Member Info for CeeD

In my last post, I explained how the market’s opinion on the prospects of the take-over succeeding could the derived from the share price. This principle can be applied to share price movements from now on. We won’t know what will happen in the end but we will know how the market is thinking.

There are two aspects to this. How the share price moves and, how the share price reacts or doesn’t react to news.

Dealing with share price movements first, here are all of the possibilities and what I believe they mean.

Share Price Goes Down towards pre-offer amount. The deal is dead in the water. No one believes that it will go through. A substantial increase in the offer price will be needed to change this outcome.

Share Price stays where it is. The market is uncertain if the deal will go through. I estimate a less than evens chance. Consequently, we might see a small increase in the offer price to try to get it over the line.

Share Price goes up but remains under the offer price. The market has concluded that they deal will likely go through. Satan (sic) Resources is unlikely to increase its offer. Not all is necessarily lost though (see below)

Share Price goes up and exceeds the offer price. The market has sniffed out a third-party bid.

It is also important to watch out to see if the share price is reacting to news or not. Things which should move the price (up or down), in normal circumstances, include the gold price, company news (results, drilling etc), the oil price and whether gold mining stocks or up or down in general.

Share price is reacting to news. This indicates that the market does not think the deal will go through.

Share price is not reacting to news. This indicates that the market thinks that the take-over will succeed. The offer, is stabilising the price.

I am inclined to think that there won’t be another bidder. Gold mining stocks are too bombed out at present. However, if there is one (or hopefully several) it will come late on. Potential bidders will be watching the share price movement as outlined above for clues. If the price goes down, they will know that 13.5p is considered derisory. This means that a substantial increase would be needed. On the offer hand, if it seems that 13.5p is acceptable, they would not have to offer much more.

I am staying put until the bitter end. My favoured outcome is ‘no deal’ but if Patel does win, I won’t have lost money at 13.5p.

Good luck all.

Wincanton

Pre-offer / Assumed fall back price if offer fails: 297p, Offer Amount: 450p, Current Price: 438p, Profit if offer goes through: 12p, loss if offer fails: 141p

Shanta

Pre-offer / Assumed fall back price if offer fails: 12.65p, Offer Amount: 13.50p, Current Price: 13.10p, Profit if offer goes through: 0.4p, loss if offer fails: 0.45p

Analysis

The low profit to loss ratio on Wincanton indicates that the market believes that it is highly likely that the deal will go through.

The almost equal profit to loss ratio on Shanta indicates that the market is highly uncertain as to whether the deal will succeed or not.

Conclusions

The recent good news (record production and drilling results) means that in the absence of the offer, the share price would be over 12.65p. Accordingly, the loss if the deal fails is much lower than 0.45p.

New institutional investors may be buying as they see this as a good each way bet. A short term profit if the deal goes through, with some chance of a higher offer but, a good long term investment if it doesn’t.

Prediction

The take over fails and Patel is toast.

Hi Redhill, you make a very good point. The money was raised back in 2020 to fund West Kenya drilling. So, the investors paid for it but Patel reaps the benefit. What’s there not to very annoyed over with that?

Just added another 46,864 to bring my total no vote to just over 77,000.

It is good to see Blackrock and Ruffer buying. If everything does through as the board hopes, buying in at c 12.9 gives them c5% gains (dividend and profit) for a six month hold. Twice as good as short gilts. If another bid comes in then they will do even better. The point is that they must see little downside if the deal falls through.

Doing the same calculations, I will be holding my shares until the bitter end. If another buyer comes forward then I will have to sell but and a higher price with the satisfaction of seeing the board thwarted. Best of all, I am hoping it all falls through, this company is worth much more. At worst, if the bid succeeds, then I still gain. A no brainer hold imho.

I cannot image how any truly independent director could possibly support such a ridiculous offer.

Add my 30,000 to the list of no votes.

Hopefully, the stupid price will bring forward some other interested parties.

Neither 46% or 25% can be right. The grade is 1.6g/t . Take off 46% and the tailings of the tailings would still contain over 0.8g/t. Pan African’s tailings only contain 0.39g/t and they reckon that they can recover around half of this. The low figures I have seen simply don’t make sense

I don’t know where the 46% recovery rate comes from.
Data from the PAF definitive feasibility study gives a range of estimated recovery rates from 34.4% to 75.71% depending upon the specific dump.
The average grade of PAF’s TSF’s is just 0.29g/t. Ours is 1.6g/t so I would expect a much higher recovery rate from Goldplat’s dump.

I think you can 10x the profit on the TSF gold.

PAF have just released details of DFS relating to one of their TSF’s with a read across for here. It quotes an AISC of $914 per oz based upon estimated total recoveries of 650,000 oz. It requires massive capex of $161m but here’s the point. The estimated grade is only 0.29 gpt and they expect to only recover c60% of this. Put another way, they expect to lose c0.12 gpt. Deducting this from the 1.6 to 1.7 gpt in our TSF indicates a much higher recovery rate for us. Combine this with our much lower capex requirement and it’s easy to see the enormous profit potential from reprocessing our TSF.

Watch Gold price tomorrow after Fed Interest Rate decision. I have a feeling that large gold buyers have been holding off in recent days waiting for the bullion banks to hammer the price when the 0.50% interest rise is confirmed. This will cause a sharp drop as the Algo’s will join in. At this point the buyers will pile in reversing all of the recent losses. Maybe just wishful thinking on my part but let’s see.

Due to the rules of the buy back GP can’t pay more than 5% more than the average price last week. So today’s buying probably just speculators (or market makers) front running the buy back. I would prefer dividends as share price increase due to buy back might well be temporary in nature.

So instead of taking $450,000 cash. GDP took shares that they later sold for $415,000. Another genius move after overpaying for the minority interest shares.