My calculation is more realistic due to the fact that I think Fung's answer to an important question at 31:33 is a not entirely correct.
"Crystallex has a contract to work the mine up until what date?"
Fung eventually said, "The 20 year period will start when we start building the mine.."
I'm no lawyer but if you take a look at:
http://google.brand.edgar-online.com/EFX_dll/EDGARpro.dll?FetchFilingHTML1?ID=5532521&SessionID=J3ivWFsgRboPzz7
It clearly states:
CLAUSE EIGHTEENTH
DURATION OF THE CONTRACT
1.- This Contract shall have a duration from its date of signature for a period of twenty (20) years, extendable for one (1) or two (2) periods of ten (10) years, previous agreement of the Parties, said extensions shall be notified in anticipation of the force of the Contract.
The MOC was signed on 17/9/2002 which leaves us with approximately 13 years left on the contract since then.
Given it would take 2 years to build the mine, we are left with 11 years that we can claim lost profits on.
KRY's EIS was appproved for a 20 tpd operation producing 250k oz /year.
So let's assume we produced for 11 years at 250k oz/year with no increase in capacity which gives us 2.75M oz.
Takign Fung's approximate of $100/oz in lost profits but using the above gives us a conservative $275M in lost profits due to unrealized gold sales.
Let's include the whole $350M invested so far and we are at $625M. This is not even close to the $2B Fung mentioned. But heck let's assume we are offered $625M in a settlement.
Assuming the recent market cap of approx $70M represents the value of KRY's assets (equipment/cash/etc) and that are outstanding liabilities are $130M.
$625M + $70M - $130M = $565M
Let's also assume that the recent award of 8M options dilutes our shares to 303M for the sake of this calculation.
We are left with approx $1.86 / share. In my personal opinion that would be the best case scenario for a settlement. I don't see that happening.
Given that we're dealing with VZ, a more likely outcome is that we'd probably get 1 times the invested amount or $350M. Then we are left with $290M or $0.96 / share.
Opinions?
