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From an earlier post:

'........we kept only those with resources that fall almost entirely into only one of our three broad groups: Inferred, M&I, and P&P leaving us with about 90 companies to calculate some averages on and we got these numbers:

• US$20 per ounce Inferred
• US$30 per ounce for M&I
• US$160 per ounce for P&P

Here’s How to Value a Junior Miner’s Gold in the Ground
https://munknee.com/how-to-value-a-junior-miners-gold-in-the-ground/

As he says, they are a rough starting point but it's always a case of taking a view in these situations. At least there is some science behind the numbers rather than taking a single instance and projecting it on to CNR.

Incidentally, I also got burned by Arian (AGQ) or Alien as it renamed itself. The major difference between that disaster and this is that the key players have real skin in the game in the form of equity. And, rightly or wrongly, they have not gone for some dodgy funding deal. JW was naive to say the least on that one, although at the time I thought worse....

Seingred

I'm still optimistic on the P&P valuation although I do appreciate that it's a case of weighing up the positive local relations and supportive politics against the Sleepy Joe effect. I've no doubt that buyers will be playing on the Sleepy Joe angle to drive down the price so it really is down to the strength of the negotiating team. If we get an auction then industry averages are probably attainable. If we just have one serious player in the game, then yes, a $130 P&P is a risk. Halving it to around $65 P&P would take 14p off my 65/66p bringing it close to your 50p estimate. The question I ask myself is whether the Sleep Joe effect would have that much impact.

Good discussion.

Options & Warrants.
I've just been through them to estimate what they would raise and what the strike prices are. The warrants are easy. The strike prices are 35p to 50p and would raise £8.2m if all exercised.
Options held by officers/directors (i.e. in the financials total 11.8m and would raise £5m. Total options are 16m leaving 4.2m where I've no choice but to estimate what the strike prices are. The average would be about 42p, raising about £1.8m. In total £15m would be raised if all options and warrants were exercised. It's a fair bet they will if the overall asset deal exceeds 50p. At 40p you can cross off 5.8m warrants, 2.7m options relating to directors/officers and likely a good chunk, if not all, of the 4.2m held outside the officer/director list. I think we can fairly assume the asset valuation exceeding 50p as everyone with an option or warrant will want a piece.

Then you have the latest rights and warrants to deal with. The convertible loan note won't raise anything as we've already had the money. It will however add to the shares in issue. The JM warrants, if exercised, would raise £2.5m as per the RNS. Then you have the 1:6 from other shareholders, 159m, which would raise up to £4m if everyone went for it. The RNS assumes £3.2m (plus the £1m loan note) so I guess they assume not everyone will go for it.

If all options and warrants are exercised I'm coming up with 239.2m fully diluted. The raise associated with this would be circa £18.2m, albeit £3.2m is associated with the current rights issue and would likely be spent along with loan note cash on keeping the company funded through the negotiation phase.

That's where I get my £25m (£10m for the land and SAG mill and £15m raised through exercising warrants and options. These non-resource assets would equate to about 10p in fully diluted share valuation terms.

My resource valuation using established industry averages for different classes ($20, $30, $130) adds up to $160m or £133.8m or circa 56p in share valuation terms. Add the 10p and you are in the middle of my hard asset valuation range of 65/66p. At that price all options/warrants will be exercised so the numbers work. Beyond that, as before, you are then in the world of what value you can get for the 'softer' assets, the mine crew on site and ready to go, local relations and politics etc. Hard to value but it does have some. You can add a few million or regard it as wiggle room if the resource averages don't work due to market conditions.

I'm back to 65p. The nonsensical values in the 30s or below are really way out, as I'm afraid is expecting anything in three figures. However much I would like it I know that anything above £1 really needs Condor itself to be on a track to producing.

I'll definitely be taking up the rights.

Also, there are some with a strike price of 42p.

Agreed on the options point.

From memory, I don't think many options kick in before a 22p strike. Thus, anyone buying in today is buying at a better price than the insiders can get through their options (latest rights/warrants aside).

BFS is all about the open pit resources, plus it’s probable which is a big difference to just M&I. I doubt there would be much NPV discount for buying a probable resource prospect. Also, you have to add in the underground resources, M&I, the land value, the SAG mill and the cash brought in from exercising warrants and options. There is a good £25m there. I’ve spent some time on this and keep coming back to the same range of 60p - 70p, albeit I’m looking at an all asset valuation not just the BFS open pit project.

Nonetheless, I do think a buy-in is still on the list of options. Ultimately, if JM doesn’t get the price he’s looking for going down the development route is also still there.

No matter how many times I try I am coming up with a 60p - 65p valuation in assets, using average market sale estimates for in ground resources. What I don't know is whether these averages reflect permitted resources. If they don't I could be estimating on the low side. I've also assumed that all shareholders take up the rights and have ignored the £4m raise, assuming that it is basically a cost of negotiation and will essentially be used to fund it over the next 6 - 12 months. That is if the sale takes that long.

In summary, anything below 50p is plain silly. Anything above 80p is pretty optimistic; even above 70p is a stretch. 60p - 65p is my expectation, although I would love to see 75p. 60p should be achievable without any negotiating capability; 70p plus is where the expertise starts to play in.

Incidentally, none of these numbers make any financial recognition of the fact that the company has a team on site ready to take the next steps, that local relations are very good and Nic's political environment is helpful. All of these points play into the negotiation process once you agree on the hard asset valuation. It's the ability to monetise these softer assets that will make the difference between 60p - 65p to the 70p plus area.

The SP could go anywhere in a market this thin. At the moment, like me, most people are likely saving their cash for the rights issue rather than buying in the market. If it did drop below 15p that cash would probably go into a market buy rather than a rights buy, putting a floor under the market price. After the rights the cash is in the bank and negotiations are funded so it would not make a lot of sense dropping further. Then again half a dozen trades can shift the price.

I have a suspicion that more than a few recent trades have been sells by committed investors to fund the rights at a lower price. Why wouldn't you? I did consider doing it myself but did not want to mess with my CGT situation. I'm actually surprised that the market price is not a lot closer to 15p. But then again, to repeat myself, this is a very thinly traded share. Anything can happen.

No sign of the corporate action on the HL platform yet. It looks like tomorrow.

I've tried to rationalise a valuation around 60p but would be interested to see other attempts. Maybe a bit more than a guess at 40p, 80p, £1 etc.

Anyone else ready to have a go?

I thought it was worth checking what the average valuations were for gold in the ground given our situation.

Let's start here (from the last RNS)

The 2022 FS produced a Probable Mineral Reserve of 7.3Mt at 2.56g/t gold for 602,000 oz gold. Production averages 81,545 oz gold per annum for the first 6 years of an 8.4 year mine life. Low initial capital requirement of US$105.5 million (including contingency and EPCM contract) and low average Life of Mine All-in Sustaining Cash costs (AISC) at US$1,039 per oz gold.

602,000 'Probable' ounces. Probable and Provable ounces tend to attract a better valuation than 'Inferred' and ' Measured & Indicated'.

Jump in to this article, 'Here's How to Value a Junior's Gold in the Ground'.
https://munknee.com/how-to-value-a-junior-miners-gold-in-the-ground/

'........we kept only those with resources that fall almost entirely into only one of our three broad groups: Inferred, M&I, and P&P leaving us with about 90 companies to calculate some averages on and we got these numbers:

• US$20 per ounce Inferred
• US$30 per ounce for M&I
• US$160 per ounce for P&P

The BFS changed those M&I reserves to P&P which was its whole point.

It does not give us an exact valuation for the project but does give a good range. Valuing at $30 assigns no value to the BFS so we probably need to look at numbers closer to $160.

Let's say around $150 for the Probable element, say $90m.

Add in the open pit numbers 827,000 Indicated at $30, say $25m, plus 69,000 Inferred at $20, say $1m.

Brings us to $116m. You then need to add the SAG mill, other assets on site, land, balance sheet cash, trained people and potential to extend the mine. Let's say this brings the overall asset value up to $150m or circa £125m. The warrants and options, if exercised, will bring a lot of cash in , maybe another £15m. I reckoned on about £12 - £13m before the latest RNS. You can probably add another £3m to that, at least.

I'm coming up with about £140m in assets. I'll say 238m fully diluted although I doubt all will be exercised. In a nutshell I keep coming back to about 60p in value terms following the latest placing. Down from my c.65p but still just about within my expected range.

You can obviously put any numbers you want in this and come up with your own answers but what it tells me is the 40p asset value is on the unrealistically low side and anything above 80p looks like a heroic stretch. But you never know. JM will want a solid return on his investment as will the other major shareholders. It's not a firesale situation so lowball offers below 50p value will probably be consigned to the same place the equity and debt financing proposals were filed.

60p will be a poor return for a dozen years invested but we are where we are.

Dems the breaks.

I can't do my own but I will be taking part.

You probably can't do it within an ISA if you have reached £20k, but I don't see why you couldn't use a general share account i.e. the rights may be granted in the ISA but you take them up in a separate share account - talk to your broker.

That's how I read it as well.

I've sold a few bits and pieces today to fund taking up the offer which I obviously intend to do once HL nails down the process. Ultimately, I see this as means to an end. Without it we are on the negotiating back foot. Talking dilution is not very helpful as we can't say what the effects of having a fully financed negotiating position is. It may well be that we get the money back in terms of ultimate value. After all, what would be the point of doing it if it was not actually beneficial towards the final objective, to get the best deal possible?

I'm sticking with my view that ultimately the deal will generate value equating to 60p - 70p, albeit perhaps closer to 60p given the additional raise.

The higher the share price, the more likely the placing will be fully funded. The more likely the share price will be fully funder, the higher the share price.

The mms have reacted to a placing without really understanding the situation. Having said that they found the point needed to attract buyers back in.

I'll probably take part although the timing of the raise has caught me by surprise.

JM is an old hand at this sort of thing and likely knows that you don't conduct an effective negotiation if there is a (cash) hourglass working against you. I'm in agreement that this is a signal that lowball offers are pointless, as are attempts to protract negotiations.

My gut tells me that there has been interest since the BFS and that the timing and nature of this RNS is a clear signal. Whether it encourages a faster or slower offer remains to be seen.

I'm also of the view the options play into it. There is an expiry timeline for each tranche so it may be to compensate for a longer timeframe - still thinking this through.

I think you'll find that one of the main drivers for selling the assets is that the market seems unable to actually attribute a realistic value to the project - the actions of the past week kind of prove the point. I've described the SP action as bizarre but if truth be told it's all down to a tiny number of investors creating a downtrend in a thinly traded market. It would not surprise me if more than a few of these had expectations way beyond what the market was prepared to grant and just decided to bail rather than wait a few more weeks or months.

I do believe we have had interest in the past. A half decent board would not just accept the first offer that came along but would attempt to solicit interest from as many as they think might be interested. Ideally to create an auction type situation. This is what I think is happening. If you have a strategy of selling the asset and want to maximise value then this is what you would do. We have yet to see whether current movements in the SP are a dump and pump exercise. For me the recent drop does not pass the sniff test.

Just remember that this latest trend is being driven by a handful of shares in a largely illiquid market, and by generally uninformed investors. I’ll be very surprised if you don’t get your 46p back, whatever the current meaningless MV suggests. I doubt there are many in profit at 21p, the options and warrants are currently worthless, all large investors are under water and the asset is worth 3 or 4 times its trading price. I know this is lost in a panic sale situation but it’s no less true.

The trend followers remain in control of this wave. There is no reason to sell other than the fact that some others have decided to bail. It smacks of defeat being snatched from the jaws of victory (of a sort!). I can’t see it lasting for much longer.

It's a moving feast but let's assume all the options and warrants are exercised i.e. about 36m shares. Add this to the 159 and we are about 195m. Strike prices are all over the place from 22p to 42p (anything above this has lapsed by now). I started tracking them down but gave up having lost about 3m options somewhere in my calcs. Nonetheless, I estimate that both would bring in somewhere north of £12m if exercised.

I'm working backwards here as a 'think out loud' exercise. To get to my 65p value point we would need to raise c.£127m. (195m fully diluted x 65p). About £12m of this would come from the warrants and options, leaving about £115m. This is within the La India NPV ranges so it's not impossible. It just looks like it is when sitting on a 22p market valuation (£35m).