Stephan Bernstein, CEO of GreenRoc, details the PFS results for the new graphite processing plant. Watch the video here.
The original JV details from the GGP RNS dated 12 March 2019 stated the 5% became available after stage 4 is completed, and this included the production of the FS. This all subsequently changed as per GGP RNS 30 November 2020 (2 weeks before the appointment of SD was announced), and I guess this is when the FMV "within 10%" clause appeared - not originally mentioned in March RNS. The changes meant that the 5% FMV option became available after the PFS was produced. The PFS and development path suits GGP (high grade first - early returns), but was also for a fraction of a fraction... This is now complicating things as regards the 5% FMV that became available post PFS (perhaps more consideration should have been given to this possibility when the JV agreement was changed?).
Extracts (12 March)
"After meeting the milestones in the four-stage Farm-in (set out below), Newcrest has the option to acquire an additional 5% interest at fair market value taking Newcrest's interest in the Farm-in to 75%."
"o Stage 3: If Newcrest incurs an additional US$25 million in expenditure in relation to the Tenement Blocks and delivers a Pre-Feasibility Study for a project on the Tenement Blocks (the "Stage 3 Commitment") within a period of 24 months from the date following satisfaction of the Stage 2 Commitment, Newcrest will earn an additional 20% Farm-in Interest (cumulative 60% Farm-in interest);
o Stage 4: If Newcrest completes and delivers, or incurs no less than US$20 million in expenditure toward the carrying out of, a Feasibility Study for a project on the Tenement Blocks (the "Stage 4 Commitment") within a period of 24 months from the date following satisfaction of the Stage 3 Commitment, Newcrest will earn an additional 10% Farm-in Interest (cumulative 70% Farm-in interest)."
Does anyone know know if there are any contractual time constraints within the JV on the establishment of FMV for the 5%? I have tried to find this info, but failed...
I had a vague recollection that in the original JV it was 12 months...
Thanks
C
I for one will definitely will be holding longer term. Operating in an expanding market that requires the help and benefit that their products bring.
@Dank3 Good comment as regards cash. At a great level...
Very pleased with the announcement regarding consultation with a view to US listing. This will give a lift to the SP IMO.
GLA LTH
The current bid of 13.6p equates to a valuation for GGP's current 30% of Hav as 4.2b x 13 6p = £571.2m, giving 5% as £95.2m (if one assumes GGP's value is solely Hav...). This is the current Hav FMV as calculated now using the current knowledge of the ore body, and is only Hav... with zero value assigned to other tenements.
Will we get more than £95.2m ($129m)? Yes I believe so.
For reference broker estimates for the 5% FMV:
$228m = £169m (Berenberg) +77%
$280m = £207m (Canaccord Genuity) +118%
A couple more trading days next week until the results are released Wednesday 7.00am. SP trending upwards for a few days now, and may continue next week.
Looking forward to some good results hopefully.
GLA LTH.
https://www.medscape.com/viewarticle/968171?src=mbl_msp_android&ref=share
The buyback has reduced the number of shares in issue by around 4.6%. The point if it is that it theoretically will result in an increase in shareholder value, all other things being equal...
Looking forward to the release of the results on the 16th and hoping for an SP increase leading into them... we shall see.
GLA LTH
From 29 December RNS:
In aggregate, Morgan Stanley & Co. International Plc, who undertook the program on the Company's behalf, purchased 33,763,488 Shares for a total consideration of $99,997,939.89 at an average price of £2.1903 pence per Share.
There is a large percentage of PIs holding this share, and we would have a say on any sale of Hav or GGP. The larger your holding the more of a say you have... Personally I would be guided by SD and the BOD, but I would not accept 29p (and I'm pretty sure neither would they recommend such an offer). It would be much too low.
With the SP at it's current level (for whatever reasons...!) and apparently relatively little II interest at present it provides an opportunity for PI holdings to increase at these levels, if circumstances allow IMO.
I believe PI sentiment is likely more adverse to selling at a low ball offer than IIs might be if they had a larger proportion of ownership (they may have less sentiment/patience/foresight/belief), which is odd given the drive for increased institutional investment, and even more so if it is institutions keeping the price low.
Onwards and upwards.
GLA LTH.
@Zoros
I don't believe my figures are miles out, but happy to be corrected.
Take your $500m for 5% as an example...
We currently own 30% of Hav so the value of that would be 6 x $500m = $3b, even at this stage with no value attributed to other targets and allowing no potential for growth in Hav compared to the assumptions and figures used for 5% FMV calculations at this point in time (and note that we keep the cash for the 5% we sell).
$3bn = £2,220m
$2,220m / 4.2bn shares = 52.85p per share, an increase of a bit more than 8.6p on today's SP (of course we don't know what the SP will be when the figures is released so cannot give a figure for the increase, or decrease!!, at that point in time)..
IMO the valuation of the 5% will set the value for all of GGP's ownership of Hav, i.e. 25% retained + cash for 5% sold. Why would it not?
BB quote $228m and an SP of 24p, which is what you get if you revalue GGP's 30% of Hav, again more than an increase of 4.3p on today's SP.
Personally I don't believe you can allocate an increase in SP to the valuation of the 5%, it depends on the SP at the time. FWIW I believe it revalues the whole of GGP's 30% ownership of Hav.
Thought others might find this useful...
5% FMV figures to see what SP they might support via rerate, following on from previous posts (zero value assigned to all other prospects, zero growth after FMV established, etc. so Hav only and specifically at time of 5% FMV...)
FMV in US$m > SP
90 > 9.5p
135 > 14.25p
180 > 19p
225 > 23.75p
228 > 24p (Berenberg)
270 > 28.5p
280 > 29.6p (Canaccord Genuity)
315 > 33.25p
360 > 38p
Ready Reckoner:
Divide US$m by 9 and take 5% off (simplifies full calculation)
So 270 gives 30, subtract 5% gives 28.5p
Actual result is 28.54p, so pretty close
5% of Hav is about to be valued. After the sale GGP will still own 5 times that amount (25%), and also have the cash for the 5% that was sold.
At the current SP (14.2p) GGP are valued at 4.2b x 14.2p = £596.4m = $806m (x rate 0.74). One sixth of the company(we own 30% Hav currently so 1/6 is 5%, no value attributed to anything else...!) = $134m.
If we achieve more than that then surely the whole company's market cap would rerate, not just the 5% that was sold?
If we get $228m (£168.7m) as per BB then we would hopefully rerate to 24p (6 x $228m = $1,368m = £1,012m gives 24.1p per share). Not sure why £175m (more) would only increase SP by 4.3p, which would currently give an SP of 18.5p...