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@bluetiger, exactly. With emphasis on "sometimes".
Others disagree but to me ROCE is an important metric for income producing companies. Not so much for an exploration company, however, somewhat meaningless at this point in GGP's life cycle.
Look up Return On Capital Employed if you want to understand why this is (sometimes) the case.
Re debt financing, I would need to research this but do remember watching an interesting you tube piece that showed how companies with debt actually are valued more than companies that have no borrowings. Think it was on the principal that whatever the value a company has borrowed the market calculates a future earnings multiple return, which is then priced into the SP.
Money is cheap takingmytime
And it doesnt have many easy homes at the moment . And gold is the best home of all . Debt finance is cheap and that’s the way to go
dont forget ncm has got other jvs in the paterson area also antipa is just one.
@schlemiel
Excellent post, but I don't agree with one of your conclusions.
If we need further financing (we might not after the sale of 5%), debt financing is likely to be better for shareholders than a further equity raising.
Further equity means dilution of current holdings. If it is done as a rights issue so we get to partake, we'll have to put up the cash to do it. That means extra cash just to maintain our current percentage of the company. But if we have extra cash we want to invest here, we can do that without a rights issue, just by buying shares.
It comes down to this -- is the debt financing going to cost a higher interest rate than the shares are likely to return over the same time period? If so, equity is a better way to go. If the debt financing is a lower interest rate, then debt financing is the best return for investors.
History, of course, may not repeat itself, but I believe the price on these shares has a long, long way to go, and that debt financing can be achieved right now at incredibly low rates. That suggests debt financing is going to be a better value for shareholders.
I am certain that the BOD will crunch the numbers and make the best decision. If we do reach the point where we need more cash, in all likelihood the SP will still be undervalued and have major upside left, and debt financing will be cheaper. And unlike the SXX comparison that you drew, I suspect there will be lots of debt financing available. That gold is getting closer and closer to coming out of the ground, and it's value once out of the ground is getting higher and higher. There will be debt investors wanting a piece of the action -- NCM had no difficulty raising debt financing recently.
That should be 200 sq km not m
It's difficult to quantify cobalt resources as it's concentrated in other mineral ores mainly copper and nickel .
Panorama is quoted as having a cobalt area of 200 square metres that's 8 times the size of Blackhills
Good times to come:))
So Berenberg slashed its target price for Sirius from 35p to 17p but, talk about sitting on the fence, advised "wait until certainty is achieved before taking any action". We waited until certainty was achieved and got 5.5p.
Better advice would have been "sell" or "sell half now and see what happens".
Current market prices around $$33,000 per ton, much in demand and rising.
Have'nt the faintest idea about the size of our Panorama resource, except to know that they are "" significant"" - a useful and broad ranging description.
And they have neither been disregarded or dismissed. Perhaps Magic will give us a simple resume on the mineral in due course.
Tig
Hi tig.
Yes I've noted your comments on cobalt. The amounts and
Potential profits look quite exciting. I wonder why its not getting as much publicity as the gold and copper.
Hi Tig
I noticed the cobalt concentration at Havieron to be 4107ppm that's nearly as high as Panorama but I haven't found which zone identified it.
Most cobalt will come from the copper and also the iron **** plus some concentrated in the waste rock
ChristaB--- selling Hav, / drilling Scallywag / Goliath /Kraken / Black Hills hugely important, and not forgetting our Tasmanian tenements .....BUT....... we now also have - COBALT and Panorama joining the list , - adding to our potential great future. It all keeps on giving.
Tig
However not selling haverion and sharing in the spoils, offers us a great future too. What's not to love about ggp.
Schlemiel.
I agree l.l.
For me SXX was a very expensive lesson. But still I watch myself making similar decisions with greatland gold.
I've no regrets ggp has brought me back from the brink of undergoing a seriously long working life. And I believe it will go on from here for years to come. Selling haverion would be fantastic consolidation and ( hopefully) once scally drills increase the portfolio it will be onwards and upwards.
Schlemiel.......your 09-29 post was excellent.......a nice dose of reality......
Schlemiel. You say that it is a contractual obligation that NCM buy 5% at fmv. This is not strictly true. NCM has an opportunity to buy 5% at fmv at the successful completion of phase 4 of jv, that does not mean that they will take up the option. Not wanting to be negative but wanted to make sure facts were accurate. Gh has already said that if he needs further funding, he would not intend to dilute further but believes he would be able to get commeecial loans.
ATB and GLA
RA
easy.
Haveiron is such a unique asset with zero processing capex demands (Telfer around the corner so the cost would be operational from income (sales)) that raising equity would be a breeze
**Shares in potash mine developer Sirius Minerals PLC (LON:SXX) sank on Wednesday after Berenberg downgraded the stock to ‘hold’ from ‘buy’ and slashed its target price by 50% to 17p from 35p.
In a note, the German bank said that following news on Tuesday that the FTSE 250 firm had delayed a planned US$500mln bond offering, the risks relating to the group’s polyhalite project in Yorkshire were now “greater than the reward” and suggested that investors “wait until certainty is achieved” before taking any action.
READ: Sirius Minerals slumps as it slams brakes on US$500mln bond offering
“As outlined in the financing package, there is no guarantee that alternative methods of financing can be secured…and as such the company could again run into cash flow issues. With the deadline for completion now drawing closer, the risk is now too high to argue that Sirius Minerals’ shares currently represent an attractive investment”, the broker said.
However, despite the uncertainty, Berenberg’s analysts reiterated their long-term view of the project unchanged, saying that if the company managed to secure funding for its Woodsmith site the economics were “favourable”.**
https://www.miningcapital.com/companies/news/900285/sirius-minerals-slides-as-berenberg-downgrades-to-hold-and-cuts-target-price-in-half-900285.html
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Apologies to ex-holders in SXX but BERG pointed out SXX's weaknesses months before the company imploded
The moral of the story is simple. Without cash a company is insolvent, dead, kaput and the value of shareholder equity falls to zero. Liquidity is everything in the corporate and personal world. Cash comes from varying sources and with varying degrees of difficulty. That source is either internal (positive cashflow generation from product sales) or external (equity investors or debt investors with both forms of financing reliant on security of investment and confidence in the company).
GGP's cash balance is minimal at present relative to its market cap but we have 30% of a Tier 1, high grade gold-copper discovery that can be profitably exploited for minimal capital outlay (debt or equity financed. I hope GGP offer 'us lot' an opportunity to participate in any future equity fund raise).
The initial 5% at FMV is pure cash in the bank, it is a contractual obligation. This is massive in terms of market confidence. The other 25% is also hugely important to support the company's market value. If we didn't have this contractual guarantee the price would fall away ala SXX
I bet we have financiers (with Newcrest at the front of the queue) queueing up to finance our 25% to take Hav to mining ala Franco Nevada at SOLG. Again, I'd like to see, in the absence of a takeover, our capital demands to finance the mining of Havieron come from equity not debt. Shareholders not debt holders or royalty companies (Franco-Nev or Sandstorm for example) should enjoy the upside.
Heddle could easily raise $100m from equity investors, easy, e