I often get asked by potential investors and shareholders; “Abraham, what happens if you’re right and there are multiple high-grade ore shoots on this property and we actually hit another one? What will be the impact on my investment?
Without getting into the most obvious risks like, maybe we’re just plain wrong and it does’t exist. Despite all of the double-digit gold assays (ounces of gold per ton) we encountered during exploration, maybe the massive magma chamber that created this deposit pushed concentrated gold solutions into only this one, tiny, 10,000 square foot area? Or, maybe the next one is too small, uneconomic, etc., etc. But, since this question assumes success, my response goes something like this:
IF we encounter another ore shoot like the first one that produced 133,000 ounces at an average ore grade of 16.01 oz. of gold per ton (More than a few geologists believe that it is more likely than not, several ore shoots exist). AND, IF gold prices remains in the neighborhood of $1,200 and mining costs are similar to what we’ve experienced during exploration, LKA could earn $.55 per share. IF, the market would value our shares at at least 20x earnings, (a very conservative valuation considering the bonanza ore grades and the possibility of additional discoveries) LKA’s market cap would be somewhere north of $300 million…around $11.00 per share. We closed yesterday at $.17 per share with a tiny market cap of $4.6 million. You can slice and dice these numbers anyway you want and still come to the conclusion that LKA could be hugely undervalued. If, at any time, the markets expect we are on the verge of another discovery, this could change very fast.