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Hear hear Jamesp21- and don't forget we'll have 20% more income from HAV to finance the extra debt In the extremely unlikely event that NCM don't take up the 5% offer.
James surely that would be paying debt by selling assets , not always seen as a good thing
TBF I can get a bit paranoid. That has been on my mind since my last post here.
And to add more, when we pay off the $50m loan, GGP as a company will prove it is able to pay off its creditors. That is a huge green tick for future debt.
Hi Canary
There was a lot in your post.
In my view your conclusions are not right.
I asked him from 3’ away about rights issues and would private investors have a chance to participate.
He said in London it’s a lengthy costly process and they had been looking at it but decided to use the Primary bid system which he said was not an ideal way. They have spent a lot of time going through the scenarios and he is shocked at the number of shares in issue and doesn’t want to dilute if possible, he said he would prefer to consolidate.
He did not say he was going to have a fund raise, he said he has Term sheets on his desk from a number of High Street Banks one of which he banks with.
His preferred route is with debt and possible consolidation.
In the NCM loan terms the monies for the 5% will firstly be used to pay off the loan and interest or if Ggp chooses by some other means where the debt can be paid off in full to NCM.
I believe you have put words in his mouth, like Chinese whispers.
James is spot on. GGP would never have made NCM an offer for the 5% without the certainty of payment. Equally, GGP would not have made that offer if there was any possibility of no funding being available for our share of the capex. To have made that kind of offer without surety of finance would have made Shaun, and our entire board, look like plonkers.
ATB
Interesting post Canary 3 ....if they don't take the 5% .... in order to leverage and squeeze us re: lack of funds ... the Mining sector is watching... and NC stated a few weeks back them want more JV exploration partners
I'm optimistic the 5 % will be snapped up, an upgraded MRE2 to around the GGP figure and SD gets on with raising funds....
Finding $60m based on a ridiculous valuation to potentially mine who knows how many multiple dollars worth more would be a scenario I’d be delighted with, and I know Shaun Day would too. We offered to pay more than $60m to reacquire the 5% ourselves, don’t forget that. Would we have made that offer without knowing we could fund it…? You decide.
Notes from LSE Webinar - 21 Mar 2022
https://www.ggpchat.co.uk/viewtopic.php?t=90
* Bank funding, previously told us you weren’t keen on equity, going to be bank funding and you had some term sheets from the banks, wonder what the latest is on your conversation with the banks?
- $123m required, have $50m loan from NCM so leaves a gap of $73m USD although most likely given the JV provided security to NCM on that loan which is a lit bit unusual for JV loans, the banks will probably make us deal with that?- It would be rare that you would have a secured lender sitting above the banks so we work through that?- I think there is an opportunity to bring in some debt and again why can we do this at a PFS which is not normally when you can ‘bank’ these in the cycle??- Because it’s a Tier 1 asset in a Tier 1 jurisdiction and our JV partner is a major ?- All of those confluences in the same way that this is an excellent equity opportunity actually apply to banks, so I think we’re going to achieve something rarely seen in the debt market, which is to fund a PFS which again is a credit to the quality of the asset and the team we have.
Taken from Dip666 notes
The main worry for me is that NCM don't take up the 5%.
That means that GGP will have to find a lot more cash. The loan terms include that it can be paid back when the first ore has delivered cash. I think NCM will take 80% of GGPs she until the loan is paid in full.
NCM have a first charge on the asset and as we know, because SD told us, that the banks won't lend with NCM having a charge against the asset.
Come the FS- There will be a funding discussion between the JV partners either for the next year or to first ore. Once that is concluded GGP will have to show that they have the funding.
So 72 million was the number if i recall but that will have gone up quite bit IMO given inflation and will be revealed at FS driven by NCM
GGp will not be able to get a secured bond away because of the charge, and so it will have to be an unsecured bond, if they go that route and that that will cost a lot. The current interest payment on the NCM loan is 8% plus Libor which today is 3.96 rolled up quarterly. That equates to 12.5 annual.
I would suggest that an unsecured bond will need to be at least that.
They could perhaps do an unsecured convertible but of course that is just delayed dilution.
If GGP try to sell the 5% to another party NCM has first refusal, so if you were a lender would you go through DD and so on with the chance that NCM will just buy it anyway? I don't think they will.
I think that puts GGP in a very poor position.
We need the money for the 5% if they agree it and ideally immediately not after a couple months at NCM timetable.
Finally SD has basically told us there will be fund raise, he wants to have 150% of operating expenses going forward as buffer ( very sensible IMO),and he ruled out a rights issue when he was across.
SD and his team will be all over this of course but it is not an easy route IMO
It's always about the funding when you are the size of GGP
Hi LA
Would it not be possible for him to do one of them as well?
Just a thought!
I know it wouldn’t have the same clout as one by the major miner but it could open the door!
All the best Ben
Ben 15.36 - it's normal practice to have a bankable feasibility study to take to the banks for funding. That's not to say SD hasn't already established agreement in principle through his ongoing dialogue should the decision to mine be formally agreed in Q4 2022.
On top of that Shaun released a MRE of 6.5moz by a legitimate company of which was recognised as a worthy MRE by all except Newcrest as of yet!
So when he went to London looking for finances he wasn’t holding a hand full of lottery tickets!
He was ready and fired up , he in my mind has come back with the financial backing to mine!
All in my opinion of course
Somebody was saying roughly to what we know calculation’s about $35m has been used , but saying that it could be optimistic calcs as we do not have full knowledge and it is a guestamit but don’t forget we should still have the $16m fund raise.
I can’t see all of that being used, so in my view we could have anything from $16m -$40m to start with!
Just my opinion and dyor
https://www.youtube.com/watch?v=HQZuX7UmHg8
minute 29 onwards
S day already said the 5% will pay off the 50m loan...suggesting the draw down will be almost the full 50m of the loan.
lebugue - there we go. If Newcrest do take up the 5% we should be paying that off and still ending up with at least $25m
DGR: Extract from the interim accounts at 31 December 2021 released on 21 March 2022:
"The Group has recognised a foreign exchange loss of £581,303 in the income statement as a result of the US$27,188,755 million loan held by the Australian subsidiary with Newcrest Operations Limited in respect of the Havieron Joint Venture. The functional currency of the Australian subsidiary is Australian dollars while the loan is denominated in US dollars".
Doubt whether the drawdown has reached $35m yet.
Cant agree with much of what he said , the only problem i can see is the interest shooting up at the mo and a good deal maybe hard to find
Bullabulling? Seriously?!
Havieron is proving to be one, if not the biggest, gold/copper mother lodes in a generation, or more, and you sight Bullabulling?!
If Newcrest Mining, for some unbelievable chance, wasn't interested, then I can guarantee that a number of major miners would be!
GLA & DYOR!
Not sure that banks will be too keen on lending huge amounts based on gold in the ground.
Rosso that must be the most pathetic statement I think I’ve ever read on this BB.
What do you think the banks will lend on ? A Brinks Matt van full of gold bullion parked in the foyer.
Of course banks lend money for mining the stuff in the ground.
Jeez
rosso- You're assuming they've used the entire $50m loan. I'm sure i've seen some calculations based on spend and previous accounts where it looks like less than half of it has actually been drawn down. We could well end up with a lot more cash than you're predicting
NCM take their 5% UMV (Unfair Market Value) for just $60m. Most of that cash goes back to Newcrest in order to pay off the loan. Leaves GGP debt-free. But how are they going to continue to explore the 100%-owned licences + whatever is needed to bring Hav into production? Not sure that banks will be too keen on lending huge amounts based on gold in the ground.
What bothers me is a takeout on the cheap, which is maybe what JPM is betting their short on. Cant help thinking back a few years to Bullabulling and its multimillion oz resource. Unable to secure the necessary cash, the Co. got wiped out by Chinese-owned Norton Goldfields with a take it or leave it paltry offer. Could the same happen here?
Also, other than an updated MRE, what are we expecting from NCM later this week?