Member Info for CMgoldgard

@Sunjammer99 what is this "coop" that book5 is referring to?

@coldcut what is CPO?

@ElectricLion point well taken.

He’s let the sales process run for so long precisely because he wants to extract maximum value. What that value is is the million dollar question.

@frenchie38 thanks for the clarification.

Just trying to get a more objective, data driven estimate of what would be an acceptable offer to Mellon.

My assumptions maybe wildly in accurate though.

Although the fact remains that Mellon owns over a quarter of the company so he can do as he damn well pleases.

He has sunk in a good USD20m into the company. Chump change for a man worth USD1.5b, so I’m sure his exit price has to be at least double the money to make it worthwhile. After all, He has been chairman for a good decade or so now.

Assuming he has his net worth in cash, he could’ve just put it in an interest bearing fixed deposit account and the accrued interest would’ve made him more money than the decade he has spent on this project. All that without lifting a finger.

I’d wager Billionaires like Mellon are driven by more than profit. After all they’ve got more $ than they can spend. More important than the profit motive, He probably wants the sense of achievement / satisfaction derived from striking a good deal on a pet project.

Just based on the publicly available information on the director deals listed here on this forum, Mellon's average SP for the 27.84m shares that he owns at a total cost of about GBP 9.52m would equate to about GBP 0.34 / share.

Do note that Mellon owns just over 53.4m shares.

Assuming the balance unaccounted for 25.56m shares were purchased at average prices of GBP 0.15 / share, Mellon's average SP would still be about GBP 0.25 / share. Though I reckon he probably bought into those 25.56m shares at prices closer to GBP 0.30 - 0.40 / share.

No worries, thanks @ condor_forever.

In the 2020 annual report, it states that, "In March 2021, the Company announced the purchase of a SAG mill from First Majestic Silver Corporation for total consideration of US$ 6.4 million, including $3.0M payable in shares of the Company."

So I think that's a clue that the balance owed on the SAG mill will be paid only when the assets are sold.

As of 2023, Child's renumeration is GBP 200K P.A. "In March 2023, Mr Child received a cash bonus of £62,000, as well as a bonus issue of 258,333 shares at 24 pence each. The total bonus value of £124,000 related to the year ended 31 December 2022. No provision has been made for any bonus relating to the year ended 31 December 2023."

Of note is that the annual reports also state, "It is not the Company’s intention to cease trading after the potential sale of the Nicaraguan assets."

Not sure if this answers your question, Seingred.

https://makominingcorp.com/news-media/press-releases/index.php?content_id=133

Transaction Highlights

Condor has signed an irrevocable undertaking that, subject to the approval of the Nicaraguan Ministry of Mines and Energy (“MEM”) by December 2020, it shall transfer (the “Transfer”) to Nicoz Resources, S.A. the Potrerillos Concession. Transfer documents have been filed with MEM.

Within five days of the Transfer being approved by MEM, taxes of up to US$90,000 shall become due to the fiscal authorities in Nicaragua, being 15% of the agreed consideration value of US$600,000, which Mako and Condor have agreed to bear equally. To this extent, US$600,000 in cash has been paid by a subsidiary of Mako to Condor and US$45,000 has been placed into an escrow account by each of Mako and Condor with a third party agent, to be released and paid out upon approval of the Transfer. The net consideration to Condor from the sale of the Potrerillos Concession after deduction of taxes is approximately US$555,000.

That's fair enough.

Anything that deviates from such a payment fee structure really ought to raise eyebrows.

Buried deep in the annual report is the list of options / warrants that COG directors can exercise. Suffice to say, I think we can at least get a 50p price for the asset sale.

To quote from the annual report 2023 regarding Child's renumeration, "In the event of a sale, there is a bonus scheme, based on a long standing arrangement, whereby the CEO is due a bonus calculated on a sliding scale ranging from a flat fee of £500,000 to 3% of the transaction value based upon the share price at sale, so long as such share price is no lower than 40 pence."

There's also smelter royalties due to 2 other parties that we acquired concessions from.

If there's any comfort to be drawn from this, it is that the BOD incentives seem to align with us retail and long-suffering piddling shareholders.

after all, the whole project and attendant personnel are not revenue generating. they are one big cost centre.

i'd be pretty ****ed if these brokers / conveyancers get paid even before the ink is dry on any contract or agreement to sell the assets!

I'd have thought that COG management would've been prudent enough to structure such fees in a manner that is contingent on the assets being sold before any fees due are to be paid.

Maybe condor_forever can shoot an email to Child for clarification? I've written several to him to no avail.

IMHO the loan facility clause regarding the sale of the SAG mill is a distraction. A potential acquirer may not even utilise the SAG mill, especially if they already have their own equipment set-up.

It's a minor asset sale, and any proceeds would probably go toward repaying Mellon's loan facility and the balance proceeds retained for working capital.

Don't expect the assets to be sold this week. After all, Childs just hosted 2 different parties to a site visit earlier this month.

I expect that COG management would want to see what other offers are tabled before making a final decision. After all, the whole point is to drive a competitive bidding process.

Unless these potential bidders are working at warp speed, (financing, due diligence and the whole 9), it's not realistic to expect an announcement of a sale so soon.

On top of that, COG also has to conduct reverse due diligence on the acquirer. I'd reckon this sales process still has some more months to rumble on before an RNS is made.

The last fundraiser was in December 2023 for GBP 1M. So I'd say this latest GBP 475K loan facility means that management expects another 4-6 months of working capital runway before a deal is finalised.

Is the 3% smelter royalty due to B2Gold & Royal gold still applicable?

This was part of the royalties settlement agreement between COG and the above mentioned parties.

With the share price tanking like that, it’s time to buy more and average down. Don’t expect the assets to be sold this year. I think that’s just a pipe dream.

To me, a full paper offer or a 60p offer + further payments upon meeting production targets / milestones make the most sense.

Highly unlikely that any mine builder is going to table an outright cash bid that is 4-5 times the current share price.

Jurisdiction, limited trading volumes and liquidity. That and an asset sale process that has been ongoing for 2 years and yet still has not been wrapped probably explains why the share price is in the gutter despite record gold spot prices.

The higher the spot price of gold climbs, the more money potential buyers will have to cough up to acquire COG's assets, we have a billionaire majority shareholder who is happy to continue financing the company until a binding, fair price offer is made, so all we can do is sit and twiddle our thumbs.

Is there any communication from the company in recent years that explicitly stated its intention to build a mine? I was under the impression that the board had always wanted to sell the assets right from the start.

A quick back of envelope calculation; if we take the base case of the feasibility study (81,545 oz / annum for first 6 years & total of 602,000 oz gold on the 8.4 year lifespan single pit La India mine), less AIC of say ($1,250 + 20% = $1,500) because costs have risen substantially since the FS was published, and assuming POG / oz of $2,500.

CAPEX as estimated in the FS was $105m + 20% to account for inflation = $126m. A potential acquirer @ $1,000/oz of pure profit (POG - AIC) would need about ~19 months to recoup CAPEX. Sooner if the feeder pits are mined concurrently with the La India open pit (~15 months @ 100,000 oz / annum).

Assuming COG has already sunk $100m into the project since inception, I think it's reasonable to assume that Jim Mellon is not going to sell the assets for anything less than $200m. And in view of the rising POG, I reckon he's looking at $250m - 300m. At $200m, that's 4x the current MCAP, or 5 - 6x if we get to $250 - 300m.

If an acquirer were to pay $200m (4x MCAP), he'd still need to fork out $126m for CAPEX, bringing the total acquisition cost to $326m.

Honestly, I struggle to believe that anyone would pay 4x MCAP for COG, let alone 5-6x. A potential acquirer's financing costs might even increase the total acquisition costs to $350m or more. I find it highly unlikely, in this current climate, that COG's assets will be acquired at such a multiple.

I reckon an all share transaction or a mix of shares and cash is the most likely outcome.

So Mark Child's role is as a glorified salesman, and he will continue pushing the project to get as competitive a sales process as possible.

The July 2024 update stated that a preferred bidder had been identified, so I reckon a binding offer will be made in the near future.

Jim Mellon is a shrewd businessman, and you don't become a billionaire by selling assets on the cheap. He's probably invested more money in the project than everyone on this board combined, so he has teeth in this game. Frustrating as it is to continue waiting.

I'd prefer an all-cash bid i/o an all share transaction.

Having watched the full interview, the key takeaway is that Jim Mellon, as the major shareholder of the company with over 26% stake, is fully involved in negotiations regarding the sales process. And that he just waiting for the right price to be tabled before he will agree to sell the assets.

Offers from South American, Chinese, Middle Eastern and Canadian miners had already been received.

As a CEO, Mark is expected to globetrot, hawk the project, and drum up interest. We only hope that a binding offer can be reached before the year is out. With gold spot prices now past the US$2,550 / oz mark, the minimum we should and can realistically expect is doubling the current share price.

I have also emailed Mark but don't expect a reply.

As per my understanding, the company had informed the market via RNS that they received several offers, albeit lowball ones. And the only obstacle to a deal getting done was the prices offered.