The company has 275 million shares. The
following table is of interest:
| Year |
2010 |
| Production |
150,000
ounces |
| Gold
price |
$1,250 |
| Revenue |
$187,500,000 |
| Estimated
profit |
$120,000,000 |
| Shares
outstanding |
$120,000,000 |
| Per
share |
44¢ |
|
It is one-time net income . . . and it
is not a small company.
Basically speaking, the company only needs
about $25 million capital expenditure to achieve the above
aspirations. With the current market capitalization of
about $150 million, in four years' time the total revenue
would be greater than the current market valuation of
OYM. What if the price reaches $2,000?
| Year |
2010 |
| Production |
150,000
ounces |
| Gold
price |
$2,000 |
| Revenue |
$300,000,000 |
| Per
share |
$1.10 |
| EPS |
70¢ |
Value
can be anywhere between $5.00 and $10.00.
|
The subsequent cash flow over a period
of five years could be as high as $1.0 trillion, which
is about ten times higher than the current equity value
of Olympus Pacific Minerals, Inc.
Olympus operates in a geographically virgin
territory in Vietnam and in the gold-rich area of the
Northern Philippines.
There are three basic segments: Phuoc
Son in Vietnam, Bong Mieu in Vietnam, and Capcapo in the
Philippines.
Olympus is a believer of large exploration
budgets as it permits the company to explore a large portfolio
of tenements. Apart from continuing to develop the above
three territories, it is constantly exploring territories.
The newly discovered explorations have hidden economic
value.
The gold targets by property are as follows:
| Capcapo |
3-7
million |
| Phuoc
Son |
2-4
million |
| Bong
Mieu |
1-3
million |
|
Olympus is poised for significant gold
production, as illustrated earlier, but what is equally
important is further exploration discoveries within the
most economically productive mineral provinces.
The Team
Employing over 400 employees in Southeast
Asia and drawing its key personnel from a worldwide base,
Olympus has an experienced management team with a globally
proven track record in gold mining and exploration.
Funds
Olympus has been successful in raising
funds to meet its aggressive exploration targets. Up to
December 2006, funds were used predominately for drilling
programs at Bong Mieu and Phuoc Son. As of January 2007,
Capcapo Northern Philippines has been added to these two
projects.
Once the Phuoc Son project commences production
in late 2008, it is fully expected that the company will
be self-sustaining.
Production
Olympus is producing and shipping gold
from its Bong Mieu demonstration plant. The company is
planning construction of its second gold plant at the
higher grade Phuoc Son property. Completion of the Phuoc
Son gold project is estimated to be 18 to 24 months after
approval of the Phuoc Son feasibility study, which is
near completion. Annualized gold production at Phuoc Son
will be targeted at some 60,000 ounces.
There is potential that additional production
will commence in Vietnam and the Philippines within the
next five years that may take the annualized production
to approximately 150,000 ounces.
Exploration
Exploration success at Bong Mieu and Phuoc
Son during the 2006 drill program was significant. A resource
update for Phuoc Son was published March 7, 2007. Bong
Mieu's resource update is expected by mid-2007. The budget
for exploration activities over the next five years is
projected to be in excess of U.S. $25 million, much of
which will be funded from production.
However, the potential territory is unknown,
but could be quite promising. With a possible cash flow
of $1 billion to $2 billion in the next 12 years, Olympus
is self-financing the entire Southeast Asia. Ho Chi Minh
was right. Vietnam will be rich, rich in gold.
Nevertheless, the Olympus Exploration
Portfolio includes a number of highly prospective large-scale
gold and gold-copper projects in provinces of Vietnam,
Laos and Cambodia.
Given the monetary reserves, the exploitation
of the new territories can create a major gold-producing
company within ten years. OYM can emerge as a mining holding
company by 2015. Nobody has drilled thoroughly the former
"trouble spot" of the world.
One thing is clear: There is no more Hanoi
Hilton, but maybe a Saigon Olympus will cooperate with
Anglo-American.
The country is one of the greatest human
stories of our time. Vietnam is densely populated with
about 50 million people, and it had to recover from a
devastating war. With a remarkable establishment of secondary
industries, the economy is able now to absorb one million
people in the labor force. It is targeted for an economic
growth of 7.5 percent.
The GDP is around $60 billion per capital
of 2,600 with a labor force of 46 million people.
Vietnam has oil. The production is 600
million barrels a day, and its exports total $50 billion.
The public debt is $25 million, and foreign investments
are over $30 billion.
After 30 years of peace, the country has
$28 billion foreign exchange and gold reserves. In fact,
gold reserves for Vietnam are over 30 tons, one of the
fastest growths in the world.
Vietnam technically has been at war since
the beginning of the Second World War. As a result, its
mineral resources are hidden, and the capital expenditure
for geographic exploration has been limited.
Olympus is one of the first mineral exploration
companies.
Apart from its current involvement, it
is possible that the country's gold reserves are minuscule
to Olympus's projected assets. This is, in fact, the wild
card in Olympus. The company is an important factor in
a country with one of the highest growth rates in Southeast
Asia and is likely to explore other territories in Vietnam
and in Thailand.
Lastly, we want to point out that if,
in the coming decade, Olympus would have a surplus cash
flow between $1-2 trillion, which is about twentyfold
the current GNP, the surplus cash will be utilized to
explore the mineral resources of Southeast Asia.
|
Ounces |
Value |
Accumulated
Value |
| 2011 |
150,000 |
$150
million |
0.44 |
| 2021 |
1,500,000 |
|
$1,500 billion |
| Current
Gold x current reserves |
$28
billion |
|
Thus, Olympus can be a dominant factor
in a country that both France and the USA tried to occupy.
| The
Changing Fundamentals of Gold
|
Gold is the most widely discussed metal.
The current most important monetary deposit, in fact,
its real value is of prime importance.
I was sitting in December, 1974, next
to the late William Simon, U.S. Secretary of the Treasury,
who hit the table forcefully.
| "We
are putting gold in the commodity pages next to
pork bellies,
because this is where it belongs."
|
Gold
Consumption 2003
(Tons)
|
| Jewelry |
1,805
|
| Electronics |
238 |
| Bar
hoarding |
183
|
| Coins |
105
|
|
The world still believed that conventional
demand, like jewelry, has the overriding force behind
Gold.
I may have been the youngest person in
the world who recognized the monetary value of gold. I
was seven years old when the war ended, when there was
hyperinflation in Hungary and my family every night added
up the family's trading results in Napoleon gold and dollars.
I was so fascinated that eventually I was banished from
the table to attend to my school work. I knew, however,
at the age of seven, that my family's relative property
was due entirely to gold. By the way, we exchanged 12
dollars for a Napoleon compared to $1,000 today for an
ounce of gold.
Had the Racz family stuck to gold in 1945,
we would be billionaires.
How much is gold worth today? At $100
a barrel of oil, the Saudis sell at least 10 million barrels
a day. This is $1 billion. In one year, it is $300 billion
dollars. This can purchase, in a single week's production,
300 million ounces a year, or one million ounces a day.
Looking at the jewelry demands of Japan,
which is 100 tons a year, the total Middle East about
50 tons a year, and the hoarding of the Chinese of 30
tons a year, a new picture for the amount of gold has
emerged.
On the day of writing, January 24, 2008, the London market
opened $25 higher per ounce. If we take the total worldwide
mine production of 2,500 tons, the fluctuation of values
is enormous.
According to the recent production schedule,
the largest gold producers are as follows:
| South
Africa |
400
tons |
| USA |
300
tons |
| Australia |
275
tons |
| China
|
250
tons |
| Russia |
150
tons |
|
The top official Gold reserves are:
| USA |
8,200
tons |
| Germany
|
3,440
tons |
| IMF |
3,200
tons |
| France
|
3,000
tons |
| Italy |
2,500
tons |
| Switzerland |
1,600
tons |
|
Compare it to the budget surplus of Russia,
$500 billion; the Middle Eastern and Far Eastern countries,
$600 billion. It is obvious that new elements have entered
into the picture. In fact, the emergences of the Internet
and hedge funds have acquired enormous power.
The hedge funds control $2 trillion. The
largest gold ETF accumulated 700 tons of gold, almost
one-tenth of the U.S. reserves. Within five years, the
gold ETF's may have more gold than the official reserves
of all countries combined.
Keeping this in mind, the possibility
is on the horizon that sooner or later gold-related paper,
equity or bonds will be marketed, and those numbers in
a few years will amount to $500 billion. The demand picture
will obviously increase the price of gold and lead to
greater value for the reserves assets of a company like
Olympus and the variation of such successful exploration
companies will increase substantially.
A $100 million gold-indexed bond ties
up 100,000 ounces of gold. Ten such offerings are equivalent
to one million ounces.
Popularity of gold-indexed bonds –
a wholesale buying – can trigger ten times more
buying in ETF's.
This is a spiral that creates, in fact
With an increasing price, $10 billion
of new investment in gold creates monetary history.
Olympus's production, explorations, reserves
and prospects are going to be reevaluated.
