AGM Federal Agricultural Mortgage Corporation

EDISON EQUITY RESEARCH: ALDRIDGE MINERALS - TURKISH PRECIOUS AND BASE METAL DEVELOPER

After deducting C$7.1m in net cash as at 31 December 2014, Aldridge’s enterprise value of C$11.6m, or US$9.3m, equates to US$10.20 per in situ ounce of gold. That is close to the Canadian average of US$9.78/oz including by-products (see Gold – The value of gold and other metals, published in February 2015). However, in this case by-products account for more than half the value of the resource. Once these are taken into account, the company’s resource multiple declines to just US$3.04/oz AuE. Finally, Aldridge’s EV equates to just 3.8% of the net present value of its project. This is consistent with a company that has completed a scoping study or preliminary economic assessment (PEA), but cheap for a one that has concluded a feasibility study, for which a more typical valuation would be 20% of NPV.

Aldridge’s flagship asset, the 100%-owned Yenipazar project, is c 100km2 in area and located close to the geographic centre of Turkey, c 200km (130 miles) east-southeast of the capital city, Ankara. It is easily accessible via public roads and has good access to rail transportation and electrical power supply.

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