Member Info for adamsmithfreethi

CB helpfully included a link to a project in Mali that Endeavour is buying so I thought I try and compare the done deal there with the prospective CNR sale.
Rather than bring everything into the mix I'll concentrate on the relative NPV results. Both use a discount rate of 5% and the assumed gold price for CNR is 1600. The article on Endeavour doesn't state the assumed gp so I'll assume it's similar.
Endeavour are paying $122m for an 80% stake in a project with an NPV of $205m. That's approx a 60% discount on the NPV.
Taking a similar discount on the CNR NPV of $87m give a prospective price of $52m or £43m. This compares with the current valuation of £28m at a share price of 17.65p. That implies a sale price of 27p.
You can argue the pros and cons of each mine/politics/logistics etc (the Mali mine is more than double the size and 3 times the life of CNR) but I for one can see why the Execs want to average down.
Any thoughts out there...?

Seriously I don't get it. "The assets will be valued with no reference to the current share price . "
Really? What do you know that Mr Market doesn't? Or are we talking in terms of blind faith..?

Yeah yeah yeah - it'll fetch 50p easy and look at all my likes for posting that figure.

Just one small problem. This is the worst time to sell. Gold is down, the politics are terrible and the project not finished. Mr Market knows this and has the share price zoomed to 50p?

Nah - 25p max!

They've very sensibly pulled in their horns and concentrated on the core discovery. These are now reserves with a very high probability of being what they are claimed to be. The low probabilities are the financing and political, military situation in Mali plus future course of the gold price. It would have been nice to see a bit of sensitivity analysis - say with the gold price of $1500. Still at 4p it could be worth a punt!

I agree the RNS's are now admirably detailed. At the AGM we had a real push on this and at least management has listened as responded - good for them.
Unlike SRB whose RNS are becoming increasingly shocking.

RNS RNS talked about a new general manager. Anthony was the COO. Is that one and the same thing?

I'm on record for stating this company could go bust before Kouroussa comes on stream. Well it nearly did last quarter. It seems Dan is as good a charming money out of credulous banks as he is as bad a mining.
Quite frankly this has become one enormous bet that Dan, Anthony & co can profitably mine gold out of Kouroussa, pay off the mountain of debt and still leave some value for us shareholders and the back of the queue.
Yani should be mothballed once the high grade stuff is mined out. If the locals can artisanally make money when HUM can't then good luck to them. As for Dugbe, forget it. No one is going to fork out $400m in the current environment when gold is threatening to go below $1600
The only party in as bad a position as we shareholders is poor old Coris bank. Up to it's neck. Haha - know the feeling!

Agreed a very good summary. I didn't mean to imply any skulduggery on the company's part when announcing the sale they do what all management do now and pick the most advantageous stat which of course was the gain on original book price not the latest FV value. My point was that based on the (yes dubious - but there is no other metric) latest sale being representative of the whole fleet then the market has it just about right. In short the company is currently fairly valued not undervalued.
I take the point about the Grindrod deal but operating in SA is not easy. I'm no expert on the management but operating a port, particularly in a volatile company with an imminent general election, is not the same as operating a fleet on the high seas.
Another reason for my caution is I recall a share (can't quite remember) but it had "Gold" in the name and it was run my a Greek shipping family. Anyway they owned and ran a fleet of ships and whilst I was looking at the share it hit a bit of turbulence and fell to near zero, was taken private by the family. In short a stitch up and a bullet dodged by me.
I'm not keen to get caught this time so I'll keep a watching brief...

Sorry for the delay but I've now had a chance to look at the most recent sale, that of the Antony (MI) Limited. In the RNS it states that the net price was $20.1m which represents an IRR of 25% from the book cost. However in the accounts the ship is valued as follows:
- FVTPL 23.4 plus
- associated assets of 0.85
Give a total of 24.25m. Thus on a fair value basis the ship was sold at a loss of 4.15m or 17% of book cost (FVTPL).
Whilst one ship a winter does not make but the implication that the market discount (33%) is ignorance is only half true - literally!
Maybe I'll get round to looking at the earlier ship sales but the later sale should reflect current conditions more...

Bargain hunters should be shown the door. Thanks but no thanks - I'm happy to wait for better times and bag the profit rather than handing it over to you Mr Bottom Fisher

I've come across this stock via the THS thread. Looking at their a/cs they seem to have bought 321m of ships in the year to March 2022 and booked a gain of 245m along to way to end up with an investment of $575m with no debt - so that's book cost . With it's market cap of $387m that's a 33% discount to book value. Clearly the market is either asleep or sceptical - I think I'll need to burrow deeper into their valuation methodology to be convinced one way or the other

Every month we get treated to the Zaphod Beeblebrox glasses treatment. For non aficionados his glasses turned dark at the first sign of danger. And so it is with quarterly stats.
ASIC looking too high when compared against the current level of gold - omit it. Net cash falling - just mention gross cash. And as for the eternal quest for an operating license. Sorry mate - what's that we've clean forgotton.
I used to believe in this company but I'm really suspecting I got this wrong.
I'm going back to demand a balanced report not the cherry picking that has so obviously been practised here.
Other shareholders should too

Tornadotony,

I was not suggesting in any way shape of form that even the loss of the trucking opportunity from Vejnaly could reasonably explain the share price drop merely it's a hook on which Mr Market can provide an excuse to sell.
It's tough on investors like us but there it is. Eventually the worm turns and Mr Market will smile benignly on resource stocks again but not yet methinks...

The conflict may have an impact of AAZ operations as they are starting slowly to exploit an existing gold mine - Vitally? - in an enclave that requires access via Armenian territory. I believe they are trucking higher grade ore to existing facilities in Azerbaijan proper. Presumably with the uptick in violence the trucking operations will need to cease.
As for the remainder of the current operations as well as most of the other resources they are well back from the border.
We'll just have to suck it up in the meantime.

To be honest with all the company and country specific developments over the last 18 months I don't think the price of gold will materially impact on this company's future. It is more likely to be industry metals particularly copper but also zinc and molybdenum and I'm hoping Mr Market hasn't got his/her head round this rather than there actually being a company specific problem alluded to below.
We'll see - half year results out soon...

Solid progress - no doubt thanks to Anthony being on site. Good to see all the long lead items on order - let's just hope the company has the money to pay for them when they arrive.
Good assay results - proves Koroussa is the main hope for the company.
The more that there is on site the more bidders will have to pay up - if the worst comes to the worst and the money runs out

Thanks for the post. As far as I can see your comments are correct. One thing piqued my interest namely deferred exploration. Yes it has gone up significantly so I thought I look in the accounting policies to see what get's written off and what gets capitalised.
First the good news 1(e) under accounting policies states that "All costs incurred prior to obtaining the legal right to undertake exploration and evaluation activities on a project are written off as incurred" and "Subsequent to the legal rights being obtained, all costs related to the exploration of mineral properties are capitalised on a project by project basis and deferred until either the properties are demonstrated to be commercially viable"
So from that I presume all costs related to Coringa have been written off and not capitalised. Perhaps the ability to truck some of the high grade Coringa ore back to Palito might change things.
In that case the $6m relates to drilling in Palito/Chico. That's the bad news! Given the results there have been quite moderate I tend to agree with you that much of the drilling has been uneconomic.

There's no point acting all superior - you started the name calling and your inability to put together any reasonable argument other than I am negative means you're useless as an interlocuter never mind being my worst sort of individual - a sanctimonious hypocrite.
Go brighten somebody else's life

Ha I had to laugh Mr Butt in the sand. I'm not sure you've quite got the elements of investing unless you're just some paid cheerleader or something. The aim of investing is to make money. Sometimes this is achieved by not losing money too.
We're in an historically difficult situation. Rates are going up and gold is suffering as DCF's from project cash flows crater.
You have to look at the short term as well as longer term. In the short term only goldies with enough cash on hand and low cost operations will survive. Talk about monster reserves is for the birds if you go bust in the meantime. If you're bust those vultures with cash will take all your lovely potential assets for virtually nothing and the financiers charging you penalty fees will take the rest.
I'm trying to work out which of my gold investments is going to survive because I do believe longer term gold has a future. Developed countries economies and thus domestic assets have always been valued at a premium to those in developing countries because of the lower perceived risk of mature well run economies. That lie is now being exposed hence my long term optimism. You can stick to your day dreams if you want.
As for miser I think not. I've just spent too much time trying to give some reasonable advice. Not that you'll appreciate it but I'd rather be on balance right and unloved than running with the crowd and wrong.
The last few decades have on the whole been great for follow the crowd momentum investors. I think those times are at an end. You're going to have to think a bit for yourself to prosper now.
Good luck..

Yes I would urge every investor to read that section. It's sobering reading. Yes the management are required to add this section but it often provides a more accurate picture of how they really see things...