The future for Guyana Goldfields (GUY)

0
0

What do you see for GUY in the future?

Marked as spam
Asked on April 20, 2020 8:44 am
2 views
0
Private answer

There is some news here.

Silvercorp Metals Inc. (TSX:SVM) plans to acquire Guyana Goldfields Inc. in deal valued at $105-million.

Each holder of Guyana Goldfields shares will have the option to receive 60 cents in cash or 0.1195 of a Silvercorp common share for each of their shares, subject to a maximum cash consideration of $33.2-million. If all Guyana Goldfields shareholders choose to receive cash, consideration for each share will consist of 20 cents in cash and 0.0796 of a Silvercorp common share, the company stated.

That represents a 42% premium over Friday's close.

Perhaps under new ownership, Silvercorp can success where previous management has failed and unlock the value of its assets.

Marked as spam
Posted by Mathieu Litalien
Answered on April 27, 2020 7:27 am
0
Private answer

HI Stephen,

Guyana Goldfields is a penny stock that is highly volatile. At first glance it looks decently priced. It is trading at only 0.13 times book value and 0.26 times sales.

That however, is where the good news ends. The company has a very poor track record. EPS and revenue have been consistently declining. Production levels are declining and the future doesn't look good. Last March it slashed reserves by approximately 40%. It had overestimated the geological structure of its Aurora mine, which is the company's lone producing asset.

In the company's CEO's own words: 1.5 million ounces of gold "was never there". Ouch. It restated reserves again in late march, showing another 2% decline.

It also had to restate the first and third quarter M&A discussion documents due to human error and miscalculation tonnages. AISCs in 2020 are expected to be in thh $17050 range with only 75 million ounces of production. Despite today's high gold prices, it might not turn a profit in 2020.

Things do look better in 2021 has production is expected to more than double, and will reach a peak around  2023 before declining. Average AISC are around the $1050 mark.

Likewise, as a one-mine company operating in a less stable geopolitical environment it also carries additional risk.

Bottom line, I would consider it speculative at best.

Mat

Marked as spam
Posted by Mathieu Litalien
Answered on April 21, 2020 6:15 am