Junior Golds P/E Ratios

Not much attention is paid to junior gold mining, simply because they don't fit with the metric used in the 1980's to measure out a viable mining prospect. But even the mid-cap explorers with huge, low grade deposits might not be a good way to play the gold bull market if they have to mill out 60,000tpd. The larger the mill, the less leverage to the gold price. This is true from the perspective that the large miners give you the lowest P/E ratio out of the gold miners.

Even the so-called junior gold ETFs are a swindle from the point of view that they promote fully, if not over-valued mid-cap producers, rather than smaller gold companies.

"Claude Resources, Inc. (CGR) – CGR has a market capitalization of $347.96 million and an enterprise value of $354 million showing limited to no financial leverage. CGR shows a trailing P/E ratio of 98.1x which decreases compared to its forward P/E which is 18.2x. CGR has a high valuation at 20.1x by Enterprise to EBITDA measures. CGR has a high price to sales ratio at 6.3x."

Claude Resources is a very close comparable to GBN.V. The Seabee mine has perhaps the same dimensions as Roy Lloyd, with the exception that the grade is lower. Considering that Seabee produced 800,000+ oz. gold over 17 years of operations @700tpd, with a grade around 7g/t, and that Roy Lloyd probably grades consistently @ ~10.25 g/t at a minimum, GBN.V should be trading at an equivalent P/E. (I'm a little mystified why the grades would be this low, but we'll see with the end of fiscal year report.)

@The Gold Economy

Another POV:

@Mineweb

The Lamaque Mine

The Lamaque Mine historically produced at a grade of 10g/t. Only Century Mining with a 5000tpd mill can't seem to squeak out more than 4g/t. Grade dilution is the major difficulty in mining, and it may not be feasible to mine at depth as you would nearer surface, taking pains to dilute as little as possible. Going to depth requires taking out blocks rapidly without much differentiation, thus the large mill.

As you will see, Roy Lloyd has the same rocks as Lamaque and en echelon structural duplications. I look on with unease as the new zone near Roy Lloyd is out of the news with no drilling planned, simply because additions by adding structural duplications to the initial mine will be necessary if the geology is the same. Investigating the geological depths is a must here.

The Iskut River JV Project

If the Snip Mine or a new vein in the Iskut River JV is exploited, then its very likely that processing may take place at the Jolu Mill. If you will remember, the ore and concentrate was processed in Japan when the Snip Mine during the years it was in operation. There would be no reason not to do the same with processing of ores from the Iskut River JV in Saskatchewan. (although the ores from this region tend to be sulphides and have a different chemistry.)

Shipping by road and rail along the northern rail corridor would save on having to implement costly infrastructure in an environmentally sensitive area. You would probably add on a processing circuit at the Jolu in that case.

Snip Mine Closure Study

-F6