Member Info for dictumdedicto

The bid vs. marcap discussion is really only relevant to companies with established cash flows and fairly widely understood valuations. Condor is not one of those. It's a small asset based outfit with massive potential but no current cash flow. Bidders will buy on the back of that potential. If they are interested in the company as a whole they might try and build a stake at low share prices, but if they are seriously interested they know that buying in bulk on the market would likely double or triple the SP and marcap overnight - lack of liquidity.

As we all know Condor's marcap has never (and still doesn't) reflect its future cash flow potential. The 9 NDA parties / 4 bidders will each have their own NPV models based on their own view of what the future holds. They will bid on the back of these and some speculation on what other bidders might submit rather than waste an opportunity by using marcap as a reference point. Also, until we are advised otherwise, its the Nic companies that are for sale (the assets), and not Condor itself. How would you construct a bid for each of the Nic companies using Condor's marcap as a reference point? How would you justify a bid for a CNR Nic subsidiary company to your own board using the marcap of the parent company? It makes no sense to me. When I've built valuation models the inputs I use are what I think the cash flows will be based on a whole range of forecast assumptions and scenario modelling. That gives me a range, typically a base case, worst case and best case. I would then bid within those outputs and wouldn't take much notice of a marcap that is plainly out. Indeed, a chancer trying their hand at a marcap based bid would likely not be taken seriously given that the whole object of the exercise is to get a true market value for the assets.

My guess at the moment is that after the first bid we will see others. It may well be a case of all 9 interested parties waiting to see who submits the first hard bid. Once we get one I reckon we might get a couple more soon afterwards.

In SP equivalent terms I remain at a base case estimate of 60 - 65p, worst case 50 - 55p, and best case 80p - 100p. The difference between best and worst could be 100% with competitive bidding being the factor most likely to lift the price toward the top end.

The market price of 36p by the end of April still looks on to me, with 40p possible. Beyond that looks tougher until the news starts to flow again.

My guess is that Condor would get a much better price for a full takeover of the company mostly in paper. It may therefore be that we get a mix of offers comprising of cash for the assets, hybrid cash and paper offers for the assets and/or Condor group itself. Perhaps even a full paper offer for the company. A full paper offer, or mostly paper offer, would need to be REALLY attractive (i.e. high) to presuade the board. Cash is generally king in these situations. It could be a pretty engaging decision-making process deciding between the different blends of bid.

Nice problem to have though.....

Some interesting comments towards the end relating to the 'sale of assets' vs. 'sale of company'. They exactly mirror my thoughts of a couple of months ago i.e. the assets are the Nicaraguan companies, plus we may yet end up with a paper based offer for the whole lot. MC also explains the rationale behind the assets sale in the context of the UK takeover code (i.e. 'rule of six' comment). It's worth watching the last five minutes or so - the Q&A section of the video.

For info $200m is around £160m. If we get a bit more option\warrant based dilution, to say 200m shares (I highly doubt we will get anywhere near full dilution), then that would equate to about 80p share price equivalent. Seems reasonable enough. Yet we know an NPV of $400m has been thrown around, and that calculated at a lower PoG. The more numbers you throw at it, the more difficult it seems to become. Ultimately, it's all guess work and gut feel. Even the due diligence guys at each of the bidding entities will no doubt spew out a different result from their modelling.

I rationalised a sale price a couple of months ago based on various assumptions about average exit valuations for assets over the past few years. At the time my expectation was around the 60 -65p mark (share price equivalent value). A lot of water has passed under the bridge since then. We (currently) have 4 non-binding offers and PoG has settled above $2000, and it's starting to look sticky up there.

I need to dig out the NPV calculations to make some better numeric evidence base sense of the current scenario, but my gut now suggests that we are more likely in the 70p - 100p valuation zone vs. 60 - 65p. 100p would probably entail a 'clean' exit (from a purchaser's perspective) i.e. any residual land acquisition etc., so I'm thinking more like 75p - 85p. Having stated that, a bit of bid competition heaves the finish line back upwards towards 100p.

With everything now finally happening 60p now feels pessimistic.

I'm not sure if I would attribute that much importance to the 'cease trading' comment given the 'Going Concern' paragraph context. It is possible that enough seed money will be retained in Condor to kick-off another venture, although I kind of think that MC has probably had enough of the speculative mining business. Personally, if I wanted to stay in the business I would go for a royalty type setup rather than stick with the explorer game. But then again anything can happen.

I saw the '36p by the end of April' technical trend forecast, and I do think that's entirely possible. It's getting into the 40s that I think will be more difficult. We'll see. An encouraging pre-sale RNS could turbo charge the SP, albeit my default is still the 'wake up one morning with a sale RNS and a big re-rate'. In the meantime it's good to see it heading back into the 30s. It always was a nonesense to see such a sharp drop on the back of a 'Sleepy Joe Biden' action. And it's not taken that much volume to take it up 10p.

I've bound to say that anyone wanting a taste should buy now. You'll have no chance when the wider market sniffs out news of an imminent sale.

The 5th could be an interesting day. I would expect some last minute juggling still taking place, although the bed and ISA window may have gone already (settlements etc.).

For months I've been expecting the SP to settle between 30p and 40p once the word got out that this is (still) potentially a 3 or 4 bagger in SP equivalent terms. I think the market is finally waking up to the prospect of some fairly quick money on offer. I'm still struggling to see it go beyond 40p. It's not that I think it's worth less, but more a case of the options\warrants coming in to the money, profit-taking from day traders, perhaps a reluctance to take a special dividend instead of a capital gain, and (despite the improved awareness) a continued sceptical view of CNR.

On the other hand, gold has just exploded past $2000 and MC seems to have a skip in his step these days. Notwithstanding my 30 - 40p view, it's still a strong buy for people who don't care whether it's a capital gain or a special dividend.

As for value, my base price is now 65p equivalent (not expected outcome). With what's happening with gold, and the growing excitement about the bidding auction, I think £1 equivalent might be within reach.

Bring it on, Mark.

Valuations of the assets are all over the place.

We've had the $100m to $200m estimate, albeit that was before there would much action on the bidding front.

We've also had mention of the NPVs being a reference point. At the low end it's the P&P of $86m, and at the high end $418m for the whole show. And they are all based on a world where PoG is way short of its current c.$1975 price, a sneeze away from $2k.

If is has, or about to, develop into a full competitive auction all bets are off. You can forget $100m - $200m. It's going to be $300 to $400m. Let's say $350m, or circa £282m. We won't get full dilution but we might get up to 200m, which is SP terms would be worth about 140p. 140p is way above my 65p expectation of a few months ago, but from what I've seen so far I now think 3 figures might well be doable.

Anything can happen now.

I doubt if even the May warrants will get exercised. With a good wind the deal will be done by summer, and I doubt if the market price will reach 40p beforehand. The market has always undervalued Condor, so why should now be different? As mentioned several times before, my guess is that we will wake up one morning to an RNS and a significant re-rate.

I'm guessing the "between $100m and $200m' was inspired by the FS:

IRR of 23% and a post tax, post upfront capital cost NPV of US$86.9 million using a discount
rate of 5% and price of US$1,600 oz gold (Mineral Reserve Case).

IRR of 43% and a post tax, post upfront capital cost NPV of US$205.2 million using a discount rate of5% and price of US$2,000 oz gold

If you go back to the 'LA INDIA PROJECT SEPTEMBER 2021 PEA EXPANSION SCENARIO
to 150,000 oz gold p.a.' (deck headline) the numbers change to:

IRR of 54% and a post-tax NPV of US$418 million, after deducting upfront capex, at a discount rate of 5% and gold price of US$1,700/oz.

So, one way or another, the buyers will enter negotiation with a 'safe $100m opening gambit, and CNR will have said f... off, we are thinking $400m. Neither side will get their wish list answer but it will likely end up perhaps around the $250m - $300m zone. If there is real competition for the asset it could go a bit higher, especially if there is confidence in $1900 gold sustaining.

Just my latest thinking on the situation, albeit I'm guessing just like everyone else.

It was illustrative, albeit I am now more optimistic about the eventual asset sale price than I was 3 months ago. MC will not give anything away for obvious reasons, but he is pretty clear about where in the the ball park the board's expectations lie. And it's not at the low end of the scale. We should all be thinking about where previously published NPVs are rather than off the cuff statements from MC. We will not of course reach those valuations but given the interest I now think we will not be a million miles away from them.

My own base case expectation is that the subsidiaries will be sold but, as suggested, a bid for the company could always happen; perhaps from a new player.

I was too optimistic in timelines. If anything, there might now be more interest (and more delays) than before. All being well this should bring a better price outcome. My earlier optimism was largely influenced by CT changes in April, but if we get a far better price the additional tax should (hopefully) be worth it.

As expected the market, the day traders, are not really allowing the share price to increase. I'm also aware of the fact that warrants and options might be having a effect on sentiment - who would want to buy a large chunk if all it does is to push the price up to a point where those options and warrants become viable? At the moment only the 22p tranche is a goer, and not much of one for that.

If I'm honest I'm not too bothered about the SP remaining low and can't really see it getting to the upper 30s with current day to day trading activity. As I've mentioned before, I think we will wake up one morning with the opening SP significantly higher than the previous day's close. It won't match the asset sale valuation but it will be in the right direction. Let's say the assets\subsidiaries are sold at 75p equivalent value, maybe the SP will be 55p. Market selling, profit taking and options\warrants exercising may well hold the SP below asset sale value.

I could be talking complete *******s, but thus far the market reaction has held no surprises for me. Condor remains a strong buy if you are prepared to wait for the distribution and not play it for short term market gain. Also, I don't agree with other posters on MC. I am of the view that things are rolling out quite nicely, despite the fact that I thought it might have moved a little faster. And we could yet see a new player come in with a knockout bid.

Yep. iPad typing ****-up. And that was nearly clock-up….

I’ve rationalised my thoughts on valuations based on market prices of in the ground resource. Somewhere around the 65p mark in SP terms. But I now think the game has changed.

We have robust interest in the assets.

The price of gold is on the way up.

The jungle drums suggest that we should be thinking bigger, more in terms of the $400m NPV rather than $100 - $200m When MC suggested that we didn’t have the interest we now have.

There will indeed be value in the CNR shell once the assets are sold.

To cut a long story short, while I don’t think the SP will reach the value of the asset sale I do think that £1 asset value in equivalent SP terms will be a million miles wide of the mark. With the latter in mind I’m also dubious about whether all the options and warrants will get exercised on the way up. This will be one of the factors holding the SP down and encouraging profit taking from traders.

In summary I’ve edged towards a far more optimistic view of the eventual outcome.

I haven't posted because I've had nothing to say, but today's update puts a new perspective on the situation.

MC qualified his comments by suggesting that the offers were not binding. True, but the fact is that we are now in a competitive tender situation. It looks like we have moved into a Best And Final Offer stage, and today's news basically tells everyone that they need to sharpen their pencils for their BAFO submission. The interest shown might also attract a late bidder. Once news gets out anything can happen. Firms not previously interested might suddenly get interested. Everyone has a price but nobody likes losing without giving it their best shot.
Enough of the platitudes. I think what this means is that my assumptions of $150m could well be far too pessimistic. A competition for the prize might even double that.

As for current market value, as we have seen today with many people wanting to take an early profit suggests to me that the market will not allow the SP to get anywhere near what the final asset sale value will be, at least not until the final deal is announced. We'll wake up one morning and find that the MMs have adjusted the price to the point where they feel they can meet market needs - I doubt it will fully reflect asset sale value. At which point those who want a capital gain may well bale out, and the delta between the asset vale and SP will increase. I could see hours, perhaps a day or two, of rather chaotic trading and the SP bouncing about a bit. It will settle but I suspect it will settle lower than the opening price on the day of the sale announcement. Having said that I wouldn't bet anything on any particular outcome. Sale day could well be mad in any direction.

Trying to rationalise a SP in this situation is impossible. The fact that the market still thinks CNR is worth less than 20p suggests that there is a lot of doubt still. Meanwhile, it's still not even reached the 22p, the lowest option price for those still valid. It's not looking like further dilution is going to be the issue that some thought it might be.

I'm sitting tight. I honestly don't see the point in selling at the moment and I'm scratching my head as to why people seem content with a penny or two when outcome will be significantly more.

Meanwhile gold is at $1912 when I last looked.

I’ll post my thoughts when I get home.

https://youtube.com/watch?v=maSteRYRpiU&feature=share

I just had a look at their balance sheet. Net assets were approaching $3bn at the end of 2021 so they look like they are big enough to stand behind a $150m or so bid. Having said that it would not surprise me to hear that half a dozen potential suitors have kicked the tyres in recent months. Zhaojin are likely just one of many.

It's been a month since I expected an update with nothing forthcoming. A deal by the end of this month looks like a stretch, unless we have something unexpected in the works. I know MC won't talk to anyone at the moment, at least not on this matter, so we are all guessing. Even the MMs have run out of ideas. A penny up or down doesn't seem to move the trading dial, and they probably don't want to drop it much further until something tangible is in the air.

There doesn't seem much point in more speculation. Everything worth saying seems to have been said, including a lot that wasn't worth saying.....and still isn't.

One thing I will say though is that I don't see much happening in the way of exercising options and warrants. The insiders probably can't and the outsiders are in the same boat as the rest of us - will I get a return on my 22p, 35p, 40p, 48p, 50p etc? It will be even more frustrating for them.

I had pencilled in today as a possible RNS update day, so I have to profess disappointment at the lack of one. I’m not really sure what to infer from the lack of news. It could be that they have a far more generous timeline than I assumed, or maybe the interest is not there at the prices looked for. No news will continue to be interpreted as bad news by the market as Condor bumps across the bottom.

Fed has scaled back to only a 25 basis points rise. It's seen as dovish. A return to $2000 could be on the cards sooner than we think, although Condor seems immune to any excitement.

It's somewhat ironic to think that not getting a bid (and announcing the fact) could well put the SP back up to 30p+ again. Is (cosmetically) bad news actually good news? Much as I would like to exit Condor, I would much rather just know what's going on. Are we still selling, or are we back on the road to production again? Maybe the old 'build it and they will come' is a better way of selling Condor than a pre-production asset sale.

I had Friday targeted as a possible update day. It does feel like we should be appraised on the situation, even if it’s to say no serious bids yet. If nothing is forthcoming I guess my ‘by end March’ aspiration is dead in the water.