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Hmmm. A new poster with, coincidentally, exactly the same viewpoint as shakhtar.
So, you've just joined the wonderful ranks of LSE today 'down-to-earth'. What made you do that, might I ask?
You seem to be thankful one moment to the mgmt and cynical and dis-trusting the next.
Anyway, if you've made your decision to exit after many years, why bother posting now?
Should be some decent newsflow in the next week or so, annual results and Kapan guidance.
Ciftay are hard at work for us and yes, they are doing work for which their payment is an investment in Chaarat, seems like a great endorsement from a pretty big company.
Agreed - the mgmt is comfortable doing business in the FSU - this typically does not bode well to anyone but management. Making money in Rusia, as Martin and Artem did, does not necessarily mean making money for your partners.
I was a very long term holder and took advantage of the high share price supported solely by Martin and the other Oligarch to bale out at a nice profit. Am very thankful to them indeed. How long the facade will last is anyone's guess.
Does anyone know anything about the deal with Ciftay? They are presumably not going to invest a penny but to commute a small part of their profit from working with the company to a share in the deposit. Is it Martin trying to make the project look better? One wonders.
As to using 5% discount - well the investors in the "convertible bond" are charging 14% for their money so the minimum discount rate to use is probably that. is it not?
As a non-holder, I presume you haven't been studying the development of the Tulkubash project alongside the Kyzltash project for the last 8 years or so like a lot of investors have on here.
We've watched the company being dragged through Krygyz legal battles and slowed down by previous ineffective mgmt and Chinese involvement. We finally have a mgmt with over 40% skin in the game capable of delivering a fantastic business in the Krygyz and the FSU where they are comfortable and very able to conduct themselves.
This company is building a big stake in the region, as LTH's we are all well pleased and in profit with our investments and we're all looking for a lot more in the next 2 or 3 years.
One point I would add - the joint venture with Çiftay valued 12.5% of Tulkubash and Kyzyltash at $31.5 million, implying a valuation for the whole asset of $252 million which, considering the stage of development of both projects (Kyzyltash in particular), is not bad for a 'mediocre resource'.
Well, I try to look at all my investments objectively so tend to look beyond the 'marketing' as you call it.
I don't think that anyone would paint the Tulkubash FS as massively compelling (and I too disagree with using a 5% discount rate), primarily due to the mine life, extension of which will improve the value considerably (consider the change the last 12 months of drilling has made). But what is compelling about this ore body is the potential scale.
This FS covers only a fraction of the strike length and Tulkubash alone is likely to be a 5m+ oz resource. And whilst the grade is nothing stellar it is adequate for an operation of that size. But to consider Tulkubash on its own is to miss the point. Kyzyltash parallels the Tulkubash ore body and is already 5m+ oz along a fraction of the strike. It is refractory so requires a more capex but has a decent grade and is likely to be very large indeed. It is envisaged to produce 200-300k oz per year. The cash generation from Tulkubash will assist in the development costs.
Development of Tulkubash is already ongoing with infrastructure being put in place. I have no doubt that they will finance this project which is where the “top class management” management come in.
I think Kapan was a decent purchase. It is not astonishing (in the way that BMN's Vametco was for example) but it is a decent resource that is very likely to facilitate mine life extension. In a rising gold environment it will be very profitable and provides some cash flow for other operations.
But all of this also misses the point to some extent. The USP of CGH is the M&A activity within an area that can provide plenty of potential targets and CGH has the “top class management” that have the contacts and business skills to follow this through.
So, I would say that I understand your perspective whilst disagreeing with your valuation.
By the way. You say 'just trust me'. Of course I don't! I have no idea who you are. But neither would I expect you to trust me either. This is, after all, just a bulletin board to share views.
Daisan, as a holder you’re obviously seeing and hearing what you want to see and hear in all those company’s marketing campaigns, but for someone who understands something about mining, and mining in Kyrgyzstan in particular, it is obvious that company is trying hard to ramp up what is in reality a very mediocre project.
“The initial post-tax net present value for Tulkubash, using a 5% discount rate and a long-term gold price of US$1,300 per ounce, is projected to increase to US$70M with an undiscounted total cash flow of US$114M.”
That’s not just mediocre, that’s poor! A marginal project at best! Who are they kidding by using 5% discount rate?! Themselves and their shareholders. It should be at least 14-16% for Kyrgyzstan and the type of risks involved at this stage of the project. The IRR they report is 20%. I would not touch a project of this size, where the margin of error is so small, unless IRR was well into 40%.
Just think about it - “undiscounted total cashflow of $114m”! Do I understand what that means? That’s a total value that this project is expected to generate over life of mine! Before discounting to today’s value! Before adjusting for risks, including financing availability, execution risks, permitting risks, political and social risks etc etc.
The resource is 1.2g/t. Just trust me, this is poor, even for a simple leaching operation. This project will never work financially. They need to triple or quadruple the oxide resource before it starts to make some sense.
The Armenian mine was bought at fair value, ok even if one accepts there was a discount, maybe it’s fair value is $70-80m. So what? I repeat what I said - at market cap of $160m and with debt of $70m this company is ridiculously overvalued.
So far I haven’t heard a single argument from anyone on this board to convince me that I’m wrong. Put it into numbers people, show me where the fundamental value is coming from, apart from empty statements and promises by the “top class management” and I might change my mind.
I must admit I did have a bit of a chuckle over the 'mediocre' comment.
Well, I wouldn't consider myself as massively knowledgeable but I do feel that poor comment should be rebutted when it is posted.
Great interview with Dusty on the 'mediocre resource' Shakhtar declares, where just last year's drilling was in fact the lowest discovery cost Dusty has ever had in his 44 years in the industry adding 650 k oz of gold and another 1.5 years to life of mine.
https://www.youtube.com/watch?v=1uWn1p3uleE&feature=youtu.be
Wish that I was as knowledgeable as you
Alternatively you could look at it as a company that:
- has a management team that has a level of excellence way above most other AIM companies
- has a vision and the contacts to build a major gold miner in the FSU states
- has picked up a producing asset (with production levels and resources in the same ballpark as AAZ) for not much more than the amount invested in it in the last couple of years by Polymetal
- currently has 1.2m oz reserves and 9.1m oz resources
- is targeting 1m oz production and 20m oz resource base within 5 years
- has identified a gold district that has identified 7m+ oz on 1/6th of the strike length
Always interesting to see how people view things differently.
Why don't you say what you mean?
Why would it "take off"? What are you basing your opinion on? This company is overpriced by a mile! Market cap of $160m plus net debt of probably around $70m, that's an EV of $230m! For what? A small mine in Armenia that Polymetal couldn't get rid of and had no buyers until Volynets showed up at the door, and a mediocre resource in a country with one of the highest political and social risks. The only reason the share price is so high is because Martin is buying up all the liquidity there is in the market. Let's hope he doesn't run out of money as this will crash to 6p, where it belongs.
Keep faith arrow it will take off more news coming up
Well the response was pathetic, aim is dead, if things remain like this no one will bother investing, a positive rns and no response, had it been negative we would have had a 30% drop I'm getting to old to be wasting my precious time.
Excellent report imo.
Gold up, Chaarat down.
For some reason gold price does not seem to affect Chaarat SP?
nice to see gold going up hopefully we can get some news soon and move up to the 40p mark
Hi Pablo.... Sat with my father during the 1950ies while he laughed hysterically at Sgt. Bilko. I was 15/16 before I understood why ... developed most of my early negotiating skills studying Ernie’s techniques. ( not pc today ) :) BW
Enlighten me on your name, I used to watch loads of those Phil Silvers’ shows, magic. Don’t think you’ve got many worries about ‘bust’ if you’ve averaged down to the teens, it’s ‘win big’ for you and me. My first buy in was at 64p but my average is in the low teens thankfully now. We’ve outlived Dekel, Linda and others and watched Martin A and ‘Fasanara’ take complete control. He’s got so much skin in this game, he’s not going to let us or himself down. Have a feeling his average might well be in the 20’s now, he’s just kept on buying all the way back up
Held for 8yrs (approx.) .... topped up during the lows of 2015 ... haven’t top sliced ... win big or bust now. :) BW
Sounds good, convertible bonds taken by a new investor for another $5m for a total of $15m. Convertible @ 37p should that be desired at a later date