We would love to hear your thoughts about our site and services, please take our survey here.
London South East prides itself on its community spirit, and in order to keep the chat section problem free, we ask all members to follow these simple rules. In these rules, we refer to ourselves as "we", "us", "our". The user of the website is referred to as "you" and "your".
By posting on our share chat boards you are agreeing to the following:
The IP address of all posts is recorded to aid in enforcing these conditions. As a user you agree to any information you have entered being stored in a database. You agree that we have the right to remove, edit, move or close any topic or board at any time should we see fit. You agree that we have the right to remove any post without notice. You agree that we have the right to suspend your account without notice.
Please note some users may not behave properly and may post content that is misleading, untrue or offensive.
It is not possible for us to fully monitor all content all of the time but where we have actually received notice of any content that is potentially misleading, untrue, offensive, unlawful, infringes third party rights or is potentially in breach of these terms and conditions, then we will review such content, decide whether to remove it from this website and act accordingly.
Premium Members are members that have a premium subscription with London South East. You can subscribe here.
London South East does not endorse such members, and posts should not be construed as advice and represent the opinions of the authors, not those of London South East Ltd, or its affiliates.
True however that the corporate presentations have - over a long period - made no obvious contribution to anything....yet.
Utterly inconceivable that the company’s management is dragging its heels. Especially one overall so experienced and well connected.
Its a double edged sword isn't it. The vast majority of explorers end up raising cash, drilling, increasing resources, rinse repeat. By the time they are done, shareholders have been obliterated and they then struggle to raise financing so either dilute more, get taken over for pennies or fold.
SXX, AGQ, XEL, GKP all the same story. Personally, i think Mark has done a stellar job in minimising dilution. Yes it has tested my patience many times but now that we are so close to production, its easy to get anxious.
I have holdings in other gold "producers" and the market still isn't valuing them fairly. Yet GGP is worth almost a billion quid. Go figure. No point in wasting cash on exploration, put all efforts into getting cashflow coming in.
reason i think no toll milling... till land sorted out... as villagers would not get work it would be done by outsider contractors so i thimk marks weighing all options up sensibly
Totally agree with T123, I’ve been here for years now as we trundle along at a snail’s pace. Why is there no drilling to prove a 5mill district? Our communications are still amateurish and whilst MC is a nice guy his presentations lack excitement to bring in buyers.
I admire the optimism of those expecting developments in October and a price of 80p.
Yes i totally agree and if toll agreement had happened sooner i am sure all of the below would be happening in parallel as the guarantee of cashflow would not only double shareprice, so any further dilution would be minimal but also well supported, but also go a long way to self fund the project. i would like to know timeframes for different options as i would expect if you get your finger out a lot more could be done quicker and does a second hand mine get us up and running faster than china kit? I personally liked option today to go for smaller upfront kit to get ball rolling as we have cash in bank for deposit, especially if it help shorten time to first pour, and in parallel and as soon as possible, raise money to buy the bolt on kit to go to 170k ounzes with underground. I am sure jumping to 170k is not immediate logistically anyway so there is probably a good lag of time before all corners of La India are operating to that level. I am sure its a blow to MC also that toll has need been agreed. There might be other reasons holding it up.
Everything just seems to be far too cautious though - 50k ounces pa in 24 months, then bring it up to 170k with underground in Year 3 of mine operations - so 5 years (!!!) until there is a 170koz pa operation? Seriously, 20 years to get to 170k from project inception, are you kidding me? It should all be getting done in parallel - permit the underground resources while Lycopodium or whoever are building the plant and do a big bang for 170koz pa, 4000tpd starting in 2 years.. all the studies/permits have shown that the gold grades are there, the locals are willing, the government are desperate for the foreign investment.. Do the toll milling deal and use the 2 years of cash and gold loans to fund the spending for the plant, new mine plans etc, tap investors for the rest. 170-200koz pa is a story a lot more people will want to be a part of - anything could happen in Nicaragua in 5 years.. it needs done ASAP. Oh and while they are at it - keep drilling up to 5Moz to show the mine plan has legs for 200koz for 25 years..
There seems to be far too much worry about getting funding and share dilution - if you build it, they will come - with cheap interest rates set to last for years, and low returns from treasuries etc, there will be a lot of streaming companies, banks etc desperate to lend out money on a project thats set to make $1300 an ounce x 200k oz pa before tax etc.. do the maths on that bad boy..
regards
T123
Frustrating as it is i am sure MC is also tearing his hair out, or what is left of it, over last 14 years at helm. We just had to have a little old lady manning the ramparts and not selling some land she probably never even visited. Everything is falling into place slowly but i think all expected news will come in before December and October could be a turnaround month. As to toll mining agreement let hope MC and Calibre find some middle gound on price and make hay while sun shines. I am sure Rio Tinto who invested in Calibre are also lurking around as they did not not move into Nicaragua just for a small agreement with Calibre. Calibre for example might want a cheeky stake in Condor as part of any agreement. News could land anytime in October.
Its a real shame your pertinent questions cant be put to Mark, however I guess if he answered he would be showing his hand and in affect any negate the strength of his ongoing negotiations.
Lets hope as soon as land is tied up the Toll deal is announced (he has made it clear he is in favour!!)
100% respect your views Tester, hopefully post Xmas we all have huge smiles (if not before)
Sooooooo............do I buy more????
ps Interestingly another reasonable trade this am taking price to flat again!!
Dont get me wrong - this project is going to be a cash cow for 30 years when it gets going. CNR (or whoever takes it over) will reap the rewards of all this excruciating long term preparation for many years to come, esp with higher gold prices undoubtedly on the way etc..
But I honestly just feel that enough is enough now. Yes you need to be careful in business with your capex spending when you dont have cash flow, but you also have to speculate to accumulate. Gold is worth $1900 an ounce right now. But its not worth anything just sitting in the ground (thats the way the market is seeing it, even though I dont believe its true). The company should at the very very very least be valued at 3% of the gold price in the ground i.e $4B so $120M. With permits, it should even be 5-8% I believe, but thats simply not happening. Investors need to see that the gold can and will be sold. End of. So bite the bullet and do the toll deal with Calibre. Just go ahead and start to truck the highest 5.5g/t ore from Mestiza to La Libertad. In a 5Moz district, CNR can very, very easily find more high grade stuff.
MC is talking about reducing dilution to a minimum but at this rate, with the ongoing lack of interest in the company, the SP wont be at a high enough price to raise the equity CAPEX for 30% of the plant price when the financing is required early next year without it.. and thats not something any of us want to see. A proven income stream at the highest level possible from Mestiza in the meantime would make a huge difference to the SP / financing options..
regards
T123
I honestly share you frustration and tbh I was most frustrated with the last fundraiser when the momentum was lost and we dropped from 60p to 40p in days!!
That being said we are now so close, and we do seem to be making progress ie land purchases etc
Surely Mark will be going through events methodically and the next 6 months will define us!!
Personally I am hoping for £1 by Xmas (although 80p seems more realistic), and then who knows................
As a positive Marks interests are aligned to ours re SP and we have Jim backing him where needed!!
Keep the faith as its you that normally motivates so many!!
Fully agree T123
Just annoyed with lack of progress towards cashflow. Its been 10-11 years here, that should be more than enough to start to release value from the assets that CNR has. Frustrating to see FTSE div yields of 5-10% which we are missing out on by having cash in here. Randy Martin selling half his stake at a lowly 50p is just the latest annoyance.
CNR should be toll milling by now, end of story. Its been 2 years since it was first mooted. Actually generating cash would do wonders for the SP.
And with the gold price where it is, the company should be full steam ahead with drilling to expand the resource while waiting on land purchases and mining studies. There is a 20,000 m drill program all set to expand the resource to 3M oz - so get on with it. Announce the gold grades etc.
Clearly all the investor presentations and videos are not making even the slightest difference to the company. Honestly? just give it up MC. Concentrate on running the business. Spend the $10M you have to generate the interest we need to move the SP. Start making some cash and the market will take care of the rest. Its no good just talking endlessly about it.
There is a lot of news in the pipeline and I feel like CNR just needs something to break its way for a change..
regards
T123
Hi Tester,
After all your patience and with partial visibility of what's to come you sound frustrated! Guess mining is like me with DIY, I start with lots of exuberance with the last finishing touches always taking the longest!!
Be interesting to see if we take any more dips short term, as Seing said there is definitely value at these levels and below, and I am sitting on my hands thinking .......maybe just one more buy!!!
Will be nice to see this get back up to 50p - at the very least, just so that Randy Martin can sell the rest of his investment..
Lets hope we find out about the few remaining land purchases soon as well, results of any court cases etc
Painfully slow here..
regards
T123
that 68k buy looks like one ...onwards and upwards gla
E l , yes agreed . I am confident on gold for the medium term but expect turbulence and buying opportunities . It is hard to predict future sp for many reasons but I am holding fast in here for the next news but have to have plan b . Interesting few months ahead .
I think if GGP can hit a billion quid, then anything is possible TBH. The market is not always predictable. But yeah full production, while a bit further off, is the point at which these kind of numbers are most likely to be achieved IMO. Of course there's plenty of time for some highs and lows between now and then.
E l , no I am no expert either on those matters but It didnt seem correct to me . Yes still a tidy valuation and one that is achievable in time . I have never had an issue with a £3-£4 valuation when in full production what I dont see is a £150 m plus mcap on the back of a toll deal or land aquisitions hence my target for 80 p in the short term . If all goes to plan I will be holding for the medium longterm .We are all making our own calculations and good to have constructive discussion .cheers
Cheers EL.
Same here, just a normal guy. I'm pretty sure Mark has mentioned he can offset tax from the money they have already invested into the project.
Anyone else remember Mark mentioning this?
OK, I've been doing some Googling, and refined my estimate somewhat. I feel I must apologise somewhat as my earlier estimates were a tad optimistic, due to not accounting for income tax. The TL;DR version is that my £4 SP estimate becomes £3. A significant drop, for which I apologise, though still a very worthwhile investment! :-)
For those who are interested in the details, please read on.
This document from none other than SRK has been critical to improving my understanding: https://www.srk.com/en/publications/cost-inputs-in-a-mining-valuation
This document highlights two key points: that royalties are already included in AISC, but that incomes taxes are not. Somewhat less suprisingly but worth mentioning for completeness is that AISC does not cover any costs related to financing or working capital.
Having come to the realisation that income taxes needed to be accounted for, I wondered, with a somewhat sinking feeling if income taxes could be levied both in Nicaragua and also in the UK. This is rather outside my comfort zone, but this doucment suggests that will not be the case: https://www.saffery.com/~/media/Files/S/Saffery-Champness-V2/documents/publications/2016/Tax-factsheet-taxation-of-foreign-branches-of-UK-companies.pdf. Quoting: "Alternatively, under rules first introduced in 2011, companies can elect for profits of foreign branches to be exempt from UK tax."
According to Condor's presentations, the applicable Nicaragua tax rate is 30%.
So my revised calculations are as follows:
Gold at 1870 $/oz and AISC at 700 $/oz at 120k oz production gives $140m gross profit, which becomes $98m after tax. If total number of shares are 180m (say), then EPS is $0.55 and a guesstimated P/E ratio of 7 gives a $3.82 SP, or about £3.
On the upside, I think a P/E ratio of 7 may be low-balling it, and then of course there's upside from higher gold price and increased production. Therefore I still think £4 a share is possible at some point, despite my error in omitting tax from my original calculations.
Disclaimer: I'm not a mining guy, nor a tax guy, just some guy doing his best, so DYOR and don't take my word for it!
Cf ,yes royalties are correct .what royalty /cut do we think calibre will take from a toll mill deal .more than 13 pc thats for sure . Aaz are proving up more ounces . Obviously there are differences between all examples .
El ,yes I think all are undervalued and when cnr reach successful production and debt free then its a totally different story especially if they reach 150 k oz plus but that is a long way in the future presently . aaz and shg are using their cash to expand so will likely be bigger producers in a few years ,aaz with cngr probably and shg with Barrick as a main investor and Their newly aquired 1.2 m oz kenya project .
I just dont see cnr without production being worth equivalent ammounts but happy to hold all of them and more than happy to be incorrect .lets see what gives . I am a happy man if I am too conservative .
So I guess the question is, what exactly does AISC actually cover. I always assumed, it was, well, just about everything, but on closer inspection, it may indeed not cover some taxes. Corporation tax rate is 19% in the UK, so I guess you can take that off my profit numbers. I'm at the limit of my mining and tax knowledge here, so would love anyone else to comment on any of my numbers.
On the bright side, if anything my 7 P/E ratio estimate could be on the low side, and of course there's a path to 170k oz, and gold price could be higher. Still not sure how AAZ can only be making £20m after tax though.
Don't quote me, but I remember aaz have to give 12.5% to the government for royalties. Ours will be minimal. 3% royalties I believe.
Just reading the data for AAZ on LSE (yes I know it may be out-of-date and/or inaccurate), but, it says AAZ only made £30m in 2019. And that's before tax. Less than 20m after tax. So, one way or another, that's probably where the discrepancy lies. Those numbers are probably trailing twelve months, so if AAZ have ramped up production a lot recently, it might not be showing up in these numbers, or it's valuation just yet. I'm calculating $140m profit for CNR at 120k oz production. Could that be too high I wonder?