Orogen Royalties (TSXV: OGN) gained today for an 8th straight trading day to $1.65 per share and has gained by 135.71% since NIA's initial suggestion at $0.70 per share.
OGN has a current enterprise value of $311.54 million despite revenue of only $6.87 million. If we value their non-Beatty Gold District royalties at 10x revenue or $68.7 million their 1% royalty in AngloGold Ashanti (AU)'s Merlin+Silicon Gold Projects is worth $242.84 million.
Merlin+Silicon is still many years away from production. AngloGold Ashanti (AU) is likely to acquire Augusta Gold (TSX: G) in the upcoming weeks at a massive premium because G's directly adjacent gold projects are the most advanced in the district and AU has already paid US$600 million to acquire all of the lesser quality properties in the district (North Bullfrog and Sterling). Only Augusta Gold (TSX: G) is left for AU to acquire and finish consolidating the full Beatty Gold District!
When a gold project is many years away from production a 1% royalty in that project is equivalent to a 5% equity stake.
Merlin+Silicon have total gold resources of 13.26 million oz so 5% of that is equivalent to OGN owning gold resources of 663,000 oz.
Augusta Gold (TSX: G)'s 100% ownership of Reward+Bullfrog is significantly more valuable than a 1% royalty in Merlin+Silicon.
Augusta Gold (TSX: G)'s fully permitted Reward and past producing Bullfrog have a total of 1.92 million oz of gold resources adjacent to Merlin+Silicon.
Augusta Gold (TSX: G) deserves an enterprise value equal to 2.90x more than the value of a 1% royalty in Merlin+Silicon.
The market is valuing a 1% royalty in Merlin+Silicon at CAD$242.84 million. Based on this, Augusta Gold (TSX: G)'s 100% ownership of Reward+Bullfrog is worth CAD$704.24 million.
Augusta Gold (TSX: G) has CAD$43 million in debt owed to its Executive Chairman and CEO. If AU acquires Augusta Gold (TSX: G) next month for CAD$704.24 million minus the debt of CAD$43 million equals CAD$661.24 million divided by 85,929,753 shares outstanding equals $7.70 per share.
We assume AU will acquire Augusta Gold (TSX: G) at a discount and shareholders will walk away with $6 per share or a premium of 450% above today's closing price of $1.09 per share.
Past performance is not an indicator of future returns. NIA is not an investment advisor and does not provide investment advice. Always do your own research and make your own investment decisions. NIA's President has purchased 224,200 shares of G in the open market and intends to buy more shares. This message is meant for informational and educational purposes only and does not provide investment advice.
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