattybuoy] 21/11/2006 13:42

That is a truly astonishing price which Freeport is paying for PD. Doubtless there are various "strategic" reasons for it beyond the simple maths relating to reserves though.

[wassapper] 21/11/2006 09:01

Well done rambutan. Go the the top of the class and add a gold star to your chart.

The rest of you should be ashamed!

[rambutan2] 21/11/2006 08:53

and that's only the copper.

whatever, it shows that egu is undervalued by some margin.

and i'm with wassapper on the dcf debate.

[bangor] 21/11/2006 08:41

Let's take this to the logical conclusion. This means the share price should (as we're rounding up)... quadruple.

[rambutan2] 21/11/2006 08:32

me sir!

i'll round it down to a nice neat $1.5bn ie £800m.

[wassapper] 21/11/2006 08:15

This is an interesting article to add to the debate. Did someone say we had 1,191,000 tonnes of copper? (the answer to the question at the end is c$1.76bn and I eagerly await the response about economies of scale etc) ...

How Much Is Copper Worth In The Ground?


By Rob Davies



Metal prices might have eased off a little last week, but it hasn't stopped corporate financiers from putting together mining deals. The most recent one is the takeover of Phelps Dodge by Freeport-McMoRan for US$37billion in cash and shares. Phelps was vulnerable after it failed to rescue Inco from being bought by CVRD in the summer and it hasn't made the most of this bull market because of poor hedging.
These deals are always interesting, apart from the potential to make money, because they put a definitive valuation on assets which do not come on the market very often. Here, the key assets are mines and the reserves that go with them. Valuing mines, particularly producing ones, is a combination of valuing the cash flow and the ore reserve. But you can't get one without the other. In the case of Phelps Dodge it last published its ore reserves in its 2005 accounts and, on a quick calculation, amounted to 25 million metric tonnes.

Taking a copper price of US$6,000 a tonne, a slight discount to current prices, that gives a gross value of US$150,000 million to that metal in the ground. Freeport has agreed to buy Phelps Dodge for US$37,000 million in cash and shares or roughly a quarter of the gross value of the metal. Put another way, it is paying about US$1,500 a tonne, 70 cents a pound, for metal in the ground which it then has to mine, process and sell. ... more ...



And the question is: "If Phelps has 25 m tonnes of copper and is valued by CVRD at $37bn, and EGU has 1.191 m tonnes of copper, on a pro-rata basis, what is the value of EGU based upon copper alone?"

[chipperfrd] 20/11/2006 18:10

Thank you Maxim, very interesting, although not surprising!

[maxim1999] 20/11/2006 16:35

EUROPEAN GOLDFIELDS (EGU.L - BUY) - PRICE/TARGET: 194p/290p: White times article
indicates Barrick may be interested in acquiring EGU for a mooted £250m. This
would equate to just 220p per share. Importantly the article also indicates
several other 3rd parties could be interested in the Group's high quality well
located assets. We believe any offer would need to be at least at this level
with a possible premium added to take account of additional exploration
potential in this region, which we have not valued in our model.



This news highlights the attractiveness of EGU's assets and growth potential.
The Group has (i) material, high quality (measure & indicated) resource and
reserves (ii) substantial growth opportunity from the pipeline of projects at
Olympias, Skouries and Certej (iii) is experiencing a rapid decline in financial
risk having now moved into profit, and (iv) has low risk, European based assets
that are situated in regions of geological interest being located in the
Serbo-Macedonian Massif (note Rio Tinto for example are exploring neighbouring
Serbia for copper/gold porphyry systems).



We have a SOTP derived target price of 290p. In addition, on a gold equivalent
basis, at current spot prices, we believe the shares appear extremely attractive
trading at less than $20/oz versus peers on over twice this level. On such an
attractive valuation the award of final mining permits, which are progressing on
schedule for mid 2007, could be the final hurdle that will make the Group even
more attractive to cash rich third parties.

This is from Evolution if anyone cares

[rambutan2] 20/11/2006 16:30

they presenting at mines and money tomorrow.

[azalea] 20/11/2006 15:34

Topped up with another 1k, on the suspicion that the $ will continue to weaken significantly on into 2007 causing pog to rise accordingly.
Irrespective of any bid rumours, the current cranking up of production should coincide with that rise; any other boosts (licences, et al) will only add to the pressure pushing up the share price as the results draw near.

[caiman27] 20/11/2006 12:07

Due by Q3 2007 according to the company

[buffin] 18/11/2006 22:49

Any thoughts on the timescales for the Greek licences or have we already covered that?

[maxim1999] 18/11/2006 08:47

Unofficially I hear that the first price the co would even contemplate to sell out at is 350p!!!!But I recon that the co is bid proof until they have the Greek licenses as any buyer would not want to buy before then and by then they would be 350p anyway...so you get a premium to that anyway!!!!!!!!!!

[novicedave] 17/11/2006 21:43

wassapper- have you actually done an NPV analysis?

All i have seen from you is NAV calculations (based on in ground metal prices).

[wassapper] 17/11/2006 20:08

Great. I look forward to seeing the analysis.

280p is about £320m or $570m. These assets are worth a whole lot more than that on a NPV basis. Reading has already got the drills going to increase those reserves and resources. The bids better come soon before they are compliant and added to the total.

His production forecasts are also very conservative.