Sapan Gai, CCO at Sovereign Metals, discusses their superior graphite test results. Watch the video here.
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VC - Just a continuation of the GE.
3 Stooges just taken out of the firing line to avoid the flak.
Front line expected to jump out of the trenches and go over the top till the machine guns run out of bullets.
Jolly good show chaps - a round of applause everyone !!
I think it's likely that it will be 40% rather than 60% as the latter would imply completion of stage 3 and NC not wanting their 20%, which to me seems unlikely. GGP have around £6m in the bank currently or thereabouts, £2m of which came from sales of a third of the warrants. Once the other two-thirds are sold that will increase by around £4m. Although it is a concern that the cash burn rate is increasing, up by around 60% at end of 2019, I thinkthey have no debt and with the current market cap (which one hopes will be significantly higher then) I don't think there would be a problem to borrow cash or raise cash via new share issue. Even if the burn rate continues to increase by 60% (excluding the FS contribution) this would give a cost of around £6-7m plus the contribution to the FS (if it is US$40m) so looking at a total of £13-14m IMO, with c. £10m in the bank.
2019 cash burn = £4.4m, assume increasing to £7m for 2020.
FS contribution = US$20m x 40% = £6.4m
In March they reported a cash reserve of £6m. Warrant conversions should add to that, and if necessary I would imagine that GGP could borrow fairly easily. Others probably know better than me though.
Unfortunately the fine detail of the JV farm in agreement with NC appears not to be available which makes it uncertain and open to some speculation. The only additional information available is in The Terms of the Joint Venture agreement at the End of the RNS(12/03/2019. I agree that the 5% could have been a later addition to the earlier negotiated terms of the Stages. The way the JV agreement is presented suggests this but on that basis there are other items of possible concern.
The overall impetus seems to have been that Newcrest spend the money for a straightforward increased share through each stage-ie keep it simple with no money changing hands between GGP and Newcrest during the stages.
But there in there is a possible problem with Stage 4.
Namely if Newcrest completes, delivers or incurs no less than or in excess of US$20M in producing the Feasibility study within 2 yrs of stage 3 completion in return for the 10%. This on the face of it seems in line with the rest of the earlier JV stages (no money changing hands) BUT In the Terms of the Farm in reported at the end of the RNS JV announcement in a separate paragraph it states that " Expenditure incurred in connection with the Feasibility Study that is in excess US$20M shall be funded by the Parties in proportion to their respective Participating interests in the Joint Venture at the relevant time the Feasibility Study is delivered, according to the terms of the Joint Venture Agreement".
This would mean in the event of the Feasibility Study Expenditure exceeding US$20M say US$40m GGP would be expected to contribute/fund, either 40% or in worst case 60% towards the excess (subject to what Split applies at the deliverance of the Feasibility Study applies) to Newcrest, the manager of the project. Either US$8M or US$12M. Do GGP have that kind of money in the bank?
If things did turn out that way it would be an awful way to start Later stage financial negotiations in relation to the 5% part of the agreement at market value and the later tolling negotiations.
One would hope GH is aware and that agreements/relations would be honorable between the GGP and Newcrest and that Newcrest would not try and use this possible tactic as Manager of the project to really screw GGP.
I hope really that I will be shot down in flames and these concerns will be unfounded as I have supported GGP and GH at all times.
That 5% we negotiated had Clive Latcham's name written all over it, GH wouldn't have much of a clue negotiating all the specifics of a deal like that.
That's why I grew very confident in the summer of 2018 when he was brought in with the sole purpose of negotiating a deal on Hav, they knew back then this was a biggie!
You don't employ someone with the expressed role of negotiating a deal on a specific license unless its very significant.
It's been a long haul but we are almost there, if we can just drag our arses over the line until July I think we may have enough for MRE, Newcrest will be desperate to get one so we are lucky there.
Im pretty clueless with all this type of thing, but it seems to me, It would be ideal if we sell 21% to them, for a huge amount, then get 4% of what they pull from the ground for the next 100 years..;). Any thoughts?
Not long now chaps....and ffs sake turn off the BBC and Sky news....
Ive never seen such blatant attempts at social engineering and manipulation in my life, dreadful stuff.
Just mouth pieces of the global Elite.
Journalism is dead.
The PM, Health Minister, and Chief Medical Officer ALL getting the virus at the same time, give me a break.
Up your Ar*e Boris and Christchurch for Christmas.
Re Scallywag. I'm sure Rio will be very interested too.
Morning all. The great thing about the 5% is that it puts an independent valuation on the stake and thus GGPs valuation. This should underpin the sp.
One other thing that GH said some time ago was that NC are VERY interested in Scally. I remember him recounting a conversation with NC when he went through all their assets in the Pilbara and after each one they said 'and Scallywag', 'and dont forget Scallywag'. Seems that after Hav coming up trumps, they know they missed something there.
Great shame we cant drill it for a few weeks.
Lux - Brilliant!! It never occurred to me. Peel's everywhere. I'm drowning in Peel's. I love that woman. Enuff from me...off to queue up with the rest of the hoi polloi...fcuk me (excuse the French), it's like living in Soviet Russia...one piece of bread and a hunk of lard for 2 roubles
cheers fellas. Enlightening. No need to lie awake now perusing GGP. I can now lie awake dreaming of Diana Rigg giving me a massage and feeding me grapes. That's when she was in her 20's, obviously
thanks
He definitely said that in one of his interviews - I'll try to dig it out a little later.
Schlemiel,
right of first refusal. It cost NC nothing to have this but ,my guess is it was a give from GGP to get NC to agree to the deal.
5% at market value. Same as above. I guess NC would have wanted more but GGP negotiated it down to as low as possible. I know a lot of investors who always want 75%. Don't ask me why but that is their target. Maybe it is as simple as having most of it while keeping the owners skin in the game. That is always crucial as well in these finance deals. So there may be several reasons there that joined the result.
As for the timing. I think GGP did a stellar deal at that time with the limited amount of holes in place. However, as NC does have history at HAV and probably kicked themselves for letting it go in the first place, and they know the whole area very well and they need gold like right now, NC was the right party to take the jump right then. If one of the above parameters had not been there GGP might have had to go at it for a longer period to prove up more which would have been ata cost to GGP and probably ended up in the same place, if they were lucky.
So I guess we were fortunate that the stars aligned and GGP took full advantage of the timing.
MS
Cheers PG
You say 'minimum amount' Newcrest wanted. Did GH confirm this. I say this simply because a desire to achieve the minimum does suggest a desire to raise it upwards to achieve more than the minimum.
thanks anyway
schlemiel - I remember GH doing an interview where he mentioned that Newcrest wanted a clear path to 75% and that was why the 5% was added in. That was the minimum amount that they wanted to be able to achieve to close the deal.
Personally I think it was very astute on GH's part to get this 5% at 'fair market value' - this 5% will probably cost Newcrest in excess of the costs of the previous 70%
ATB - Paddy
fomenting as they do - no need to reply, just musing -
Why does Newcrest want first refusal over GGP's other licences? That expression of interest is a positive and does suggest they see potential value what may lie beneath. Does Newcrest see a geological extension from their previous involvement in this location which may explain the insertion this part of the agreement?
Why 5% at market value following the various hoops that Newcrest have to jump through before that happens? Why not 10%, 2%, 15% or even the remaining %? Why 5%? What's the corporate reasoning behind this figure from the perspective of GGP and from Newcrest's angle? The 5% appears at first read to be an arbitrary figure but cannot be. There's always a reason.
The Havieron deal is in many ways outdated in that it was negotiated and agreed to upon information not known. Only now, after thousands of metres drilled, has the true scale of Havieron revealed itself.
Has anyone seen the full agreement?