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Everybody is looking at the 5% valuation from GGPs point of view. Whatever amount is used GGP will be assessed on 5 times this but Newcrest's HAV asset value will be 15 times this adding to their value. So it is in their interest to have a realistic value as well.
Looking forward to the news soon
imho, gla, Matt
Imo another way to look at is - if you assume 90%+ market value attributed to GGPs share price as a proxy for 30% Hav stake that GGP has, then at £526mn market cap the 5% stake would be valued at around £70mn? That's the closest public market value attributed to Hav can be seen? Not seen any good estimate here that's based on similar incremental acquisition of the license by some other JV?
There’s many factors that can go into the 5% negotiations. Market cap will not be one of them - this is (or should be) a well known fact.
Here's a repeat of my guess:
I have had a go at using the Newcrest / Pretium deal to try to value Havieron. Obviously I am no mathematician. Feel free to contradict me.
Newcrest Pretium acquisition.
09.11.2021
Newcrest are spending $2.80bn US for 95%, so the 100 is valued about $2.95bn US.
Brucejack has an AISC $743 and is forecast to produce 311k oz pa over 13 years, which is a total of 4,043,000oz Au. The deal values each oz Au @ $730.
Havieron PFS suggests the AISC will be $643 and the area in the PFS will produce 160k oz pa over 9 years, which gives a total of 1,440,000oz Au. If we use the $730 oz Au figure on Hav that values Hav at $0.25 or £0.18, or £0.054 for GGP's share. It will actually be more than this, though, because of Havieron's lower AISC.
However, we know that we have 4.2m oz Au eq in the MRE. Applying the $730 oz Au figure to that values Hav at £0.55, or £0.165 for GGP's share. Double the MRE, which doesn't seem unreasonable, and you get £0.33. That is £0.039 per m oz Au eq.
Regis / Tropicana came out about £0.044 per m oz Au.
Multiply the average (£0.042) by 4.2m oz Au and we get £0.176.
10m oz Au eq would mean £0.42 and so-on. You can do the maths.
Obviously the Brucejack mine is up and running while Havieron isn't yet, but there is obviously a lot of room for our SP to climb. It may take a while, but it will definitely happen. You only need to look at the satellite to see that.
Using the £0.042 per m oz Au eq figure to value the 5% Newcrest can acquire (0.042 mulitplied by oz Au, divided by 6 to get 5% instead of 30%, multiplied by number of shares (4,206,000,000)).
4.2 m oz Au: £123,656,400.00
6.3 m oz Au: £185,484,600.00
7.4 m oz Au: £217,870,800.00
10.0 m oz Au: £294,420,000.00
15.0 m oz Au: £441,630,000.00
20.0m oz Au: £588,840,000.00
Berenberg 5% value at $220,000,000 / £165,000,000. Implies 5.5 m oz Au.
(Company value at 23.01.2022: £0.142 per share / £597,252,000.00 market cap.)
If we use these figure to value the 25% remaining, that gives these figures per fully diluted share:
4.2 m oz Au: £0.15
6.3 m oz Au: £0.22
7.4 m oz Au: £0.26
10.0 m oz Au: £0.35
15.0m oz Au: £0.53
20.0m oz Au: £0.70
Interesting times: looks to me as though at the current price we're sitting on the launchpad.
Q
Thanks Prof, good read.
This is the bit that gets me, Hydro, as I think looking at the Pretium deal gives real insight into Newcrest current mindset.
We know they paid $2.9b for Brucejack, and we know that on proven reserves it is say $700/oz, though using indicated figures you get in the $300/oz range. We also know we have copper and a more economic / profitable mine based on current info. Brucejack, whilst having amazing though sporadic grades, has had its issues. Put it this way, it’s no HAV.
If they’re willing to drop that kind of capital in rural Canada for 100% ownership, I just don’t see them stopping at 5% with us when they already own 70% of a mine sat in their back yard. Unless they have categorically chosen to keep GGP alongside for some strategic purpose, I just can’t find any reason to think they won’t try - it makes too much sense for them.
It makes you wonder what language is in the JV agreement - if I was GGP and wanted to see the asset into production over the next 30 years, I’d be looking to sell 1-2% royalty stream, (a) for a sizeable cash injection, and (b) a small dilution of our interest to a separate party might deter any takeover. This then clears the way to move towards being a multi asset company.
Surely anyone should buy into GGP for the suspense and game theory alone ;) All very positive and the only way is up - it’s just how high and for how long!
If the market thought we were going to get over £200 mil for our 5% we wouldn`t be languishing around our current price. I`ll go along with Seav`s valuation of around £70mi.
“The market” don’t know Jack about the 5% valuation. Silly to state that. Less than 4 weeks and we will all know where the cards fall between GGP and NCM.
Hydro, isnt the shorter Newcrest ?
What possible advantage would Newcrest gain by shorting GGP?
Newcrest shorting GGP??
Reputation in tatters
Future deals with juniors compromised
Industry pariahs
I think not
any suggestion that Newcrest would be shorting demonstrates a really low level of understanding
NCM will eventually take all of HAV. They want all of it. They may need to take all of GGP to be able to take HAV, but they will take at least HAV. My gut says later this year. But let’s wait and see.
The longer it takes them to take HAV / GGP, the more it will cost them.
Lot of waffles been eaten this morning 5% will come when both parties agree terms:-)) My crystal ball tells me 13p a joke:-))
Crystal ball tells me gold mine is much money unless the James gang turn up and steal it:-)).
If newcrest want all of haverion they will have to make an acceptable offer as the juri juri etc will carry on. An in the ground price for what may be a low estimate of whats in the ground won't achieve that . Taking on the experienced staff they have,ggp will demand a good deal and i can't see less than $3 billion. How much of that us shareholders would get will be nearer a quarter of that. But ggp would bevin a strong position. Last day for the shorters today, can't see them having much success going forward.
Newcrest shorting GGP?
Arguments for
Targeted small area for MRE
Updated even less of that area for PFS to keep it under a tier one mine.
Accelerated works to trigger 5% FMV, before other targets investigated.
Arguments against
Reputation
Good working relationship with GGP - although SD having 5o form an experienced team to fight our corner
All of the above arguments for, can be explained by the need to keep Telfer operational.
I suppose it depends which side you are standing on, as to which one you want to believe.
Keep holding. Hopefully good news starts tomorrow evening.
''Newcrest shorting GGP??
Reputation in tatters
Future deals with juniors compromised
Industry pariahs
I think not''
To secure themselves possibly the largest gold discovery in several generations and guarantee the future profits of the company for decades?
Possibly!?
Some forget that NCM 's overarching strategy is not just about Havieron or indeed Australia - look at their portfolio - spinning a lot of plates and the Pretium deal displays they have growth plans on other continent's too.
Good idea to think about NCM's strategy with the more corporate and expansive POV that Sandeep and their BOD have, yes Havieron is critical to Telfer but they have to spend a lot of time and focus on other things.
In a way, their grip on Havieron is very secure as they already hold 70% (and probably soon 75%)and time is their friend in that they could perhaps choose to buy out in a few years after risk is vastly nullified and they have a better idea of Juri/Scally prospectivity. yes they pay more - but risk is lessened at that stage so would balance things out from a corporate view.
Good corporations take long term views carefully weighting risk as much as opportunities, don't get me wrong they may well buy us out by 2023 but when considering things from NCM's view - take onboard all of their considerations as a business and also their major shareholders who are probably more risk averse than us crazy b@stards :-)
A point that needs to be emphasised, is that current share price will have NO impact on the 5% valuation !
But the reverse is also true … the 5% valuation could have a huge impact on the share price.
Sums me up to a tee dip666 :-)))
I agree the share price doesn`t come into the calculation of the value of our 5%.but does indicate the market believes the value is somewhere around £60-£70 million. If the market has got it wrong and it turns out to be £200mil we are due for a massive upward re-valuation. We shall find out in about 3 weeks time.
Dcgc.. nope you nor the market can use todays share price for what they think the 5% is worth, that’s just stupid ! This share price has been manipulated since 32p for what reason I cannot understand, only for large accumulations whilst, taking it up and down for huge profits !
We have to also keep in mind that that the 5% FM valuation we will probably see is a result of two teams negotiating, not the same as an actual public valuation report conducted using guidance under the Valmin Code where some of us can happily pore over a massive document reviewing every little detail.
If the above were the case, we would see a range of values and then a case for selecting a particular value and methodology from the various ranges and secondary methods used to justify final assumptions.
Example:
1/ Valuations within a 10% range are agreed so average taken and £210m is the price tag for NCM to mull over for 30 days because :
- GGP happy at £220m
- NCM happy at £200m
Both happy.
2/ Say we go to arbitration and £200m gets determined as the price tag for NCM to mull over for 30 days because :
- GGP submitted £425m for their valuation
- NCM submitted £200m for their valuation
- 3rd party calculated £300m FMV so they go with NCM's value as per FMV process as determined as being closer to FMV
NCM happier.
3/ Say we go to arbitration and £350m gets determined as the price tag for NCM to mull over for 30 days because:
- GGP submitted £350m for their valuation
- NCM submitted £200m for their valuation
- 3rd party calculated £300m FMV so they go with GGP's value as per FMV process as determined being closer to FMV
GGP happier.
We'll only be told the final price tag from my understanding, perhaps not even if they had to use an average if no 3rd party required? If so, then making assumptions it is an accurate and true valuation is perhaps not that accurate as taking the FMV price tag and calculating our 30% of Havieron is thrown off by even a £10m difference for each 5% :-)
Looking at scenario's 1 and 2, to me it really really makes sense for NCM/GGP to be collaborative as some really random outcomes could happen via 3rd party based on whatever valuation each party submits, even with the same FMV value and also why I think each need to keep this in mind and be sensible!
So who do you think the said 3rd party would be , independant obviously but would they be mining experts or do they do this kind of thing for all business types ?
Oops my uber long post should read looking at scenarios 2 & 3!
Freddie, probably a consultancy firm such as SRK Consulting who authored and conducted the example I studied who conducts valuations under the Valmin Code as they would have the relevant experience/knowledge to assess a FMV to judge both valuations.