RE: Potential risks?15 May 2020 14:13
Hi Freedom, I feel I should to give you some form of answer as this is genuinely a fair and balanced board. GLR has 6 projects ongoing as you may know. 1 post reply would take me forever to highlight everything. so stick with Starzinc. 72000 tons of zinc in the ground ranging from 1m to 60m deep High grade ore. 2 risks that are being spoken of 1) the licence - the Zambian government grant this and also own 5% of the site and CB has spoken to them recently and as described in the share conference 2020 that "...they are happy...". as of July 2020 RNS the plan was to start mining in q2. so everything spoken about so far seems to fit that plan. 2) price of zinc - JLP are buying all 400,000 tons of ore off GLR to extract the 72000 tons of zinc. the price they buy it off GLR is based in some way on market price of zinc. 12 months ago they were going to buy it off GLR for $60m. prices have now fallen 25% so the NPV of Starzinc has also fallen. Even at its fallen state Starzinc NPV is still worth at least 5 times the current market cap (which is still huge) to GLR and not its potential 10 times when zinc prices return which of course is even better. You can gain some sort of prediction from researching world zinc demand that prices are likely increase again. so to answer your question the above are the risks and it almost is that simple that, it is that good. CB also gives this perception in his interviews. If JLP (we assume by way of contract with GLR's agreement) decide to wait for zinc process to go up for the benefit of themselves and GLR, this could delay revenue into GLR. this then splits investors into what i can see as 3 groups. those who believe star zinc NPV should be factored in some way into SP now, those who believe the NPV should be factored in when the licence lands and those who believe it should be factored in once it is turned into revenue.
please DYOR as from there you can decide where you want to sit on that scale. I am at the beginning obviously with a LTH plan for bigger rewards. I for one outweigh the "Zn price and possible delayed revenue" perceived risk because JLP are contracted to remove industrial waste tailings from their site by the government and so need our high grade ore to bring the average up. They cant just wait for prices to go sky high they have to start at some point which then put GLR in a position to firm up a price as JLP are stuck between a rock and a hard place. GLR have enough cash for the next few years without revenue, not that they will have to wait that long. They are just 2 small examples risk mitigation.
You can then consider the huge values of Glenover, Ka****u and the others projects
Good Luck
I look forward to the coming week when the MM's stop playing games and see where the Re rate takes us and then the imminent news of the licence for take-off
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