Roundtable Discussion; The Future of Mineral Sands. Watch the video here.
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A quick Google throws this up: https://seekingalpha.com/article/425081-10-gold-producers-with-undervalued-p-e-ratios
A few years old now, but don't see why it wouldn't still be relevent. P/E ratios mentioned are: 22.84, 12.58, 22.33, 21.55, 13.88, 11.61, 10.76, 10.81, 7.04, 10.23.
Now we can argue until the cows come home as to what an appropriate multiple might be for Condor. It's possible that there may be some factor, tax probably, that I'm not taking account of. I'm no accountant after all. But your AAZ example at 80k oz at low AISC doesn't sound right either, unless of course it's just stonking good value, which is possible of course.
If AAZ is all you say it is, then frankly it implies that gold mining juniors are simply not being valued the same as most other companies on the stock market. Which is possible, but would be strange. Price-to-earnings ratio's are a standard metric in the rest of the stock market, and 7 is hardly considered to be a challenging multiple in most other scenarios.
Production oz's is less important than profit as far as I'm concerned, but you say AAZ has low AISC as well? How much money are they making then? Something doesn't seem to add up somehow. Do they have a short mine life or something? I could see the market marking down a company if they were just about to run out of gold...
Hi el , yes tsg . Tsg p/e was worked from the previous years production with a much lower gold price .I think there probably is a flaw there somewhere .I would have thought p/e would be worked out profit after uk tax as we are a uk listed company but I am no expert in these matters .maybe we can have a few examples of a uk listed 120 k producer with a mcap of a billion usd . I think cnr would need to be debt free and paying dividends to get full rating which is many years away imv
I prefer simplistic comparisons . Aaz produces 80 k oz ,is expanding into other projects has lower aisc than predicted for cnr is debt free ,paying a good dividend and talking about a special dividend .a mcap of £150 m .
I want the billion dollar m cap for sure and in years to come it could well happen depending on gold price but right now I am happy aiming for 80 p .
Hard to say Simms, but I tend to think that we ought to be valued on a P/E ratio basis, once production is established (might take a couple of quarters to get up to speed and the market to start believing it). So you attempt to work out what that would be, and that's the valuation gap to be closed between here and there.
There's quite a few variables to work out that P/E-based valuation, but the biggest one under our control is the size of the plant, and the associated dilution that'll go along with the financing. Until we know whether we're starting at 50k oz, or 120k oz, and given that toll mining may, or may not, add another 40k oz or so, with the profit split in some fashion... it's very hard to put any concrete numbers on it.
Another important variable is what P/E ratio might be appropriate. There's quite a range to choose from, but Seingred mentioned one recently which had a P/E ratio of 7 (and was considered to be good value at that price).
My personal spreadsheet numbers are something like this: 120k oz production (timeframe uncertain), $1870/oz gold (today's price, may be higher, unlikely to be much lower over the long run IMO, BWTFDIK), gives $140m profit (after AISC, but before debt repayments or other expenditure). A P/E ratio of 7 gives just shy of billion dollar valuation (which seems fantastical now, but unless there's a flaw in my maths, conservative if anything). 180m shares issued at that point gives just over £4 a share.
So that's the gap to be closed between now and the market assigning a fair-to-under-valued P/E ratio to a 120k oz operation. Exactly how and when that gap closes, and how many more false dawns we'll have to endure, I really can't say.
Short cutting time to production through toll agreement is clearly highly beneficial to Condor as it would signficantly enhance Condors prospects and share price and make future funding of plant a great deal easier. Certainly the likes of GGP hsve reached dizzying heights on ability to fasttrack gold production through agreement to use a local processing plant. However as of today the only thing we do know is the mine build and i am interested what anyone makes of the likely value based on that scenario.
HI simms - yes as evidenced by Pure gold on AIM last year/this.
"For me the goldilocks zone is between confirmation of construction and first pour. "
I think my question would be, if CNR doesnt follow the "normal" junior producer model, but instead announces a toll milling agreement for a share of 40koz pa with Calibre and that is to happen within 100 days (MC estimate) - does that goldilocks zone become condensed into those 3 months? And the SP moves accordingly.... And with further uplift when subsequent actual plant decision is made / deposit put down and a timeline for full construction? The market would clearly recognise that any further need for dilution / fund raising is minimal at that point with a reduced $50M capex and a revenue stream from toll milling already underway.. thoughts?
regards
T123
For me the goldilocks zone is between confirmation of construction and first pour. Generally the share price multiple i have seen is 3+ or getting closer to its True valuation as once gold is being produced there are industry metrics. Would be interesting with more experienced gold investors what Condor market cap should be once we have first pour and assume no issues. For me we know where we are today and i am very confident we will get go production on time and assuming $1700 gold as base case where does that get Condor. We can then have a pretty good idea the gap between the day the mine is decided on and finance is in place and that first pour date. MC did once mention a valuation of gold mine in production based on indicated gold but it must be more nuanced than that but would be a useful number and compare to Mako and Calibre.
E lion . Yes a correction or two is absolutely to be expected . I still think there is a big stock market crash awaiting and goldies will get hit so I am prepared for buying over the next couple of months .And selling. Too . I dont think dictos theories work for aim . Cnr holding up well tbh today .I am only buying here sub 40 p .There are more enticing shares right now but happy to sit tight in cnr right now .
Personally looking to add to shg and aaz and widening early stage small cap explorers as this is where I reckon the best gains will be over the next 6 months .
mb, did you say you sold the 22K shares you bought yesterday? Is that right? What new information did you have when you sold that you didn't have when you bought?
I said a few weeks ago that I was suprised the gold pullback then wasn't longer and/or deeper. A good pullback is healthy in a long bull market. And yes may throw up some bargains as a result. A buying opportunity though IMHO, rather than any reason to question the overall gold (and Condor) investment case. I follow this guy on twitter for most of my gold technical analysis insights FWIW - https://twitter.com/Northst18363337
I echo that seingred. It’s why I took my 22k buy from yesterday off the table.
Just surprised how quick gold pulled back but even more so why Jim dug in for 100k which is good news but the turnaround was when they must have registered the rns fir this morning.
Still have my original holding here but I also feel it’s going lower for now.
Elise ,I said you could maybe be buying back ggp for half price .well on the way now . Personally I think the next couple of months are going to be traumatic generally and there will be great opportunities to buy goldies at discounted prices ?cnr hasnt gone cheap enough for me yet to add but there are a lot of good shares. Getting hammered and more to come .bargain time aproaches .thr looking strong though sammy boy .
https://www.kitco.com/news/2020-09-22/Gold-price-has-room-to-test-support-1-714-in-this-correction-Moor-Analysis.html
Hats off to HM as who else is putting their hands in their pockets and buying. If MC has moved to proceedings against final holdouts this is good news as that land owner will quickly sell. If it went to court and they lost (almost certainly) the price of the land would be considerably less. Also the local villagers waiting on jobs must surely be the best soft power, assuming the landowner is known to others as they are literally holding up employment. However it is slightly odd as i was not aware this land owner was owning any stretegically important land as MC said we own all land for mine location so i do wonder where land is or whether its a government license requirement. Otherwise crack on as it will take 12-18 months to build the mine depending what prep can be done now and mine decision. I suspect the fastest route is a key factor.
Sorry, link appears to be broken. This site has similar info: https://www.pinsentmasons.com/out-law/guides/the-model-code-on-share-dealing
Agreed AF. The rules around BoD trades are often misunderstood. Directors cannot buy if they are already in possesion of price sensitive information. They also cannot buy in a closed period prior to interim or year-end financial results.
Since JM has bought, we can assume he isn't breaking these rules, but all that means is that he isn't aware of any news that the market is not aware of. eg. That the land purchases have already been completed or that Calibre have agreed to a toll mining deal. It does not mean that there will be no new news for x amount of time, merely that JM didn't know of any when he bought.
More here: https://shareinvestors.co.uk/2017/04/21/understanding-the-rules-and-intent-of-director-share-dealings/
If one is inclined to believe book5 on ADVFN, then it sounds like we have entered into compulsary purchase proceedings for the remainder of the land. Assuming this is true, then this represents the beginning of the end for land purchases. No idea how long the proceedings will take of course, but it shows that we're entering the final chapter of this particular piece of the puzzle.
I disagree in respect of news, the land purchase could occur at literally any time, a contract could be agreed with the vendor(s) today for instance. The fact it is being negotiated is public domain and the decision to sell out of our control.
Two issues come to mind with this purchase......news may be further away than I thought and secondly the buy is at a time where investors are careful about the level of risk in the current market. But clearly he sees this as a good level to buy.
CF, net worth is irrelevant. Do you buy shares with your house market value? No of course not. Most of his wealth is tied up in various assets, and thankfully for us, a good proportion of it is in condor. And he continues to buy more. It would be a better comparison against his free cash position, which of course we don't know.
On the other hand, bet you wouldn't say the same if he just sold £50k!
More shares in safe hands yet again. Jim is buying for a reason, irrespective of the amount he is buying relative to his wealth, the fact is, he is buying. If you were a billionaire why bother with a minnow like Condor.
Jim has a plan here, just sit back and let this story unfold.
cf, Liquidity is likely more of an issue than his personal finances. Nothing to suggest he wouldn't like a few more million, but buying them on the open market is probably impossible without the price going nuts. That's why guys like him like placings and warrants. Plus, buying a small amount is better than selling a small amount in my book!
Remember, Jim is worth around £1billion (from Google 2019). If this is correct, he has only invested an extra 0.0043% of his net worth.
That's like me investing something like £400! Good these shares are in safe hands, but to me it shows there isn't enough wider interest in condor at the moment. We are getting towards the business end, come Mark, get things done.
Great & happy to see internal support but probably means no 'game changing' news for a month though! Maybe final land acquisition as that could come at anytime?
True ‘Rajbury’ not that it makes an iota of a difference here! I see gold is still taking a hammering, over $200 down from the high! Still holding and trying to keep the faith, hard to do after a recent top up in the mid 50’s. ATB & GLA as always.
Always a vote of confidence