Roundtable Discussion; The Future of Mineral Sands. Watch the video here.
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OK, my opinion, and stated before, for what it's worth...
The RNS wording states, very clearly, that, "Under the joint venture agreement, if the option exercise price cannot be agreed by this date, each party is thereafter required to notify the other of its assessment of fair market value. If both parties' assessments are within 10% of each other (now 20% as agreed), the option exercise price will be the average of those assessments. If both parties' assessments are not within 10% (now 20% as agreed) of each other, the parties will proceed to independent expert determination, with the expert being required to determine which of the values nominated by the parties is to be the fair market value."
It's clear!
That all said, IMHO, we'll (GGP) be massively outside the 20%.
So, what does that mean?
If the RNS T&C are clear and accurate, then the arbitrator has to chose between the two figures.
However, there is absolutely no problem, legally, for both parties to agree to something else, prior to, or during arbitration.
The problem, is that none of us know EXACTLY, what the actual T&C state.
If, purely for example, we're 50% out in the FMV figures, or indeed maybe significantly more, do investors think that Newcrest would actually hold us to their, in this example, hugely 'discounted' figure?! That would, at the very least, completely change any relationship we ever had with them!
Let's see...We can all carp on about this, including me, BUT, until it's all resolved, who knows?!
That all said, we all know, as Newcrest do too, of course, that, at Havieron, "every drill hole is finding more gold"!
@SaS (and Others)
"..... go and Yell off the cliff tops out to sea, in a force 10...."
If you're needing someone to perform this task I'm in the perfect northern location and not doing much else today, although to be fair it's probably only a Force 6....maybe force 7 during squally showers.
Cmon ladies & gentlemen, are we still chatting about the 5%, six months on.
I know it’s an important piece of the jigsaw, but nobody and I mean nobody has got a clue apart from the directors of both companies, as to what is actually written down in the agreement that was drafted.
You might as well go and Yell off the cliff tops out to sea, in a force 10 as no one will hear you.
All your musing’s are all based on “ If’s, but’s, maybe’s” and total guesswork.
Why not just wait until it is announced, about which path they are going to go down. Because as sure as eggs are eggs, nobody on this board will be correct in their interpretation’s.
Not having a go at any individual, but this is becoming very very tedious.
With the passage of time since the 20% clause was introduced and no agreement reached I think it is safe to assume that the 2 parties are not even within say 30% of each other's valuations otherwise they would have had a basis for compromise.
Hence the speculation that Newcrest's valuation of the 5% is maybe only $50-70m. Had it been $100m with Greatland's at say $130m I would have expected a compromise to be reached.
The passage of time tells us that has not been the case. The revised MRE of 6.5m oz that GGP dropped on the market in March must have widened the gap between the 2 valuations to such an extent that arbitration is the only option now imo. GGP have nothing to lose on going down this route - if they were being saddled with a $50-70m valuation anyway they may as well go for broke so to speak.
I would happily settle for $130m to bring this to a conclusion - that would be a reasonable outcome if the 6.5m oz is acceptable.
5% x 6.5m oz x$400/oz say = $130m.
Clearly Newcrest want a lower figure. Business is business.
These are just my musings. Just trying to work out what might be going on behind the scenes.
Panama - agree with everything in your post.
No point speculating about the JV negotiations - but NCM were firmly in the driving seat here - having negotiated many previous JV's with undoubtedly a huge legal team advising - and also with Telfer nearby and nearing the end of it's life. GGP had great initial results from the deep drilled holes, but needed a JV partner to provide money for drilling, and I beleive GH/CB chose wisely with NCM due to Telfer and need for a find to feed that mine ASAP - and do not forget SD has said he could not beleive how good the tolling rate is for processing GGP % of Hav ore.
When the Juri JV was negotiated, my thoughts are that Hav required much more drilling expenditure than was envisaged - due to the size and excellent results, and NCM were probably spending a good bit more than the JV stages required, so NCM justifiably wanted to get to 70% ASAP, and the point when GGP had to start paying their share of drilling costs and capex. GGP would have struggled to get finance for this from the market, and no appetite for further dilution - so again NCM provided the $50m loan and drove a hard bargain on the Juri JV. NCM were in a much stronger position than GGP.
Would SD have managed to do a better deal - we will never know. Also SD was saying he'd have bought Telfer for a $, but that would have been a huge gamble - I think Paterson and Hav will feed Telfer for years - but we did not know that at the time.
We are in the period where patience is required, until we get to production and start getting revenue. I have been convinced by Hydro, Costa et all that the SP is being manipulated - but personally I have continued buying all the way down. Have made significant purchases in 2022. I am reassured about my stake here by Bamps/Paddy et all. I read and listen and make my decisions.
Now I read Tymers posts yesterday - and he always goes on about greed. I am fortunate I have funds to invest (through hard work). I am investing here - realising AIM is high risk - hoping I'll succeed and be able to help my kids and grandkids have a better life. Like many I was brought up in a council house with hard working parents. So if investing to try and make my families life better is greed then I have to accept that.
Tymers also said not trading is based on greed - I wish I had traded this share - I never held because of greed - lack of time and yes probably ignorance - not being an experienced investor. I accept learning when to sell and take profit is the hardest thing to learn. But with GGP - I really beleive the risk from here is very low, but many will take fright and sell thinking there are quicker profits elsewhere.
GLA. Read, research listen and make your decisions.
Thanks for the reply Rational
I gather from interviews that SD is not impressed by the deals signed up to by his predecessor (s?) so assume he will be negotiating hard.
With the agreement to expand the negotiating gap to 20%, I thought that was to prevent the need of an Independent Experts services.
The 20% target zone tells us that the original starting points of both companies were miles apart.
Chester.
I think it's been confirmed by a few people Strudel that there is no 12 month deadline for agreement of the 5%.
The 12 months only referred to the time limit that NCM had to inform GGP of their intention to take the 5% after delivering the PFS.
It's still in both NCM's & GGP's interest to get this sorted in the shorter term IMO - with the amount of news that NCM have lined up for the second half of 2022, it would make total sense to have the 75% wrapped up before they hit the market with their upgraded MRE in August, the DFS in Q4 (probably) followed closely by the decision to mine. There will probably be an outline of the possibility of converting the starter mine to a bulk mine included with the DFS so that 5% will grow & grow from an exploration upside the longer that it's left to sort IMO.
ATB - Paddy
johnpwh. In the arbitration process, the independent expert will be required to choose one or other of the parties' valuations. After that NCM will have one month to decide whether to take the option or not. The IE would not be expected to come up with a third valuation. There was an interesting post yesterday that suggested that NCM may take the valutaion which is chosen by the IE and then attempt to negotiate from there. It's one very big game of poker, who will blink first.
strudel - great post, but there is one error. The 12 month time period is now moot as it referred only to the period within which NCM had to declare their intention to enter the 5% process. That was initiated last December and so the 12 months is now academic. The next time limit will follow the IE's decision as NCM will have one month to decide whether to take the option.
ATB - RA
Love it Strudel. Lol
Sandgrounded
'We were outmanoeuvred by NCM'. Think that is inevitable in these situations in my experience, where independently of the rights and wrongs money (and the need for it) talks .
As they said memorably in one series of 'Peaky Blinders'........'Big f*cks small'!
There have been lots of good posts making sensible points about the 5% sale. I was musing, pre-breakfast, that the dragging out of the process to agree its value probably suits Newcrest as much as it suits us - we are close to the six month anniversary of NC triggering the buyout clause. Both parties probably didn't expect to be here with no agreement yet....
Using numbers just for comparison, and not strictly related to anything specifically Havieron or gold....
NC said they wanted to buy an asset that the last formally recognised report said was the size of 3. The valuation they apply, because they are big company cautious / used to getting their way, makes it look like a 2.
GGP said "eh?" when they were offered that and legitimately did a fresh report for up to when NC said they were buying, using all the correct parameters, that formally said it is actually a 7. Even if NC still are cautious they would have to say to their shareholders we need to cough up 6 to buy this.
In the meantime drilling continues and the size and scale of HAV continues to expand. So NC are now likely to have to persuade their shareholders to be happy that the original concept of paying 2 to get hold of something that everyone was fairly certain was going to be a 10 is now pay 6 to get something that everyone is fairly certain is going to be a 15 (or more).... And as more drilling happens the true size becomes more and more known and the 15 climbs upwards.
It also crossed my mind that NC will get more and more nervous that the 5% deal hasn't been agreed the closer we get to December and the 12 month time period expiring. If NC hadn't shared their workings with GGP as to how they reached the figure "2", I think SD said that to the folks at the face-to-face meeting in London, then they are the ones faffing about and causing delay - the reluctance to share the calculations probably points to an embarrassment of how much they thought they could screw the price down cos GGP are the minnow, IMHO.
And just as I stopped musing I came across Bamps morning geology post:-
P-T .....pressure-temperature?
23 ....no idea
A flurry of acronyms describing types of gold finds !?!?
.....it drove me out to find breakfast.
As I remember it, the Juri j/v was part of a package which allowed us access to the 50 million dollar loan as well as tweaking the original Havieron j/v terms.
I am not criticising anyone for negotiating these deals. I am just stating what I think are the facts.
We were outmanoeuvred by NCM, when they cleverly chose a tiny fragment of Havieron, to concentrate on and do the pre feasibility study to allow them to claim the 5% option.
Having said that, by concentrating on that area, we will be mining many years ahead of normal which will bring in much needed cash to grow our company.
Swings and roundabouts.
Bit late to the conversation here, sorry, but referring to DIPPS sat 17.57pm post, if the option goes to arbitration is the 'referee' bound by one or other of the estimates? Cannot he/she impose a third amount if he considers both the estimates presented materially incorrect?
Trying to get my head round SD accepting the 20% amendment form the original 10%. If the 2 sides are < 20% then if the average is taken that is surely bad for GGP, since such a disparity will encourage a low estimate by NCM (although admittedly one that the arbitrator may then regard as too iow if he/she gets involved).
I personally hope this is sorted amicably, arbitration would imply to me a partial breaking down of the partnership arrangement.
We will try and organise that for later in summer Tig. No problem ! Take care !!
@ panama, ..... Just you sock it to them Panama. The sane voice of LTH knowledge and reason.
there is far too much idiotic , speculative cr*p flying around on this board from those too idle to do proper research.
Hope to see you soon . I am just about coping , but I need a hug.
Tig
My usual in haste typos but you get my drift !
Hindsight is indeed a wonderful thing , but folks nobody has Itn, or we’d all be richer healthier and wealthier !
GH has become unpopular through selling out and leaving legacy deals not always in our favour ‘now’ but hey … as an initially small to,e explorer with little funding or backing what might you have done any better ?
He had along with Callum , the foresight and bravery to dig deeper and discover our new found wealth to be ! A once in a lifetime achievement! Many of us may not have bought originally had it not been for his actions or chutzpah! ( not sure I would have anyway !)
He left his position ( pushed or voluntarily who really knows ) and took his spoils. We now have a great money man taking care of the legacy.
Be happy ! We are lucky in my view !
Onwards & Upwards.
Markjph
I agree with you Mark, Hindsight is a wonderful thing; always 20/20 vision looking back.
Projects , even very good ones, fail through running out of cash. The 5% arrangement gave Greatland a good sense of security as the project progressed. I doubt if the most optimistic
among us could have foreseen the size of the Havieron discovery.
GLA
I’m with you l-a on this.
When the Havieron J.V. was negotiated what was our market cap. and how much working capital etc. did we have? Did we have access to Telfer’s facilities then and all that brings? Seems these days it might be an unpopular opinion but personally I was and still am very happy with the deal,warts and all.
The opportunity thanks to the deal is immense.
Agreed. But GH was prepared to give away a straight 75% in Juri with no 5% clause.
I think the Juri j/v was also negotiated by the former management team.
I suspect GH thought he may not get drill funding from the banks and did not want to dilute shareholders funding any further. Obviously Havieron has turned out to be way bigger than originally thought and SD even said last week it is better than when he first took over.
Maybe with hindsight things would have been done differently but this is an evolving discovery. Nobody yet knows the true scale of Havieron 3 years on from the JV agreement.
Don't forget GGP are also prepared to give away up to 75% in the Juri JV in return for drill funding. We are still waiting for the big discovery there.
So maybe GH was quite canny in holding back 5% for negotiation later.
More to the point, what was the 'Rationale' behind the 5%?
Was this a moment of desperation or weakness on GH's behalf?
No wonder SD is not happy about it, and who can blame him :O)
Whats done is done, but if I were the CEO of GGP, I would not have agreed to this binding clause.
He has said that these kind of processes are rarely opaque and not easy to set shareholder expectations in regards to timeframes in the past, so we should trust our excellent team to get on with things IMO
Just consider this as a difficult but essential part of that 'transition period' Shaun refers too, that is now my mindset.
We'll get it out of the way no matter how the 'market' perceives the outcome and I am sure Shaun will then rapidly close funding knowing exactly what capital requirements we have and we can focus on less uncertainty and more excitement as decline progress increases through official reporting and we start to see production growing nearer.
Sometimes a project having some difficulties in the earlier stages brings a sense of urgency and clarity that helps keep the project teams very focused throughout latter stages resulting in better performance as I have seen evidenced in my own professional experience :-))