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| | Corporate Profile: Avnel Gold Mining Ltd
Publisher: Kaiser Research Online
Author: Copyright 2010 John A Kaiser
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Avnel Gold Mining Ltd (AVK-T)
| Avnel Gold Mining Ltd has operated the small scale underground Kalana Gold Mine in southwestern Mali since 2004, though the principals behind Avnel, which include Howard Miller, have pursued this project since the late nineties. The mining target at Kalana is a system of shallow dipping high grade quartz veins bearing free milling gold, but Avnel has been unable to turn a consistent profit in this less than 200 tpd milling operation. Nevertheless, the effort Avnel has put into achieving commercial production has enabled it to establish title under the conditions stipulated by the Mali government, which has been involved with this deposit since the sixties when it was aligned with the Soviet Union. During 2009 Avnel took steps to capitalize on the observations its geologists had made in the course of establishing an underground mining reserve, which suggested that the quartz veins were part of a much bigger system of arsenopyrite associated gold mineralization whose structural controls were near perpendicular to the veins, and as such historic drilling and assaying strategies that were geared toward assessing the nearly flat lying veins whose gold mineralization was amenable to simple gravity based milling processes had managed to overlook the presence of a major multi-million ounce disseminated gold system that was amenable to open pit mining and of sufficient grade to support a flotation based milling operation. During 2009 Avnel undertook digitization of historic exploration data with the plan of developing a new deposit model, whose potential attracted a farmout agreement with IAMGOLD, an experienced operator of disseminated gold deposits in Mali. During 2010 IAMGOLD will conduct a major drilling program aimed at establishing a resource of at least 2 million gold ounces, which would enable it to vest for at least 52% with Avnel netting 28% while the Mali government retains 20%. Elliott Associates LP and Howard Miller's Fern Trust own 67% of Avnel and are the creditors of a $10.9 million debenture that comes due on June 30, 2010.. |
Key to Understanding IPV Charts and Spec Value Hunter Tables
| An IPV Chart is a graphical presentation of a Spec Value Hunter table that has been constructed according to the Rational Speculation Model developed by John Kaiser. The IPV Chart allows speculators to identify which projects offer poor, fair or good speculative value in both absolute and relative terms. The speculative value depends on the project stage, the project's implied value as calculated by the company's fully diluted capitalization, stock price and net project interest, and the dream target deemed appropriate for the project. A dream target is what a project would be worth in discounted cash flow terms once in production. |
| Green background indicates the dream target judged appropriate for this play by John Kaiser - otherwise unranked. |
Poor Speculative Value -   |
Fair Speculative Value -  |
Good Speculative Value -   |
| Note: narrow arrows indicate IPV is outside the fair value channel but within 25% of the fair value limits |
| Click on the company name to view the company profile, the project name to view project details. |
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| Kalana Gold Mine |  | 80% WI | Mali | 9-Production |
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| Kalana Gold Mine 43-101 Economic Study (USD except where noted otherwise) |
| DFS | Mar 30, 2016 |
| Snowden Mining Consultants Pty. Ltd. | Kalana Gold Mine |
| Mining Scenario | TR | Mining Costs |
| Mining Type: | OP |
| Cost Currency: | USD |
| Processing Type: |
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| Capital Cost: | $196,000,000 |
| Operating Rate: | 34,824 tpd |
| Sustaining Cost: | $123,000,000 |
| Operating Days: | 365 |
| Operating Cost: | $54.26/t |
| Strip Rate: | 9.9 |
| BC Cash Cost per Unit: USD | $6,829/oz Au |
| Mine Life: | 18 years |
| BC Cash Cost Net By-Products: USD | $6,829/oz Au |
| LOM Tonnage: | 21,759,000 t |
| BC All-In Cost Net By-Prod: USD | $7,004/oz Au |
| Est Startup: |
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| Spot All-In Cost Net By-Prod: USD | $7,004/oz Au |
| Production Potential |
| Metal 1 | Metal 2 | Metal 3 | Metal 4 |
| Metal: | Au |
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| Grade: | 2.80 g/t |
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| Recovery: | 92.7% |
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| Annual Output: | 101,000 oz |
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| LOM Output: | 1,821,383 oz |
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| Base Case Price: | $1,200/oz |
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| Spot Price: | $1,315/oz |
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| Base Case NSR: | $9.54/t |
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| Spot NSR: | $10.45/t |
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| Base Case Valuation |
| Reported Valuation Currency: | USD |
| Pre-Tax NPV: | $266,000,000 |
| Discount Rate: | 8% |
| After-Tax NPV: | $196,000,000 |
| Total Base Case NSR USD: | $9.54/t |
| Pre-Tax IRR: | 44% |
| Total Spot NSR USD: | $10.45/t |
| After-Tax IRR: | 38% |
| Annual Pre-Tax Cash Flow Base Case and Net CF/FDSH USD: | ($568,485,838) | ($0.96) | Pre-Tax Payback: | 0.0 y |
| Annual Pre-Tax Cash Flow Spot and Net CF/FDSH USD: | ($556,865,788) | ($0.94) | After-Tax Payback: | 1.2 y |
| Enterprise Value CAD : | $222,393,140 | $.47/sh | Share Price: | $0.43 |
| Note: |
| Comparative Valuations using Life of Mine Averages |
| Discount Rate: | 0% | 5% | 10% | 15% |
| Base Case Pre-Tax NPV USD: | ($10,551,745,077) | ($6,591,660,424) | ($4,467,663,282) | ($3,236,118,475) |
| Base Case Pre-Tax Net NPV/Sh USD: | ($17.68) | ($11.05) | ($7.49) | ($5.42) |
| Premium BC PT NPV over EV: | ($18.04) | ($11.41) | ($7.85) | ($5.79) |
| Spot Pre-Tax NPV USD: | ($10,342,584,177) | ($6,462,295,106) | ($4,381,026,174) | ($3,174,199,110) |
| Spot Pre-Tax Net NPV/Sh: | ($17.33) | ($10.83) | ($7.34) | ($5.32) |
| Premium Spot PT NPV over EV USD: | ($17.69) | ($11.19) | ($7.70) | ($5.68) |
| The comparative NPV calculations assume constant annual cash flow based on the life of mine average annual payable production and CapEx spent in year one. The operating cost includes the LOM sustaining capital. Due to details such as ore scheduling these NPV figures may differ from those of the 43-101 economic study. |
| After-Tax Valuations using Spot By-Product Prices |
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