Understood - my model is based on the next 22 years not today's fluctuations.
The all in cost to produce an ounce of gold including:
Buying the equity, driling/site work and permitting, huge upfront capex (this is a scale game), and ongoing Opex equals an new ounce of gold costs probably close to $1,600 per ounce. In the short term, some of the world's greatest hedge fund have been getting crushed in gold like the Paulson's and Baupost's of the world. So this create forced selling and the migrating momentum herd has moved on to greener pastures. Last time I checked, Central banks around the world are still printing trillions of dollars. So if you compare the total amount of fiat (or paper currency) to existing gold, we are not anywhere close to the 1980 highs. I believe the physical gold compare to paper currency peak at 2.5% - we are at around 1%. Gold maintains purchasing power and the cost to finding new gold are increasing 10% - 20% per year given the lack of financing, acute labor shortages, and lack of mining equipment.
A competent management team could make this a $10 stock......That's a big "if" at $4.20 - the risk/reward is in your favor -despite this clueless management team. If you are afraid then sell and buy treasuries.
Models are only good if the numbers that you plug in are meaningful. I had a very good one that is pretty complete and estimate monthly cash flows, financing flows, tax rates, depreciation, mining costs, etc. The only big variables should have been commodity prices. It is not that hard to build a mine and to operate one and to know what your production is going to be barring major accidents.
Problem is that the numbers that I plugged into the model that were published by the company and iterated as to their validity under direct questioning turned out to be false. Very false.
They lied directly. They published numbers and estimates that bore zero relationship to reality. They have deleted the old presentations from their website, and the podcasts of earnings only go back 6 months, but I have copies of all the relevant stuff.
In retrospect the risk in this company has purely been about the management and their false presentation of the factual state of the company, its projects and its finances. There are securities laws in place whose intent is to keep that from happening. Unfortunately here that did not deter them from making stuff up and presenting it as real.
The risk going forward, in addition to commodity prices, is now legal, in addition to the ongoing false conveyances.
CEO spoke of mining equipment costs in the cc presentation. with CHina, India and Brazil slowing down those costs should be coming down, not going up. He also stated there are more folks working the mines with reduced demand thus leading to higher costs. If that's the case then you hold off on the project rather than shell out 12.5%. After this "deal" TC owes me a life time supply of Prep H.