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Does anyone think we will be told via rns, should negotiations fail, that we have gone to arbitration?
I’m not sure we will as Shaun has always tried to maintain the moral high ground.
We could be into the arbitration period now, hence the downward pressure on the sp we simplify don’t know. As others have already said, we need to believe that Shaun is doing his very best for the shareholders and we need to sit tight.
*Less conservative metrics I meant not data i.e looser drilling density and smaller cut off grades etc. and also in regards to POG assumptions etc. as NCM are as befits a corporation very very conservative for corporate reporting reasons but will need to move a bit on this I think for this exercise.
Small changes can bring very decent increases in all aspects so akin to Hydro I've been feeling more optimistic of late since seeing the GGP MRE, but Shaun is correct in trying to ensure expectations are measured amongst shareholders. CAGR is a phrase Shaun now uses increasingly in reference to how much growth Havieron has shown in such a small amount of time, and this narrative is surely being put into their forward assumptions.
Another narrative I am noting is the positive growth to be experienced in future without a massive increase in CAPEX in certain aspects, it's all there when you look closely at the words used in the interviews such as with Liam this week - worth reading my notes and watching Part 1 at the same time to really let certain details sink in :-)
As an example.....when you consider a business of any type for a complete acquisition or partial investment for instance, one aspect is that you consider forward assumptions such as potential revenue growth year on year in helping to calculate much an asking price is 'fair'.
Shaun is very much maximising that business case through forward assumptions in resource size growth but also the existing and soon to be developed infrastructure helping to keep financial requirements in future pretty reasonable abd efficient to achieve greater production etc.
GGP's assessment of the MRE at mid December was 6.5m oz which was announced by RNS on 3 March. This was a clever move by SD and has put the cat amongst the pigeons as far as NCM valuation is concerned. Arbitration looks odds on imo as SD is not going to let this go cheaply.
Also Sandgrounded - we want rid of that loan too as Shaun has stated in a previous interview as having a preferential lender isn't beneficial for us when discussing funding. So I do expect that to be paid off and hopefully we'll have much more to cover some/all of the starter mine development costs :-)
Like Zero (ha, just kidding Zoros!) I am veering towards a conservative number but do think forward assumptions WILL be factored in by both parties as NCM need to ensure their valuation passes muster in arbitration - but theses numbers I expect to vary greatly as these are the more theoretical parts of a valuation.
I do think both teams have enough expertise to understand how to best apply the code on the aspects of the valuation that utilise drilling data etc. and other areas for example peer comparisons which seem to have industry norm, so less of a gap here but if we go to arbitration obviously more than 20% apart.
Hydro's made some excellent posts (now sadly deleted on this platform) on how using less conservative data brings vast changes to resource size whilst still remaining JORC compliant so that has made me feel optimistic that we have a better chance for a decent valuation figure than some might be worried about.......or in certain cases........hoping for :-))
@Sandgrounded - Interestingly I've posted before that were I Shaun and the GGP valuation wins in arbitration I might take the opportunity to renegotiate the JV and move the number down a bit in what NCM needs to pay for the 5% in order to tweak some things in the JV for GGP's benefit.
But at the same time also allow NCM some tweaks as a few million less $ now and better terms over a hypothetical few decades as partners might be a really good idea both financially and because it negates the win/loss scenario this exercise has inadvertently created and helps that lovey dovey structural alignment to hopefully return.
I'm sure by now NCM are aware that GGP fully intend to go into production or hold out for a very decent bid, so they need to account for that in their own approach with GGP if not planning to make an offer in the short term :-)
Thanks Ben.
Evening Bamps, 100% concur....which is why he put his head above the parapet and produced the MRE2. Great move if you ask me.....and before the cut off period, too.
But he does seem 'miffed' about this clause which suggests many of us will be disappointed with the fmv deal.
Ce la vie = let's move on, eh?
Z
Hi Zoros
Shaun does not want to give this 5% away at all and listening to him in London you are probably right with your guesstimate it will be low and he wants it over to move on but not at any low price. He’s going to fight to get as much as possible
Zoros
Respect on that and as we have all said we would all like to be a fly on the wall in these negotiations!
I will say out of all the CEO’s, I have faith in Shaun and he will do his best:))
I am down on paper a lot, but fortunately I do not need to cash in yet.
But it would be nice to look at paper profits, even if you don’t need to cash in.
All the best zoros and have a nice evening.
Ben
You won't like this, Hydrogen disagrees with me too, but I believe/accept that the cut off period for assessment of the 5%, is Dec 15th 2021. Yes - scope for future resources has to be taken into account, it seems and this is why the negotiations have dragged on....... NCM don't want much to be considered, in this regard....GGP, naturally do!
I am going for between $65m and $95m I'm afraid, which is (IMO) supported by SD's concerns. He wants this behind him....soonest. He wouldn't be talking like this if he was expecting hundreds of milions.
You can't deduce a value based on "what is an unconfirmed resource".
I know I am not going to win over many PI's with this message......at the end of the day it's only my opinion.....and what do I know?
Z
Zoros I don’t believe this to be unrealistic!
The fact is not confirmed but ‘all bar the shorters’ know there is a minimum of 20m+ ounces @ $1800 , is $36b !
Now 5% is $1.8b and a third of that is $600m .
The belief is probably 50m and in negotiations I would Chuck in a Jv a good Jv on scally for us , I don’t think it’s unreasonable!
All the best
Ben
Ben - now wouldn't that be nice!
All our prayers would be answered with that amount.
Z
Zeros is you Zoros but with a spelling mistake
Hence the reason of my earlier post , there is no way the 5% will be below three figures!
For me $300m is a fair figure !
Based on third’s $1800 per ounce
$600 in ground value
$600 to get it out
$600 profit
That’s good enough for me:))
who is zeros?
Z
Newcrest have the option to by the 5% if they wish ,end of ,it will be decided on arbitration if the two parties don’t agree a figure based on ,now the 20% range , it’s newcrest option not GGP ,to refuse .
Zeros, also Shaun Day has already stated there are several top banks lined up to provide debt finance, and logically I imagine he is holding on to see how much the 5% provides, to determine what further funding he needs to draw down from the bank(s). He has also said GGP should be in the unusual position of being able to get such funding based on PFS ie it should be available before the DFS in the final quarter of 2022. So even if the 5% doesn’t cover the 50m plus 73m capex, debt funding will be there for that purpose. All in all, he is doing all he can to manage the risk around the 5% and capital requirement, imo.
We do have to sell this extra 5%. There is not an option to withdraw. which is why SD is grumpy about it. He wants this behind him to be able to shape the future of GGP - his way.
The arbitor will look at the two figures, choose one of them after due deliberation and the deal will then have 30 days to be prosecuted (by NCM).
GGP owes: $50m and $73m, so if the deal realises $123m, roberts your mothers brother!
Free ride to production!
Next news: 9th June (6 weekly update).
NCM quarterlies: 20th June.
Next mega news: 18th August: MRE3!
Anyone squirming yet...............
Z
Dip, reference step 5, I wouldn’t put it past NCM to try to re-negotiate the arbiters decision if it goes in GGP’s favour.
Shaun Day doesn’t want to sell the 5% if he can help it, but we do have a loan of 50 million dollars from NCM to pay back. Whether NCM try to force repayment, who knows?
@Chisler - do some research bud.......hopefully Part 2 of LIam's interview with Shaun will give us further clarity, but this is how we understand it currently:-
Again for reference, this is the FMV process in bulleted list form and I have had it confirmed by GGP Investor relations as being a correct understanding and also updated as we've had more info. The SP has nothing to do with the FMV valuation, once a FMV price for the 5% is established under the process below, NCM have 30 days to decide whether to go ahead or not. It won't be something we can refuse, both NCM/GGP are tied to this process. Rational Assessor made a good point that the process contains three stages to ensure we get an agreed what I like to term ‘price tag’.
Stage 1 - Mutual Agreement?
1) Newcrest wanted to agree the option exercise price by mid-feb 2022
(lapsed now but from what we know we're not in arbitration yet though so could still be negotiating or some way through Stage 2 perhaps as of May 2022)
Stage 2 - Agree within 20%?
(Was originally 10% but NCM CEO put forward an offer to increase to 20% which our MD Shaun Day accepted).
2) If Newcrest/GGP do not mutually agree on a Fair Market Value by this date then both parties put forward their own valuations
3) If both of these valuations are within 20% of each other, then the average will be considered the valuation for Newcrest to exercise their 5% option.
Stage 3 - Proceed to Arbitration?
4) If there is a greater than 20% disparity (updated from the original 10% by mutual agreement), an independent expert is brought in to choose which one of the estimates is fair market value, so I assume that is the price that needs to be paid by Newcrest
(This is the 3rd and final process to ensure a price tag is established to ensure the process is concluded)
Once a price is agreed during Stages 1, 2 or 3
5) Newcrest then has 30 business days to exercise its option to acquire the additional 5% on the determined price tag
6) Should they choose to go ahead, then proceeds from the exercise will firstly be used to repay the outstanding balance of the existing loan we have from Newcrest.
Link to original RNS:
https://www.lse.co.uk/rns/GGP/update-re-havieron-joint-venture-rsd7s9fzp0lvtzi.html
Link to FMV Info. I have collated:
https://www.mediafire.com/folder/uv8jaum5kycrr/-+FMV+Valuation
Chisler - listen to JiffyBag, he is 100% correct.
Fool.
Thats *******s .
there is no obligation for ggp to be forced to sell 5% to ncm.
chisler
Hi Chisler,
That's not correct.
Newcrest retains its option to acquire an additional 5% interest at fair market value ( cumulative interests 75% Newcrest; 25% Greatland). Fair market value will be determined by negotiation between the parties, or, if the parties are unable to agree, then by an independent valuer .
https://www.investegate.co.uk/greatland-gold-plc--ggp-/rns/two-jv-agreements-and-funding-for-havieron/202011300700098437G/
we dont have to sell oure 5%