Gordon Stein, CFO of CleanTech Lithium, explains why CTL acquired the 23 Laguna Verde licenses. Watch the video 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.
As always Jerry you are on the money - my thoughts exactly. So sit back and relax people and continue to enjoy the ride. We are not far from that offer for HAV.
There is a maxim in the oil industry that you 'explore with equity and develop with debt'. I think that holds true in gold mining too. Of all the issues that SD faces this is the one that he should be most qualified to deal with and so I am entirely relaxed. He appears to be covering all the bases by flagging up, debt, equity issuance in London or an ASX listing, and possibly the acquisition of a producing asset, while getting rid of any financial commitments in Tassie.
A good example of using other peoples money is Donald Trump. He went bankrupt a couple of time and still ended up a very wealthy man. Come on Shaun and do the business as I’m sure you will !
SAS
Totally agree!
I once attended a seminar many years ago now run by Gill Fielding (of Channel 4's ''Secret Millionaire'' fame).
The real eye opener for me was when she stated that ''seriously wealthy and successful people are those who are comfortable with large amounts of debt''. Always use other peoples' money wherever possible.
Hi SAS. There are many reasons why i do not like debt. Banks are not friendly and could at any time demand repayment. I also expect inflation to be with us for a long time and interest rates could go up to unmanageable levels. There is never an ideal way of overcoming a need for cash. Without doubt the best way to grow a Co is organically, the journey may take a little longer but debt free in commerce is heaven. ATB Speedy
I’ve started building cash up just on the small chance that Shaun does a book build in place of finance. Small chance but I want to ver every eventuality. It can always into GGP anyway.
Morning Speedy, I appreciate what your trying to say, but you are thinking short term.
If you wanted to raise say a $100 million at today’s price, then GGP would have to issue approximately another 725 million shares, thus diluting everyone’s shares by approximately 20%.
Yes you have now raised the money, but at a lifetime cost to existing shareholders as there will always be another 20% of shares in the market.
By raising money through debt financing, you won’t need to dilute the shareholding, and over the years, just as like with a mortgage, the re-payments back to the bank will pale into insignificance as the price of gold goes up in value.
And according to you, gold will eventually explode in value in the coming years.
I think it’s important to distinguish between good debt and bad debt. Debt to keep a struggling company bumping along is one thing, but borrowing in order to grow the business, or in our case to become cash generative is completely different.
On balance however all debt to that point could be considered bad as has risk, which in turn will demand higher rates, but Given the speed of our project though we will be close to production not long after.
Hi SAS. Thee is a big diff between using debt to buy a house and debt to fund a project. What i am saying is dilution, if possible, is a better way of funding than bank debt. ATB Speedy
Hi Matty,
Agree, going down the Royalty Route would be the last option to be taken, however, if that gets us over the line to finding a source of Capex funding for GGP’s share of the mining costs then all well and good. Would only need to sell 1% not 5% ???
Refer again to Paddy's post.
Jiffy - your second paragraph is key. You don't want to overburden on interest - but as importantly you don't want to be too cautious and decide to sell off bits of the company (e.g., create and sell more shares or royalty stream and give up future income) unless you really really really have to.
Those big steady income utilities, like the water companies, have (deliberately or at least knowingly - from my perspective), taken on way too much debt to give dividends to their shareholders and cover their initial acquisition costs - they would have always known there was a downside risk if interest rates went up, or, say government capped price increases - but would have made huge sums before that happened - and quite likely, scarily, banked on government funding through any bad patch before any negative environment improved!
Spade,in general I agree 100% with what you say, I think the financial term is called 'Gearing'.
The main thing is not to overburden the company beyond it's capacity to fund the debt interest payments, that goes without saying.
Somewhat slightly off topic, I read an article the other day about our glorious water companies and the levels of debt they all have and their director salaries quite an eye opener .
https://www.dailymail.co.uk/news/article-11111327/As-UK-faces-worst-drought-decades-executive-excess-engulfed-biggest-suppliers.html
Spade...i fully agree...borrowing money, in order to buy assets that can generate revenue above the cost of that debt (or lower than the renting equivalent for your housebuying example) makes sense.
Lots of private businesses try and run debt free - and can do very well doing so - but when they need to, or want to, grow fast/faster, taking on debt is a sensible business decision if they have their house in order to generate more revenue and cover the cost.
The facts speak for themselves - how many companies run debt free? Almost none - as they borrow to allow them to grow faster. That's what most shareholders want I'd have thought.
Speedy if you honestly think that debt drains commerce, then you are not as bright as I thought you were.
Ask anyone here who has had a mortgage, if they think by borrowing money for a house purchase was the right thing or wrong thing to do.
I’ll bet you 99% will agree that it was the best thing they ever did.
The ones who thought fcuk it, I’ll keep on renting, are now paying multiples every month of what their mortgage re-payments would of been, if only they had made the correct decision, and furthermore have absolutely Jack S, to show for all the money they have spent renting.
Over the years, I have actively sort out to use other peoples money to get me where I am today.
Whether that be borrowing to finance machinery for businesses I owned, or by borrowing to finance property that I still own & rent out, which in turn has given me a passive income that I now live off and consider myself retired from the day to day rat race.
I wasn’t born with a silver spoon in my mouth, and come from what was once a mining town until all the jobs disappeared in the early 80’s just after leaving school.
I started with SFA, but learned very quickly from working behind my dad’s bar, that the ones who supped their beer in the lounge area of the pub, were far better off than the guys drinking in tap room, as it was called back then.
And that is why I stated earlier that most folk do not know how money & finance can work for them, as it is something that isn’t taught.
If it was taught in schools, instead of learning about how King Harold was shot in the eye by an arrow in 1066, all of us would be in a much better place.
It’s got nothing to do about being condescending to others, because I truly believe that anyone can make it good given the education & tools to do so.
ATB
Personally I'm dead against a royalty stream type deal - giving up future revenue just doesn't make sense to me (and clearly, if it happened it would make sense to the lender so.....) - I'd much prefer we used traditional bank financing...if we can... and with as good terms as GGP can agree with lenders. I can see some dilution may happen which would be a shame for us, but the board and SD know they need to work in interests of current shareholders too so need to be careful.
SD has told us term sheets are nearly there with several major institutions - so from my pov, I hope we can secure the funds from the 5% + another chunk in debt that will see us through until some production and cashflow develops.
@Canary3,
Re_Finance re NCM not taking up the 5% and ensuing implications etc
I would refer you to one of Paddy Galls excellent posts, ie, 01st Aug 2022 re alternative sources of finance.
'There are other options available to GGP - Franco Nevada paid $100m to Solgold for a 1% royalty on it's Alpala and Cascabel project.
NCM weren't very happy when this deal was brokered and I'm sure they won't want anything similar to happen at Havieron but how much would 1% of Havieron be worth to a royalty streamer over the next 40 - 50 years with exposure to all the exploration upside that is available there.
Lots of options available to SD yet.
ATB - Paddy'
Lets also not forget SD, is a seasoned and experienced financial professional, and will no doubt have faced similar issues in previous roles should they arise that is.
What Paddy has stated makes an awful lot of sense to me.
Typo - should read comes
Thanks Antigua - don’t like to see folk fret unnecessarily!! This will be where Shaun come into his own imho!!
Exactly Red, the biggest strength SD brings to his role is the fact he’s a money man, this gives us the best chance going forward. He will have his strategy to deal with the challenges ahead and until we hear his plan we all need to chill as you say.
Not sure I see too much point in surmising what might happen on the finance front when we not only have an FD at GGP but also a well experienced ex-FD as our CEO. Shaun was the FD in charge of finances at his previous Company when they saw tumultuous growth in size. Whatever anyone posts on here, I think I would struggle to take sides with it as it is unlikely to exactly match what Shaun has already encountered firsthand. Personally, I am very happy to let Shaun, his FD and BoD guide us through the financial complexities the way he has before. Chill people and believe in the posting of Shaun as our CEO - I do!!
Mercman -by your own admission, you’re no longer invested here…..your negative spin smacks of desperation to get back in.
Hi Rotherby. I must rewrite your last line "debt drains commerce". ATB Speedy
I read with interest, no pun.
Canary3 say
"Firstly let me point our SD has raised funds successfully before.
NCM have a first charge on the asset and as we know, because SD told us, that the banks won't lend with NCM having a charge against the asset."
A first charge will be removed if we repay the NCM loan, so this is not an issue, as SD will raise the money required, operating funds are that funds to get the MUCK out of the ground, and turn it into GOLD and Copper. The banks will have a charge over the 25% which even on Newcrest valuation of last year is 300 mill US$. The real value of this is unknown, but the banks will like a very conservative estimate I suspect that the banks will lend 50% of this without blinking, SD has figures that prove it is worth a lot more.
So if we owe 40 mill and get 60 mill wit 20 mill in bank we can get funds to approx. 150 mill all in us$, more than enough to get us to a situation where we get positive cash flow.
SpadesAspade
I agree completely debt drives commerce .
Hi Merc. The COMEX and LBMA are on borrowed time. It is a crying shame that the big gold, producers,miners and refiners do not get together and create a new market. Letting Russia, China, India dominate the market will be as bad as the LBMA. ATB Speedy
Hey Speedy, just catching up with most of the posts since the weekend and really glad to hear that Mrs. Speedy is making a great recovery. Good to hear some real positive news on here for a welcomed change !!!
On a slight key change, Panorama tonight on BBC1 at 9.00 is about some 'some Billion Dollar scandal, no its not about Greatland Gold although that could be the sequel !
Could be a very interesting watch, although don't expect anything to happen to the perpetrators as a result of any findings in the documentary.
Enjoy.