Member Info for Daisan

I don't think they will get it for 15p now. They would have to bid a premium to their warrant price to secure it but a couple of weeks ago I would have thought that they could have got it for 20p. Not so sure now that they are struggling to fill their maximum allowed without pushing the price higher. The key area is 15p which I expect will be hit within the next 2-3 weeks.

And another 100k @ 13.0625. Both could be Labro and may well indicate a slight acceleration as this is more than they have picked up in the past. Or somebody else may have decided to roll the dice and see how far they will go (15p has to be minimum given the warrants). Ask is up to 13.25 now - highest for at least 3 months. Break this area and we are into territory not seen for 4 years.

There has been a lot of water under the bridge since 2012 and about 100m more shares. The most significant change is Labro's holding. Whilst there is still a possibility that this could go to multiples of the current share price if Labro run into serious problems getting shares and are willing to chase it, I suspect that the current circumstances are such that Labro wouldn't need to go anywhere near the 120p suggested (in current terms that would be about 85p). Consider that there will be a lot more holders with shares at lower prices now so they will be more willing to accept a lower bid. As will the long suffering LTHs who just probably want some form of return.

That really depends on the market reaction once the share price reaches 15p. I suspect that there will be a number of people who seek to either sell out or de-risk at that point. I expect 15p to be reached well before the end of March given the rate of buying currently by Labro but if that flushes out a significant number of sellers then they may well get their 5m+ shares at which point there is a chance that the share price will weaken (on the basis that there will be people who will only see that the short term buying has completed). However, I suspect that the number available will be insufficient and that should underpin the share price. The really interesting stuff happens from the end of March. The options are: 1. Labro makes an offer for the entire share capital. They may wait a bit to see if the share price weakens as a result of them no longer buying in the market. This option is bullish for the current share price as they would have to pay a premium to 15p in order to gain control 2. Labro sell their entire stake. It is possible (although I think unlikely) that Labro have actually been building a stake for another entity and sells it onto them for a margin. This is likely more bullish than 1 as it likely that a premium would be paid to the price paid to Labro and the process would almost certainly attract more market interest 3. Labro sits on their holding and rides a strong gold price for the next few years. In the short/medium term this is likely to be bearish for the share price as there is no significant driver to the share price. In fact, it is probable in this scenario that anyone who has bought in to ride the Labro wave (I don't think that there have been an enormous number of these) will sell out and depress the price. I cannot see them sitting on 40% of the company - significant influence but not control. I think the most likely option is '1' above but the key is the reaction to reaching the warrant conversion price. If not many shares are available at this point then there will be more pressure on the share price before any offer. March should be interesting and I am starting to believe that there is a possibility that 25-30p may not require a second party.

Seriously tempted to up my price expectation here. They are clearly struggling to get shares (I notice that another 50k@12.75p went through this morning) and need to up their buying if they are to complete their buying by end March. I think that there will be an opportunity for them to get more around 15p, in line with the warrant price, but I question whether it will be the 5m+ that they are likely to require.

I think that this is the most likely option, but I would be surprised if he tried to take this through to production as a private company. I believe that Andersson sees this as a pure investment. His background is not in mining but he is clearly a sophisticated investor and probably shares my belief that gold is likely to do extremely well over the next few years. As an owner of a multi-million ounce deposit he could afford this as an optionality play. If gold reaches record highs as I believe it will over the next few years then this will be extremely attractive and he would get multiples back on his investment (I can easily see 10 times given that scenario).

Just because the quoted bid price is 10.25p that doesn't mean that sales have to be made at that price. The quoted bid/offer price is frequently much wider than the actual prices than can be achieved.

I tend to agree but I think 20p would certainly be possible. 30p would require another interested party. You never know, if Labro signal that they are going to make a move this may flush out another potential buyer. We are also assuming that Labro want the asset. They may just be playing a high stakes quick turnaround to a long term buyer. You never know!

Whilst I agree with the central premise of increasing the mine life, that is pretty much the only thing I agree with on SP Angel's note. Whilst I understand the need for using reserves as the basis the for assessing operations, it is hard to imagine that the near 1.5m oz outside the reserves are not going to have a material impact on production in the next 8 years. In particular, the resources at Singida will start to be leveraged at some point during this period. The fact that the resources there can support a 50-60k production rate on their own is enough to suggest an increasing production profile as NL will still be operating based on the resources identified there now. There is considerable exploration potential at both NL and Singida which should support an enhanced production profile going forwards. Add into that the fact that I see gold prices being wildly different to their forecasts and you should see that my expectation of revenue and profit going forwards is multiples of SP Angel's.

zanthrus, Not a valuation mechanism I have seen before and I would urge a great deal of caution on this if it rates AVM as offering the greatest value! Once again I would suggest using EV rather than MC as it provides the true picture of the value applied to the asset. There are certainly other factors that need to be taken into consideration. Most notably reserves (and resources) and life of mine which is where you will find AVM starts to unravel. Personally I am surprised at AVM's current valuation. Given its assets and debts I would suggest that the price should halve at least. They are definitely relying on the gold price to bail them out whereas the likes of AAZ and SHG could survive on lower gold prices. Given all of the above, I would rate AAZ and SHG as the standouts in your list although ACA and CEY are certainly quality operations. Lower quality operations such as POG may well benefit enormously if there is a significant rise in the gold price (as will AVM come to that). Balancing risk v reward still points me to main investments in SHG and AAZ.

Technically both slopes of the wedge should be in a downslope for it to be a falling wedge but I see what you mean. It will be interesting to see whether this does indeed break to the upside. Should resolve itself soon.

Given the mood as reflected in the share price seems rather positive today (presumably owing to the rise in the gold price), I thought I would look forward to what promises to be the most important news due this quarter, namely the revised mine plan. One thing that has been a drag for Shanta has been the perceived short life of the mine (personally I believe that exploration around NL has indicated that the mine is going to be around for quite some time to come but this cannot be assumed). With the revised reserves at Elizabeth Hill and Ilunga, we can expect the revised plan to shift mine life over 7 years, a key metric for many investors.

Something was bugging me about the AISC quoted so I thought I would have a quick look as to why the quoted AISC is so low and yet the cash generation has not followed through. Having considered it, I believe that I understand why. Costs associated with Singida are legitimately not included as they are not associated with the current gold production. In addition, the capitalised costs associated with going underground at NL are not included in the AISC as they are classified as development. This is not in any way to imply that they are not conforming to international standards or that the underground development is not necessary (it most certainly is) but it does show the limitations of AISC calculation as without the underground development the mine life would be rather short with a sharply decreasing production level. I.e. not 'sustaining' at all!

Shareminator, CMCL's asset is the Blanket mine in Zimbabwe (not as bad a place to invest as it used to be but I still have my doubts). Production from this mine is about 60k oz currently and I believe they plan to increase this to 80k oz by 2021. By comparison, SHG is currently producing over 80k oz and is likely to produce at a rate of 100k ish oz in the next 18 months. However, the big differences between the two companies are the debt and the ownership. CMCL has net cash whereas we have net debt. The difference between the two is something like $50m so that has to be taken into consideration and this is favourable to CMCL. Offsettiing this is the fact that CMCL only own 49% of the asset. Personally I feel that SHG has more upside as enterprise value is converted to market capitalisation but both are decent investments in a rising gold price environment. I equate Blanket to be similar in terms of resources to New Luika. SHG also has Singida which is where the significant upside is to be had here. The next six months are crucial for SHG as this is when the operations are most at risk as we move underground. To mitigate this they have built up some cash resources and an ore stockpile.

I am not sure I have ever seen sells=buys on LSE/AIM. It is not the case that for every buy there is a sell (or vice versa) during a day. Market makers are obliged to 'make a market' and provide liquidity in a share. As such, they tend to hold stock which skews the figures. The alternative is a matched trade system which is far less liquid, although possibly not as open to abuse!

Well, they have 2 months to buy about 8 million shares. I make that 43 trading days (after today), so just under 200k per day. They haven't been achieving that recently. They have managed about 700k shares over the last 7 trading sessions and have caused the share price to go from 10p to over 12p in the process. If anything shares have become harder to come by judging by their recent purchases so they will either fail to achieve their allowable total or they are going to have to push the bid higher to encourage some selling.

Hmmm. I had forgotten about the warrants. They put a different complexion on the situation. Whilst this doesn't have to mean that they will pay 15p (after all, in theory they could buy the whole thing for less and allow the warrants to expire) in reality they are unlikely to get the lot for less now and this puts a floor under any bid price from Labro. Given the amount of stock that they are getting their hands on at the moment, i.e. very little, I suspect that we will get there sooner rather than later. This still seems to be amazingly under the radar considering the situation. Nobody seems that interested.

That is indeed true but the key point is at what value is that going to happen. We have seen here in the couple of weeks that they have pushed the price up by a third whilst only managing to pick up a relatively small number of shares. They are not where they want (and are allowed) to be yet and any more buying pressure looks like it will continue to put upwards pressure on the price. I have no doubt that this will be taken out for less than it could have been. However, owing to the struggle that they now seem to have in accumulating shares, I believe that price could be double the current price and that this should come to a head within the next 2-3 months.

pablo2, I did some dummy trades. When I first tried I couldn't get a quote to buy or sell any which suggests that they may have been in auction but before I could check it freed up and now I can buy or sell freely. I managed to get a quote for 200k to buy so somebody has been tempted.

Indeed. It appears that they are willing to push the price higher in a bid to get more. This could get very interesting now and, quite frankly, the people selling really do need to consider what they are doing.