Roundtable Discussion; The Future of Mineral Sands. Watch the video here.
If, as, and when news does happen the SP could over or undershoot the value point. I could easily see a 10% overshoot on the day of a deal announcement, quickly followed by a bout of selling pushing it perhaps 10% below that point. It all depends on liquidity and how attractive our suitor's shares appear, if indeed we do end up with a paper offer.
Whatever the case the week starting from this time next week could be the most exciting in the company's history. IF, and it's still a BIG IF, we are finally at the point of cutting the deal. Like everyone else I'm reading things into what people are posting on the boards, what's not being said by the BoD and what might be happening with Calibre's fund raising. The latter is most interesting. My view is that, if it is Calibre, the deal will be all paper and the money they have just raised will be used to develop mines, including Condor's.
We'll see.
My head is now in this range. For the sake of a number I'll go for 50p. Not a an outstanding return for the time I've been in, but better than a kick in the...
I'll start a new thread on this.
Thus far, only an hour or so after starting the poll, it looks like the majority expectation is for a Calibre deal (maybe influenced by the money raise), and a price above 50p. The optimists are currently leading the pessimistic end; about 60%. That may still change.
Another poll. You know what to do.
Another poll.
Another poll.
Another poll.
A tick from me on this one.
Like many others my guess is that the two suitors are 1) A Chinese company, or 2) Calibre.
I think the Chinese will want to lowball for cash, so my view is that Calibre will win with either an all share, or a part share/part cash bid; whether it's for the assets, or a full acquisition. As such, assume a tick from me under Calibre. I think Calibre will be better able to present a higher offer via massaging the attractiveness of its shares at a point of acquisition. Cash is pretty solid, but paper can fluctuate according to sentiment, as well we know. Condor's market value seems to be sticking pretty closely to book value in the absence of any current news from the BoD.
I'm still thinking next week for an RNS, in association with the 2023 Annual Report. Based on last year, it looks like Thursday or Friday.
In the meantime, feel free to either tick 'The Chinese', this post, or 'Calibre', the next one. In will be interesting to gauge opinion on the outcome.
I keep widening my range. Just over a year ago it was quite narrow, 60p - 65p in share terms. The length of time this has taken has made me more pessimistic, and I widened it to 50p - 65p a couple of months ago. I now think an even wider range is called for, 45p - 65p. If the deal is cash I reckon we will closer to the bottom of that range, but if it's paper we could be in for more. It will depend on who buys, and how the market rates the acquisition. If it likes it, the deal could be closer to the higher end of the range.
It all depends...
No, it's the Bingo trade...
88
There isn't a deal.... until there is one. I'm inclined to believe the general feeling that we are pretty close to an announcement. Although I'm not seeing an uptick in buying, which often precedes an RNS, I sense that some people on these boards may have been given reasons to believe we are on the verge of something. Even Slim looked like a convert last week.
At a guess, March 29th.
I'm starting to think that the deal RNS and Annual Report will come out on the same day. If a deal is signed this today or tomorrow, an RNS could come out this week. I usually work on the basis that market regs expect price affecting news to be released within 72 hours, usually faster. If it's another week before signatures are on the dotted line, I'm guessing the news will be released with the financials.
Or are there any UK tax reasons that could push an RNS into the next fiscal? Nothing obvious springs to mind. Any views out there?
A pretty wide range in expectations, from around 30p on the pessimistic side to around £1 on the optimistic end. I'm still sticking with my own range, which moved from 60p - 65p a year or so ago to 50p - 65p today. Although PoG has moved in the right direction, underpinning an NPV calculation of over $600m at $2000 PoG, the reality is that the price will be set by the quality of negotiation and market conditions. The former may be in our favour (JM's track record) but the latter still mitigates against sellers. On a good day I'm thinking 60p (with a bit more if I'm in a really good mood), but on a bad day it's 50p (with a bit less if it's raining and the wider market is catching a cold). Valuation models will only take you so far.
Back to basics. Our price will depend on whether we are selling the NiC assets, in which case cash is more likely, or whether the offer comes in terms of something for the whole company. If the Chinese want the whole company, I doubt anything other than cash will be accepted (trust issues). If it's a UK/US/Can offer then paper, or paper and cash, could be the order of the day. This then might depend on what the market thinks of an acquisition. The SP could go up or down, depending on views. And then there is the bedding-in aspect. Do you bail out for cash straight away, or wait for an acquisition to bed in? Is there a prospect of dividends?
There are so many variables in this the only thing I've become convinced of, is that whatever I think on any given day I will be wrong about the outcome. Meanwhile, we seem to have a sense that something happening is pretty close, or am I wrong on this as well? Whatever the case, it's only a couple of weeks before the financials are due. It's going to be difficult to avoid providing an update, if nothing has happened in the form of an RNS in the meantime. After all we've had a news blackout for quite a while now.
I'm assuming all-in at around $500m, allowing for a bit of an uplift in expected PoG and some nominal valuation of the non-fully appraised stuff. I did dig into detail last year but decided that there were so many assumptions I thought I might as well stay in the 'back of the envelope' macro world. Ultimately, it's the negotiation that will set the price rather than modelling. In my view it basically comes down to how good JM is, sitting at the other side of the table. His track record looks good so I don't expect a lowball result, but there are limits set by current market conditions.
Had we got a producing mine I reckon we would have got a lot more for those other assets. But we haven't so I don't really think their presence will have more than a marginal effect.
I've still not really seen anything to suggest a change to my early 2023 range expectation of 50p - 65p. Spot gold is $2182, as I write, and is way above the mid $1500s this time last year. My range also emerged from average outcomes over a five year period, with quite a wide range of gold prices as reference points. It would not surprise me to see a revised NPV above $500m at prices closer to $2000 PoG.
And yet....
The market is still the market, and Condor will need to leave a really tasty chunk of money in the pot for the buyer. After all, it will be they who need to do the work pulling the stuff out of the ground. Let's say a $500m project NPV. An 80% discount does look too much, and a 50% far too little. 60% also looks like a stretch, so I'm coming back to the 65% - 75% area. Let's say 70% off the top line, or 30% of $500m, $150m. In GBP about £117m; over 200m shares and we are around 58.5p i.e. within my expected range. Now I could be wildly out. JM could be the best negotiator on the planet and get something better. But do we really think he could get 50%? $250m or £195m; or circa 97.5p? I'm struggling with these levels, but would certainly roll the red carpet out if he gets anywhere close.
60p is not exactly a brilliant return, but it's better than 40p or 50p. I'll be disappointed if the outcome drops below 50p, and pleased if goes significantly above 60p. I just can't seem to get my head very far away from a 60p expectation, with a possible 65p and a (slightly less likely) 50p now that PoG is on a roll.
Can you use this thread to rationalise your own valuations to make it easier to see/debate perspectives.
ddd
20 effin years in FI shares; a third of my effin life. It was supposed to be a short term trade FFS.
At last, something to talk about…
And if US rates cuts do come along $2100 will be just the start of the journey. I don't think it's on the cards for March, but if the FED doesn't do it by June it risks accusations of playing politics as the US election draws near.
Meanwhile, in Condor land, every uptick increases the NPV and makes us all feel that little but more optimistic. In a sense it also creates a bigger problem for JM/MC in that the sales performance outcome will be judged against a recalculated NPV (at $2100+) rather than market cap. Perhaps it will be a wake up call for any bidders in that they need to nail a price quickly, or it may well go up with the PoG.
An increasing PoG may also bring investors back into the sector. Apart from nvidia, tech may be topping off (jury still out). If it does, all that money will need to go somewhere. And we are well overdue for a sector recovery. ...DISCUSS...
In the absence of sale news earlier, I'm expecting an update with the financials at the end of the month.
With the December financials due at the end of the month we'll get a better handle on current NAV. At 20p I reckon we are probably trading at somewhere between 15% and 20% discount to NAV. NAV of course is historical cost based and we are 15 years into this project, with all the associated price inflation aspects. It's highly doubtful CNR could get this far for what we currently have on the balance sheet. In a nutshell we have two pretty meaningless indicators of what the outcome might be; Dec '23 NAV and the market price, the latter of course showing dramatic moves on the whim of tiny volumes.
So, we have a Nicaraguan stand-off. Mellon has dug his heels in, and the Chinese want to get away with a steal. I've tried to rationalise the outcome via average price of assets in, and on, the ground, but the reality is that we are in an auction situation. The Chinese are playing for time, probably thinking that Mellon will eventually buckle. If both bidders are in fact Chinese it's pretty reasonable to assume the dead hand of the state directing bid strategy for both. Pin a bid at a low threshold, and show some faux competition from the other bidder adding a few more points. Maybe; maybe not. It's impossible for me to say. Are we in the midst of a Game Theory situation? Again, there are no facts to work with, so it's impossible to speculate. Is there effectively just one bidder, the Chinese state? In other words, to paraphrase a political nutter, are they both two cheeks of the same ar.e?
I haven't been as wrong in my optimism for about 15 years. In February 2023 I thought there was an outside chance of a deal by the end of March 2023. Never in my wildest pessimism would I have thought that a deal announcement by the end of March 2024 would look like optimism. I can't actually recall any sales process I've watched, or been involved in, taking this long. Even £10bn M&A has been done and dusted within a year.
Now, after 15 years, if I'm thinking that it's no surprise that people with a shorter investment timeline are bailing. It doesn't mean the assets are worth any less, nor will it likely affect the ultimate outcome. But it certainly explains the boredom/frustration of pretty much everyone. Perhaps JM is just a world class negotiator, but for me I really think it's time to close. I long ago accepted that 100p+ was a developer based pipedream, but really, anything less than 50 -60p really would signify failure. A failure to even achieve the sort of average prices achieved by dozens of juniors over a multi-year period. But then again shi. happens.