www.meekmarketmodels.com über CAU
Canyon Resources (CAU, 1.27 aktuell: $1,39 ). Having lost on the Montana cyanide ban referendum, there are now several possible outcomes. It is not likely that they will be awarded $500M in damages sought in the courts. But while they will probably fail in the state courts, it is possible, if not probable, that the federal courts could award some damages based on a body of law that awards companies for the taking of their property (“takings”). Whatever the award is when thrown back to Montana, most likely the settlement would be negotiated by CAU and Montana. Given that they have spent a reported $70M in developing the property, one would think that they could eventually get that at least. But let’s say they could end up with something between $50 and $150M. That would be somewhere between $2 and $6 per share. But it may take years to get this, so a guestimate of the present value of this possibility is $1.50.
There is also the speculative potential that the price of gold will go to $600-700, in which case some traditional method of extraction other than cyanide possibly becomes feasible. In this case, perhaps the stock is worth $5-10 eventually, but the present value of this possibility is perhaps $2.
There have been strides in technology. There is a speculative hope that biologic extraction of gold might work and might be cheaper than cyanide. In this case the stock could eventually be worth maybe $20, even if the price of gold does not go up. The company says it will take 6-12 months to evaluate the biologic question, which could be much quicker than a court settlement. If biologic works, and gold goes to $600-700, then perhaps the stock would be worth $35. Perhaps the present value of these options is $3-5.
Another possibility under consideration at the company is to mine the gold ore, pre-process it, and then truck it out of state and process it with cyanide. While this is an expensive proposition and may not be cost effective, let’s give it a value somewhere near the current share price.
What I do not know is whether there is a possibility of both some minimal court settlement AND getting to eventually mine by a non-cyanide method. But the present value of the company should be in some manner additive of all the above possibilities.
So I would say that the stock is worth $2-3 today, double the current price. Buy for speculative recovery.
Canyon Resources (CAU, 1.27 aktuell: $1,39 ). Having lost on the Montana cyanide ban referendum, there are now several possible outcomes. It is not likely that they will be awarded $500M in damages sought in the courts. But while they will probably fail in the state courts, it is possible, if not probable, that the federal courts could award some damages based on a body of law that awards companies for the taking of their property (“takings”). Whatever the award is when thrown back to Montana, most likely the settlement would be negotiated by CAU and Montana. Given that they have spent a reported $70M in developing the property, one would think that they could eventually get that at least. But let’s say they could end up with something between $50 and $150M. That would be somewhere between $2 and $6 per share. But it may take years to get this, so a guestimate of the present value of this possibility is $1.50.
There is also the speculative potential that the price of gold will go to $600-700, in which case some traditional method of extraction other than cyanide possibly becomes feasible. In this case, perhaps the stock is worth $5-10 eventually, but the present value of this possibility is perhaps $2.
There have been strides in technology. There is a speculative hope that biologic extraction of gold might work and might be cheaper than cyanide. In this case the stock could eventually be worth maybe $20, even if the price of gold does not go up. The company says it will take 6-12 months to evaluate the biologic question, which could be much quicker than a court settlement. If biologic works, and gold goes to $600-700, then perhaps the stock would be worth $35. Perhaps the present value of these options is $3-5.
Another possibility under consideration at the company is to mine the gold ore, pre-process it, and then truck it out of state and process it with cyanide. While this is an expensive proposition and may not be cost effective, let’s give it a value somewhere near the current share price.
What I do not know is whether there is a possibility of both some minimal court settlement AND getting to eventually mine by a non-cyanide method. But the present value of the company should be in some manner additive of all the above possibilities.
So I would say that the stock is worth $2-3 today, double the current price. Buy for speculative recovery.
