Member Info for dictumdedicto

I'm also more sanguine about MC. The permits took forever, but then again what could he do about Nicaraguan bureaucracy? Given the photos of him lunching with the political premier, you can't say he didn't do his best to oil the wheels. The reality is that it was Sleepy Joe's mob that has caused the real problem. The U.S. seems happy to impose sanctions on members of the Nicaraguan hierarchy because they don't like the local politics and yet, Quatar.........?

Investing in junior mining was, is and always will be a risk. And with the BANANA (Build Absolutely Nothing Anywhere Near Anyone) Green brigade apparently calling the shots it's going to get harder and take longer. I suspect this is also a part in the decision to sell.

As you suggest, it's too early to call this stage of the process. He and JM may yet pull a rabbit out of the hat. And both are well incentivised.

It's diabolical trying to pin an overall valuation down but what we do have are the NPVs associated with La India.

At $1700 gold NPV is $116.48m or £97m
At £1800 gold NPV is $146.07m or £121m
Gold is trading around $1735 as I type.

Let's say £100m /159m (undiluted) is equivalent to about 63p.

The 'LA INDIA PROJECT SEPTEMBER 2021 PEA EXPANSION SCENARIO
to 150,000 oz gold p.a' had an NPV of $418m @$1700 gold, say £347m or about 218p (undiluted) in share price terms.

Forget pipe dream world of 200p +. We know we will be nowhere near that, but the delta between the BFS NPV and the pipedream is a negotiating point. Against this is the 'Sleepy Joe' factor, which is apparently more of an issue that Nicargua's internal politics. We are also up against North America's looming recession and (by now) several months of a falling equity market overall - the 'poor market conditions' issue.

On the other hand JM and other larger investors are in it to make some money, and as already mentioned, any offer below 50p (in share price terms) will likely get thrown out at the starting gun. JM/MC will push for 100p but will likely struggle to get a hearing themselves much above 75p (heroes if they can).

Throwing the politics, the NPVS, and general market conditions into the pot and I'm still left with a feeling that below 60p is on the pessimistic side but above 70p still looks like a stretch. We've been at 60p in the past without being as advanced as we are today so anything can still happen in the MV world.

Asset sales may be the talk but you can't rule out someone coming along and making an offer for the company as a whole. What buyer wants is obviously down to how they see the tax and cash repatriation situation. Who knows, selling the company may well be just another option thrown into the negotiations.

Agreed.

I tend to use share price as a reference point for a valuation, not that I think the company itself is necessarily up for sale. It seems to me that the board electing to go down the asset sale route precisely because the market is unable to value the assets at what they think they are worth. MV being below NAV or book value happens all the time. I bought an investment trust recently that was trading at close to 30% below NAV. In other words the assets were worth far more than market sentiment was prepared to provide. Also, MC has been complaining about the fact that CNR traded at the lower end of its peer group for years. He has not been able to explain it any more than I can.

Does this mean I know more than the market?

No it does not. In a sense the fact that I can't explain this bizarrely low valuation gives the game away. If I can't explain it then I'm pretty sure that a lot of other investors won't be able to. And this is inevitably going to be reflected in sentiment. When sentiment goes negative (or positive), if the initial wave is big enough it ends up as a trend. This trend only bottoms when the nervous, and the trend followers, are exhausted, or when you get an RNS which provokes a mood change.

Some think the market is always right. I think it's more subtle than this. In the long, and to an extent medium term, it is. But short term moves can go anywhere, which is why you often get over corrections (both ways) until all available information has been fully disseminated and understood. At this point in time I am 100% certain that I am not up to date with what is happening regarding the asset sales. My reaction is to hold fast. For others the uncertainty is too much; they just want to bail.

At this particular point is time my sense is that the NAV values calculated in the past are a better indicator of where the negotiations will go vs. a sentiment driven, low liquidity, market. I think we will end up with a cash pile in the company far greater than current MV, equivalent to around 65p in MV terms. The challenge then is figuring out the best way of getting a distribution out to shareholders.

Agreed.

The bottom line is that at this particular juncture the share price bears no relationship to what the assets will realise. The fact that share sales are taking place suggests even more that this is not even remotely understood, unless of course games are afoot.

I’m inclined to agree. We might even get something pre-Christmas.

In the the long term the market usually gets it right but short term prices are frequently way off mark, especially if the market lacks full information. In this case it clearly does. None of us know how close to the finishing line this is.

Given that MC is in Nicaragua and given that the sale documents are already out there, I don’t think it’s too much of a stretch of the imagination to put the two things together. If he’s not there to develop the mine then he must be there to conduct viewings, or maybe even to start negotiating. Hannan can do the London end and he can do the field piece. Why else would you be on a field visit when the ‘assets’ are up for sale? Perhaps the process is more advanced than we think.

They seem to have the right background for this sort of thing and will probably be incentivised on exit price achieved.

https://www.hannam.partners/sectors-services/overview/

The claim:

'Mining is our heritage and our team has executed some of the most high-profile transactions in the sector over the last 30 years.'

Latest transactions page:

https://www.hannam.partners/sectors-services/latest-transactions/

They certainly get around.

There has not been much discussion on the exit timeline, so I'll open a thread.

Given the nature of the RNS my working assumption is that there are already dozens of sale prospectuses out there and I'll be very surprised if there are not at least two or three parties that are interested in taking things further. A party that is interested will assume that there are others with the same interest and would not want to lose the opportunity of being taken seriously by offering an unrealistically low bid, or by delaying and risking being an also runner.

Christmas is a natural break point. If a party has already looked over the asset it would not surprise me in the least to find an initial offer tabled (in the English sense) beforehand. In other words in a matter of weeks rather than months. If not December then I would probably go for February, allowing for the usual new year slow startup that most companies seem to face.

Feel free to throw your twopennyworth in.....

If the mine asset is sold rather than the company we are left with the question of how shareholders are repaid. The sort of stuff going through my mind is whether the company effectively wraps-up (i.e. dissolved after paying off debtors), or whether it continues, a new project coming along.

I would be interested in views on this one.

Agreed.

MC will set expectations for the asset value equivalent in the three figures area. As with all negotiations buyers will start unrealistically low, used the share price as a measure, and CNR will start with the BFS NAV, coloured with a bit of 'potential'.

Jim Mellon is not exactly amateur at extracting long term value from a project. I'm pretty sure he is not planning to exit Condor with a loss as an objective.

I suspect that at least 50 sale prospectuses have been issued and we know that some potential buyers have taken a look at the asset in recent months. We may even have early stage negotiations taking place already.

Gold is close to it's all time highs which will likely underpin the price.

https://goldprice.org/spot-gold.html

There will be plenty of expressions of interest (tyre kickers) but I suspect we will end up with only one serious player. Best case is an auction.

It's pretty clear from representations that have taken place in the past that anything below 50p asset value will not result in any engagement. It's also equally clear that 100p verges on the impossible. If I'm being even more realistic even 80p is topside, with a 60p - 70p band a more likely outcome. It will represent a profit but will not compensate for a dozen years of other opportunities I could have been in and out of.

I'll go for 65p worth of asset value and we'll see how wrong I get it.

Is my expected exit range bearing in mind existing investors buy prices, project NAV and market conditions. I doubt we will get north of 100p given that we have to leave some return in the pot and the immaturity of the mine development. In the current circumstances current market value is meaningless as a reference point for a sale price. The clue is in the RNS. It’s being sold on ‘asset’ value rather than market value. As a 12 year holder I’m also disappointed but it is what it is. At least I know that MC & JM will get the best possible, and even if something acceptable is not on the table, there remains the option of actually developing the mine.

I've seen plenty of overhangs in the dozen or so years I've been in Condor. This one will pass just like all the others.

I am disappointed in the effects of the Biden nonesense but then again s..t happens. By this time I thought we would start to base in the 30s pending the next company moving event. Alas, it was not to be. On the other hand I'm not sure where we are at the moment. If, as the sector believes, there will be little or no effect then a sale of CNR would be as unaffected as raising project finance. In which case Condor is insanely undervalued. Unfortunately, markets hate uncertainty and prospective investors will probably wait until they see some tangible progress before reinvesting.

It's a HOLD from me but a good opportunity for some to get in while the price bounces around what is likely the bottom. Sub 20p is always possible but short of impending insolvency (not likely in the foreseeable) I doubt it would be more than transitory.

And just in case anyone is thinking: 'what if Italy don't pay?'

Let's see now:

Italian planes, ships, bonds, overseas investments. You name it, the claimant could distrain it.

More to the point, if it did refuse to pay the international humiliation and consequential unwillingness to deal with Italy would ripple throughout the world. Our case might seem like a sideshow but the consequences of not playing by the rules would reach every part of the planet.

Whatever these clowns think they can gain by their current action will be outweighed by the reputational and financial losses Italy will incur.

From what I can see Italy has everything to lose and nothing to gain.

So, to satisfy myself on the expected outcome I've done a quick tally of cases; rejected, part rejected and annulled. I've rounded to the nearest % but from what I can see 75% of cases had their annulment claims rejected, 10% were 'Annulled in Part' and 10% were '?Annulled in full'. It was also noticeable that the latter were mostly earlier cases with the last one 'Annulled in Full' appearing to be in 2009. I take from this that the procedural elements are a lot slicker than perhaps they were back in the 1980s.

We'll have to see but this thing might not even get past first base.

If you look at the annulment record there is a very low chance of a submission being accepted. The best Italy could hope for is an annulment in part. After all, if an annulment is accepted it basically suggests that the court members are either incompetent or corrupt. As some have suggested already this is politics at play. Italy have little to no chance of winning an annulment but, as with many dodgy organisations/institutions/governments , they might just think they can outrun RKH by playing for time; hoping the company will run out of money. It looks like the board have this one covered so I'm inclined to take a glass is half full approach. Each month that goes by adds £??? to the pot. Twelve months from now Italy will not only be perceived as lacking ethics but will also be regarded as dumb. RKH are not going to run out of money and are not going to lose.

https://icsid.worldbank.org/node/81661

Ad by the way, Italy is still not the main event the last time I looked.

Anyone know where the annulment submission is?

I can't see anything recorded.

https://icsid.worldbank.org/cases/case-database/case-detail?CaseNo=ARB/17/14

As ever the mm's have dropped the price a couple of pence to shift a handful of shares. It would not surprise me to see some of those trades down to a bit of a tree shake. Still, the price is the price and we have to accept that there is a belief across the Nic mining sector that the sanctions will have an impact, irrespective of what they actually say.

As someone has already stated, CNR can swing either way somewhat dramatically although in most cases it seems to be down via the elevator and up by an escalator. It will probably take a bit of tangibly good news to encourage the doubters back in, but those of us who know there is value here are unlikely to budge. I won't be.

Frustrating as it might be for CNR to be so low when it is close to actually getting somewhere, I know that the situation is not permanent. The whiff of a buyer or project finance and we'll see it move back up. And this time it might even be via the elevator rather than the escalator.