Take physic, pomp

The sum of parts at Argonaut Gold (AR.to)

To give an idea of how badly Magino has gone for this company:

  • Shares out: 332.75m
  • Share price today: C$0.82
  • Market cap: C$272.9m, or U$210.1m at today’s forex
  • Book value: U$882m
  • price/book ratio: 0.24X

That’s a producing gold miner with three working assets, ladies & gents. And even if we back out the net book value for Magino as at the last financials, U$683.1, we’re left with U$198.9m. That’s the market cap for three working gold mines which returned an aggregate gross profit of U$21.7m in the last quarter, plus a company that still had working capital of +U$140m as at last quarter end.

Or in plain English, AR.to could sell Magino for One Dollar* and, as long as the buyer takes away the liabilities attached to this all-time White Elephant, AR’s share price would double overnight. But of course that’s not gonna happen because AR.to is run by miners and not businesspeople. They surely feel duty-bound to “…build the thing…we’ll show ’em all, this is what we do, we’re professionals darnit eh...”. It’s Randall Oliphant’s New Gold and Rainy River all over again. Where is Larry The Liquidator when you need him?

*Billy Ray Valentine

1 Comment

    Agree with you financial perspective. The flip side is that the duty bound mining company in selling an asset prior to turning on the power is basically saying that beside having a poor track record for project definition and CapEx estimation, they are also unable to operate a constructed site?


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