Continental Gold merger – valuation – Gran Colombia equity | Value Investing News

Continental Gold merger – valuation – Gran Colombia equity

  • Today’s acquisition proposal of Continental Gold (TSX: CNL) by a Chinese company (Zijin) is interesting, mainly because of the very high valuation assigned – $1.4 billion of equity value (fully diluted).
  • But I was thinking, if this company can receive a $1.7 billion enterprise value for a gold mine project that isn’t even operating, but is expecting 250,000 ounces of a gold in production next year, how come Gran Colombia Gold (another Colombian gold producer) with its 233,000 ounces of production is trading at about a $300 million EV?
  • I’m still not interested in GCM equity, but relative to CNL’s takeover valuation, GCM stock looks very, very cheap.
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