Guyana Goldfields (GUY.to)

Your humble scribe has received more than one (five six to be exact) mails asking for an opinion on Guyana Goldfields (GUY.to) this morning, due to the combo of

1) ....the publication of its feasibility study before the bell on the Aurora project and...

2)...the wholesale dumpage of the stock as a result (see this chart):

 13% down at the bell today and dropping fast

As it happens GUY.to is a stock I've watched from the sidelines for a couple of years (traded it once successfully, but sold way too early and haven't returned since then) and nowadays I need to get up to speed on the story, though I did note that the 8k tpd throughput plan in the full feas today is lower than previously expected, so that might be the issue here. Therefore it's time to have a better read of the plan and the backstory....hold that thought, yeah?

Meanwhile, we're all waiting with bated breath for the opinion of Louis Lobito James over at Casey Research, as he's had GUY.to as a recommended buy since June 2011 at a price of $8.69. Surely his informed opinion on today's news is more relevant, as he's the dude with clients underwater on the stock.

UPDATE: Brad Humphrey of Raymond James puts on a brave face, but is right to highlight the thin-looking base case IRR as a problem, methinks. Here's the cover letter to the PDF RayJames just sent out (and I have no idea where you could possibly get a copy of the full PDF, oh no no no no...)

RATING Outperform 2
Closing Price C$8.40

Event: Guyana Goldfields released the results of its feasibility study for the Aurora project in Guyana.
Analysis: While overall the results were not as robust as we were anticipating (see table below), there remain areas for some optimization. Ultimately, with the known scarcity of projects producing at a rate of 250koz per year at cash costs of <$600/oz (Aurora study suggests ~$520/oz), in a geopolitically stable environment, Aurora remains an attractive takeout (our primary thesis).
Points to Note:
* While the initial capex is modestly higher at $525 mln, this is sized for a 9,500tpd throughput instead of the planned 8,000tpd. Post-feasibility we anticipate the capex could decline ~10%. The 9,500tpd CAPEX is roughly 16% higher than we were forecasting, resizing to 8,000tpd the CAPEX comes in around 6% higher than our forecasts.
* The after tax IRR (at $1,300/oz gold and $100/bbl oil) comes in at 12.7% - it appears this IRR includes the 9,500tpd capex. We expect the revised capex could add ~1-2% to the IRR. We were hoping for something approaching 20%. After tax IRR at $1,775/oz and $110/bbl oil stands at 23.6%.
* The sustaining capex increase is significant - ~$300 mln vs our $181 mln.
* The decrease in underground grade is also a concern from the resource grade of 4g/t to the feasibility grade of 3.3g/t.
* We assume an additional ~1.5Moz LOM given, we believe, the potential to increase the resource is good.