a simple NAV view of 2 gold stocks … NEM, YRI

Newmont NEM  $58 –>$200
$28.8 billion market cap at $58.30/share, plus $3.3 billion net debt = $32.1 billion enterprise valu
94 million oz of gold reserves =  $342/oz + cash costs/oz  $575 =  $917/oz markets current valuation
to value Newmont’s gold reserves at $1,750/oz, NEM = $110B =  $200/share

Yamana YRI  $15 –>$35
$11.2 billion market cap at $15.00/share, plus $25 million net debt = $11.2 billion enterprise value

22 million oz of gold reserves =  $510/oz + cash costs/oz $250/oz =  $760/oz markets current valuation
to value Yamana’s gold reserves at $1,750/oz, AUY = $26B = $35/share

sure, you’ve got to deduct some capex but it doesn’t materially change the math.

also you could argue that the finding and development costs should also be added to cash costs but i see that as a cost against future reserves. this valuation also gives no credit for other assets like copper or land, it’s just a quick and dirty guide

note that these reserve numbers are “proved and probable”.  by the time this gold bull hits it’s peak (assuming it keeps going into a true mania) i think we could see these stocks trade at 100% of NAV as calculated above plus some percentage of the extra value of the “inferred reserves”, and maybe even a premium on top of that … just like the good old dot-com days.

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