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Well if China Non-Ferrous Gold are selling out, we'll get their Holdings soon. They had 8.23% in September, that's 22.4m !
Well we're all pretty well agreed then about the point Dibs made about the full sign-off from NERIN. Sod 'em.
the timing of this RNS and the large volume could mean China Nonferrous Int'l Mining Co. Ltd aka NERIN have sold out of Chaarat. Given we no longer want their approval / sign off on the DFS I imagine our relationship is now over. Given the knowledge they have of the project surly if they wanted to buy it they would have done so by now. I don't see this a positive however maybe it will allow other interested parties to now engage Chaarat.
Does seem strange about giving up on a full sign off for the DFS. The company aren't disclosing the full extent of the problems/discussions on completion of the DFS and now they've said, "Thank you for your thorough work but we are now pulling it". Very odd and perhaps, as you say, we are not going forward with a Chinese backer. We never disclosed the name of any possible Chinese partner and Dekel now states, "A financial advisor will be appointed in due course to support the Company's ongoing conversations with interested parties. One mining group has already conducted thorough due diligence." Presumably, the group who have conducted thorough due diligence are still interested as this is surely implied. 'ongoing conversations with interested parties' suggests we've got more than one fish biting too. Perhaps the Chinese were never going to pay a decent price and this was what Dekel concluded and they were simply delaying and delaying on the over-conservative DFS with little further benefit to Chaarat. I think it is fair to infer we aren't likely to get a Chinese partner/takeover in the near future, or are we calling their bluff? In Feb we declared we couldn't keep waiting without publishing and now we've gone one step further. Thank goodness that monkey is off our back now and the 'reality of the project', as Dekel puts it, is out there for all to see.
They also state they'll appoint a financial advisor to deal with interested parties. It's clear they disagreed with Nerin's initial FS, so naturally they wouldn't have agreed on the final document and have accordingly adjusted it. IMO, they're positioning for a deal from a western company and have formatted their FS accordingly. In for a punt at 6.65, will stick it in the drawer and see how it goes! GLA.
Irrespective of Dibs actions on SHG, it is difficult to say that he is not correct in this instance. The lack of sign off is disappointing from a short term perspective and it may be that the selling seen recently is China Nonferrous reducing or eliminating their stake as a result. Somewhat oddly to be honest, considering that Chinese gold miners have said that they are looking to buy gold properties overseas including North America and it is difficult to imagine that they will find many with FS that are conformant to Chinese standards. This is akin to cutting off your nose to spite your face. I say 'short term' because I believe that in the long term this will not have a significant impact. Irrespective of whether gold corrects in the short term, I believe that in the long term it will be significantly higher. Given what happened in the last gold upswing (i.e. capital for most projects in the financial crisis was non-existent but for gold projects you could virtually name your terms), there will be no lack of interest in a project the size of CGH's.
Dibs, Your actions on SGH show you aren't to be trusted. Go away
The headline figures are much improved which is, of course, very good. BUT crucially CGH employed Nerin and co to complete the FS to Chinese standards. They have not signed off on the original FS OR this improved one, indeed CGH confirm they will NOT be seeking sign off anymore. IMO this will not endear them to the Chinese so what are the implications. This is significant because Charaat had tied their colours 100% to the Chinese mast. It is for these reasons I believe the SP has not risen significantly, if at all, this morning. LTH's will understand what I'm saying.
That is exceptional. More than meets what you could hope for and effectively doubles the value of the asset. I have bought a few this morning. Given the low profile of the company it may be some time before the value is realised but it will come.
Looking good. Lots of investors are finally realising how cheap CGH really is. Massive resource vs Market cap.
Great RNS, look forward to becoming a holder :)
They said they'd been busy and some massive savings identified (begs the question were NERIN and co. building up costs to make purchase price lower?!?). Initial Capex Saving identified : $214m Life Capex Saving : $252m New IRR : 24.82% (from 15.3%) Brilliant !
Although our industry faces challenges which are not lessened by the financial situation in China, the regional engine, an appetite for good projects in the gold sector is still evident. The interest in Chaarat, a world class, high grade, low cost of production asset has not disappeared. Your management is reviewing a number of options targeting value generation whilst minimising dilution for our shareholders. We hope to deliver news on our progress in the coming months. We commend the patience of our shareholders who will appreciate that it is important to take our time to maximise the value of the Chaarat Project for their benefit."
Happy reading. .......
we should get one shortly confirming who sold / bought around 15m shares or around 6% of the company. I think the seller is either First State Stewart or China Non Ferrous as they have around 7% & 8% holdings respectively. It would be nice if the Chinese have bought first states shares so they can rival Labos holding in reality God knows what's happening.
I bought other £5000 for this years ISA I must be MAD LOL @ 6.48 time shall tell
Pablo2, Yes, I am aware that they are looking into reducing the capex and that is worthy of the effort. But some of those items will be difficult to reduce, meaning they would have to do very well on the rest of them to get to 25%. 25% would be excellent but the capex would still be comparatively high which would still mean they would need a big hike in the gold price to make it attractive. Just for clarity, I am in the camp of those who feel that there will be a BIG hike in gold prices. I am unconvinced that the current uplift is the real deal - it feels like speculators to me on the back of a weak dollar. I expect the dollar to bounce in the short term and PMs to decline as a result. In the medium to long term, however, I do expect PMs to rise substantially. At that point this will jump to multiples of the current price.
That reduction of Capex is exactly what they are doing now. They are trying to optimise a lot of the expenditure to bring this down and I'm sure they will by a factor of 25% or more. It sort of begs the question, has all this time and money spent on the DFS been worth it? It's now released in final draft form and we're not happy with a lot of the Capex estimates resulting in a lower IRR. We are on the Chinese route so we've had them develop the DFS to their standards (and in their language) to attract Chinese money. If that doesn't materialise perhaps we have wasted some time. Who knows what all this volume is about (we're even over 2m today, after 14m yesterday) but IMO there will be a BIG RNS one day fairly soon and I've always said DFS AND JV/Sale/Funding simultaneously. --------------------- Ariel - think you could well be right about the Twitter gang - there were a lot of punters diving in on there on the volume spike.
One of the things that has been bothering me about CGH is the lack of real movement as a result of the gold price increase this year. It has moved a little but not anywhere near as much as some. I think the answer is in the DFS. The NPV is surprisingly low for such a big asset and the IRR is borderline but looking more closely at the study indicates the reason why. The capex is very high and this is skewing both. With that capex $1250 gold is not reason enough to move CGH. It needs more like $1600+ (maybe even $1750) at which point the IRR should better attract the investment required. Usually you look for IRRs of 25%+ as being very attractive. So, they do have an alternative to doing nothing and that is to try and reduce the capex substantially. Not really sure how they can do that with some of the infrastructure costs but there you go.
China Nonferrous Int'l Mining Co OR First State Investments - they each have holdings around the 8% level. It would be worrying if China Nonferrous were selling as they were likely buyers given their connections to the DFS and knowledge of the project.
I don't think the Twitter gang knew what they where taking on here, it proved to be more liquid than they anticipated, backfired on them.
Asap!
When are you retiring by the way? Anyway, very facetious Ariel, we've done all the waiting for would be Newbies. My advice, Get In Now before it's too late but DYOR
ArielArrow, I take it you are a long term holder? I know the feeling. Although I am not a holder here (but it is on my watch list!) I have gone through the same processes in the past. I think the best thing for CGH to do is.... precisely nothing. They have a great asset (it really is excellent) and it would be best served just sitting on it until the gold bull market really takes off. If it has a NPV of $350m @ $1250/oz, just imagine what the value is at $1500/$1800/$2000 plus. The thing they need to do is stop burning cash and wait for the inevitable bid. It will come. At some point. I just don't know when but I suspect in a somewhat shorter time frame than my retirement.
I wouldn't recommend investing here if you are past a certain age, you probably won't live long enough to get a return on your money.