What Could Turn Out To Be One Of The Most Profitable PM Miners
Yes we are back to this debate again, which is the best play on the precious metals. Will it be a junior, yamana, Agnico, the list goes on. But you don't often hear Lihir thrown around in that conversation. I'm positive it is because of their track record. But take a look at a some commonly used metrics: Market value to NAV = .39. You could do more of course but you would find all those metrics put Lihir among the cheapest in the group. But wait..There's more.. The largely overlooked fact of their small but potentially huge Africa mines could catapult Lihir very close to the 2m oz per annum level. Yes, they continue to struggle with Ballarat, but the company was not expecting great to news to come from this mine till the latter half of the year so why are investors? Aside from being one of the most pure plays on gold (Lihir Island has magnificent ore in terms of little bi-product), you get a good capital and cost structure. As Lihir has already raised the capital requirements to adopt a MOPU power grid for the island, The current valuation makes Lihir Island alone worth buying. It will produce over 1m oz a year bby itself and more likely than not drastically increase gold reserves. The proven reserves alone pushes the LOM near 20 years. But this could be a huge understatement, which I think will be the case. In other words, Lihir is a good investment based on their flagship mine alone, but the fact that they have potentially many large catalysts makes for a ver compelling story. This could even be a speculation play, if managment hasn't convinced you of their ability to steer the giant ship that is Lihir Island.