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Good afternoon everyone.
This could be my most important post since I joined LSE.
I am grateful to Hydrogen for his approx 8.30 post and a few others since who have been expounding on the NC takeover theory.
In the past few months a lot of the trading hasnt made a lot of sense to me and I have regularly been pushing back on my good friend Hydrogens conspiracy theories in private. I just thought we had a classic case of more sellers than buyers.
The proactive post of approx yesterday has cleared the air for me. In the words of that odious Australian 'Can you see what it is yet', well no I couldnt. Maybe I still cant but something does add up and make me very very concerned.
So here goes. NC, knowing that there sp is way undervalued (they have said so in virtually every presentation this year) are worried of an approach. This was alluded to in an excellent earlier post today. The money that any miner of Iron ore, uranium, gold or copper has been making this pat 18months has been astronomical. Major miners arent very good when they have lots of cash. Many have been giving wads back to shareholders, but they have done that, so what next. Well NC is cheap, has a fantastic pipeline for those in the know, in the industry. Maybe a somewhat nationalist Aussie govt would not allow a Barrick or a Newmont to buy the country's biggest gold miner. But an Aussie solution with BHP, Rio, Reinhart or Fortescue would be 'welcomed'. Maybe Rios are still in the doghouse.
So, NC and their advisors know they are at risk, so they need a solution to make themselves bigger and less attractive. One is the 'shock and ore' (stolen from Nick Mather), of announcing three PFSs on one day. The other is to acquire GGP before the next MRE is announced. Maybe they couldnt do this before the PFS cos of privileged information, but if they havent started work on the Dec MRE, then maybe thats ok. The lesser proposal would be to buy the 5%. Now, of course there is the unwritten code that majors dont go hostile on juniors. But what if you are desperate?
So NCs advisors instigate a programme to get the GGP sp lower. This entails day trading, spreading false gossip through the chat rooms and obviously they are helped by the sector being horrible and Speedys good friends at JPM doing their stuff on the gold price.
I think it might be tough for SD to negotiate his way out of giving up the 5%, but he has a chance of defending the takeover.
If this approach happens NC will use the line about x premium over the 30 day vwap. 40% is a 'normal' bid premium which might mean 28p. if you are like me and other lths you will know that this is daylight robbery. Shaun might be able to defend 28p, but can he defend 35p without a lot of help? Thats my worry.
I have no idea what the chances are of all this playing out, but if its a significant concern then it doesnt matter that its a possibility and not a probability. Cont'd.
Might be your most important JS, but it certainly is your longest!
A lowball takeover, for me, is the only discernable risk to our collective future wealth. However, I'm with WF on this, the complications are vast and the implications for the industry as a whole would be extremely damaging.
If we had found Havieron, in a joint venture with a mid-cap miner in the USA, we'd be cannon-fodder for corporate America. However, the Aussies tend to play with a straight bat and I don't think the scenario you paint would sit well with their collective national mission statement.
The mining industry is simply too important to the Australian GDP for it to be risked by sharp practise and corporate shenanigans.
But, stranger things have happened my friend.
Great analysis of the possibilities Jerry. Thanks. Most PI's don't vote, because they know their vote won't count. I fear we will still have very little say on any proposals.
Hi Dodge. I wasn’t trying to infer it will happen, but more what would you do if it did. I would like to think most of us would stay the course and not be seduced by a few quid.
I really don’t think it will engender a bidding war for ggp, but might make NC more vulnerable which might put them off.
Yes, I understand the context of your musings JS, so to lay my cards on the table...
I would not consider anything below Tymers 88p, but Mickeys £1.44 would possibly get my attention ; )
I also firmly believe that the unique PI power on the GGP register cannot be underestimated.
At first I rejected the possibility of BHP making a realistic offer. But on reflection BHP ( £97billion market cap) may actually make a play for Newcrest ( £8billion market cap.) So not totally silly.
Now do I think it will happen.... Not a chance.
When you think about a possible lowball t/o of GGP at say 30p that's only about £1.2 billion, and it could then make Newcrest a more attractive target. What Sandeep has to do is to get the NCM sp up by convincing the world that Havieron and the other mines are worth far more than thought. That's far more important than buying GGP on the cheap.
IPAD
Newcrest won't bid for GGP
THe only danger (slim as it is) would be BHP taking newcrest and GGP. The articles in Motley and proactive are pure clickbate
Jerry - I have no doubt that they are concerned with the possibility, as any good management team should be. Possibly one of the reasons NCM hiked their div significantly this year, was to remind shareholders how well they are positioned despite the share price.
I completely agree that as shareholders we should be considering our positions in the likely event of approaches to either NCM or GGP, I just feel that the speculation was not real, but more manufactured in this instance.
ATB
Totally agree sojourner. But who manufactured it?
TT has laid his cards on the table and he is probably right, but I am examining the possibility not the probability. Great to have this debate without some trolls interfering.
Jerry, just popped off for a double helping of homemade scotch broth...yum yum.
I suspect that one of the problems we have comes from the consensus (if you listen to Rick Rule, Steve Todoruk et al) that junior miners ultimately aim to be acquired by a larger company for a profit, and this fuels speculation over GGP as we consistently hit the required milestones for this to happen. Unfortunately for this hypothesis, and fortunately for us, our board believe that the Havieron discovery allows GGP to evolve into a miner and buck that trend - hence the SD appointment.
ATB
This is the only thing that is a bit worrying
That the CFO for Newcrest announced his retirement in May, to finish in Jan 22 and as far as I can see no announcement of replacement yet ?
https://www.newcrest.com/sites/default/files/2021-05/210505_Senior%20Management%20Announcement%20-%20Finance%20Director%20%26%20CFO%20to%20retire%20-%20Market%20Release.pdf
Shaun is a former CFO so if they did take over GGP no prizes for guessing who will get CFO job ?
Be nice to see the new CFO announcement with someone else’s name on it ASAP
Understand your concern there TallChap - but Shaun Day is the CEO of GGP, (Captain of his own aircraft carrier!). To have the CFO job at NC would be a demotion.
I think it'll be fine :)
Rex
Let’s hope so Rex
I like SD and what he has been doing so far