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The 5% purchase will actually protect GGP from what would be a very hostile bid for the other 25%.
SD has basically said any offer would have to be too good to refuse. Also GGP shareholders would have a say.
GGP can use the windfall from the 5% to strengthen its balance sheet and protect itself from unwanted approaches.
Matty, it's virtually impossible to predict the future price of anything. Gold price is sensitive to so many variables. We think it's a safe bet, hence why we're invested. But how safe is undetermined.
Reckon revenue and costs will be inflated at 2-3% p.a. then discounted by the WACC.
Matty, I'm pretty sure the POG will be flat in the DCF for the whole term. There will be sensitivity analysis on +/- x% but it won't make much difference.
Paddy, I am also in GGP for the very long term - I have never sold a single shares of theirs. But what is mined in 30 years time makes little or no difference to the value of this 5%.
In a business valuation model such as a DCF, the returns in years 20 onwards are discounted that much they aren't really worth that much so we shouldn't get hung up on the 35 years plus life.
Key to this valuation is price of gold, the variable cost of extraction and the amount of capex in the early years... And hopefully GGP's WACC is 8% or lower.
Yes, quite aware of that. However, I have no other information to be able to make an estimate - hence using the sp/mcap as a proxy. The point is that we will be looking at a big cash injection and the question is what are we going to do with it?
I have no idea how much NCM are going to pay for the 5%, however if you use GGP's current mcap as a proxy for the value of Havieron JV then you value 100% of Hav JV at £2.4bn. Therefore NCM would have to pay GGP c£110m. That is going to strengthen the BS of GGP significantly. NCM are currently worth £9.5bn so £2.4bn for the full value of Hav JV doesn't sound ridiculous.
How will this shape the future of GGP - fund existing activities, extend / widen exploration, acquire smaller explorers (or their exploration licences), diversify???
V. exciting times.
The 5% is a share in Havieron not GGP so they should totally ignore the current ridiculous s.p. of GGP.
The valuation needs to be a DCF over the life of Havieron. So needs to include all known resources of the mine, not just what was included in the first PFS.
shares like this are volatile. we are talking about a £50m mcap business based in Mali. £50m is nothing. We are a tiny under the radar business. We just happen to know that there is huge potential. It will be a rocky road until it is realised.
No doubt about it. It's a shame the SP is so poor - makes my portfolio look pretty bad at the moment - however, it can't stay down forever - we are going to mine and sell lithium and potentially gold. £35m mcap?