Not sure what has happened beside the hit piece by Hocking, but I noticed some negative sentiment from the last few posts. I would respect those personal opinions, but there are many ways to look at PRB situation. A more positive way to look at the situation would be to consider the following items:
1. Perhaps, Dave did not forsee the potential negative reaction from investors when he switched model with more emphasis to the HGZ as an UG operation. He left quite a few Moz in the LGZ outside the "new" and smaller pit design. But the total resource is still there, some 7Moz (up to 2600mSE). It should be noted that with a COG of 2.5gpt the HGZ for UG operation has over 2Moz of high grade Au (@ over 5gpt, which would be considered quite good for a UG operation). People tend to forget what has been left out from the model (around 3Moz of reasonable grade, ~1gpt). This resource will be available for an economical open-pit operation when the POG continues to improve. That 3Moz is not going anywhere, and should be kept in the back of our mind.
2. Similarly, the chromite in the RoF has a significant value, but this not been given any credit by the market. It's still there waiting to be monetized when there is an opportunity to do so (forming a JV with NOT and/or KWG, or sell it for money ~$100M = ~$1.3/s, which is quite reasonable compared to Spider TO price was $125M for a portion of BD). So, there is a potential of $1.3/s, which is about 50% of curent shareprice.
3. ~$30M Cash (~$0.40/s): which tends to be ignored by analysts with a pessimestic view.
4. Boden Gold is still open in the SE and SW directions, hence an increase in resource estimate would be expected.
5. East Limb potential for additional discovery.
6. Goldex is making profit with its UG operation at grade ~2gpt.
7 TO price for TRR Cote Lake by IamGold was $608M for approx 6 -7Moz of low grade (less than1gpt). Assuming the same TO price for PRB Borden Gold, it's value would be ~ $608M/76Ms = $8.00/s (ignoring the $130M cash and BC chromite, these two would be worth $130M/77M = $1.71/s, i.e. almost $2.00/s).
In summary, if these fundamentals are considered then I would say the $0.50 target by Hocking is way off-based (some would call that a joke, just compare his target to the cash component below).
We have not seen Hocking new analysis, but a recent report by Europacific (7 July 2014) has a target of $4.0/s.
Note the cash component alone is ~$0.40/s, adding chromite to that would bring this up to near $2.00/s. If the 7M+oz at Borden is credited at a similar TO price for Cote Lake, then we would be looking at ~$10/s. The East limb and anything over the current ounces would be gravy on the top.
I feel comfortable with my investment, and will wait for this to unfold. $10 is not bad a number to aim for, but this is only my opinion. Each person his own.
goldhunter
