$TSRMF : Treasury Metals — Independent Economic Analysis

Updated, 14 January 2020

Long-Term Price Case$1,700/oz. Au & $24/oz. Ag
Flagship ProjectGoliath
Mineral Resources (Measured & Indicated)1,174,668 AuEq ozs.
Shares Outstanding159,570,255
Market Cap$33,749,109
Average Annual Production90,100 AuEq ozs.
Payable Product1,171,294 AuEq ozs.
LoM13 years
True All-in Cost (TAIC) $1,001/oz.
Gross Revenue$1,991,199,800
Smelting & Refining($5,376,239)
Total Operating Costs($622,637,915)
Total Capital Costs ($203,581,223)
Net Income$818,808,011
Net Profit Margin41%
Absolute Cost Structure (ACS)59%
MTQ Score0.7
True Value $5.13/sh.
True Value Discount96%
Cash Flow Multiple10x
Average Net Annual Cash Flow62,679,900
Future Market Cap629,799,000
Future Market Cap Growth1,766%

Notes: All Values in U.S. Dollars

Were Goliath in production at $1,400/oz. Au, it would earn roughly 34 cents on every dollar it collects. From there, Net Profit Margins improve incrementally as the fundamental gold picture improves. An Absolute Cost Structure (ACS) of 59%* makes this possible. What is more, the ACS declines by ~11% as gold prices move from $1,400 to $1,700. It is this factor which underpins the improvement in Net Profit Margins.

We have learned to shy away from enterprises (catastrophes?) that cannot manage to rein in their ACS, but Treasury Metals is an example of a future gold producer that makes the cut.

*You’ll see plenty of ballyhooed Before-Tax Cost Structures below 50%, but they aren’t an accurate representation of reality. If you can find a gold producer with an ACS under 70%, you may have stumbled upon a real gem, though abiding by non-GAAP in your analysis won’t help you find gems. Which is to say, one must find new methodologies that enable one to push beyond AISC & All-in Costs in pursuit of extended valuation factors such as True All-in Cost and Absolute Cost Structure.

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