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Usually in the last week of March. It's going to be difficult avoiding giving a meaningful update at that time. While a progress update could be given any time it may be that they are going to use the release of the 2023 accounts as the announcement medium.
I'll stick with the top end of my (now year long range) of 65p, but given the slow process I've starting to believe that bidders have been effective in talking the price down. Instead of 60 -65p, I would not now be surprised to see something as low as 50p. Thoughts of £1+ went out of the window when the decision not to forge ahead with production was announced.
Nicaragua could nationalise anything, although if it did have a go at Condor it would effectively shut down almost all inward investment for years. No rational government would want to take that risk. My guess is that they want to continue to prove to the world that the country continues to be investable. Even the Chinese would be spooked by talk of nationalisation. In their shoes I would apply pressure by continually asking for updates on progress.
Yes. My whole 60 -65p (share price equivalent) estimate was based on in the ground average valuations. That was pretty much a year or so ago. Some things have changed to the positive since then (gold price, some M&A in the sector) and factors less so. M&A in the junior end still feels pretty flat, and market valuations for the sector are still disconnected from the robust gold price. In other words you could argue that 60-65p is low vs. PoG, but the reality is that investors are still not excited by the sector as a whole. I'm thinking Condor's bottom line is £100m (say 50p) with a push for, maybe £125m, although our two punters may have other ideas. The deal will be likely is USD, so maybe my £100m baseline expectation is too optimistic; maybe it will turn out to be $100m (£80m, or 35p - 40p after some costs).
The reality is that valuation estimates are really not that useful at the moment. It's a negotiation rather than a rationale for a first bid; a peg in the ground. There is a possibility that two bidders are actually competing with more compelling offers. At least I hope that's where we are at this stage.
And none of us have any idea whether the whole company will go, or just the Nic assets. Even that aspect might be colouring the negotiation.
It felt close before Christmas, although it now feels like an achievement if the deal can be cut by the end of March. The financials are due in the next few weeks. In the absence of anything major to announce, the BoD could be waiting to provide an update via the 2023 results release.
It's probably more a reflection of how quickly low volumes can move the SP, both ways.
Current SP is still likely a penny or two below book value. In other words our market value reflects zero value-add for 14 years of effort. Indeed, below cost. As ever, market value for juniors, AIM stocks in general, is simply a mark of sentiment and mood than worth. There is a bit of optimism today, and maybe the rumour mill is up and running again. Thus we get some more buying.
Having made that point, there is always the possibility that we are on the brink of some sort of announcement. We all know better than to predict it given what has happened in the past, but the clock will strike at some point.
I noticed two trades for 433,571 each, or 88.88k
Did you know....?
'8888 means your future is prosperous.
The number 8 reflects financial growth and stability. Noticing 8888 could be a sign that there will be an upcoming opportunity for you to increase your spiritual or financial wealth.
Prosperity doesn’t only influence money. The love you have for others and yourself can all become richer.'
Well it amused me...
I should have added, notwithstanding the webinar a few weeks ago, I am a bit dubious of two Chinese companies 'competing' for the assets. As we all know, the hand of the Chinese state works most of its industry like glove puppets. I guess we'll see what happens. Maybe a North American outfit will appear out of the woodwork.
Apart from the obvious question of the exit price for the assets, the other key question will be how the assets are paid for. These are obviously not exactly unrelated.
I think your wider range of 45p-65p is where my head is, although I'm oscillating in terms of positive or negative as to where in that range it will fall. Today I'm thinking 50p; on another day, with two competing bidders, I'm back up to 60p.
The question of how the assets are paid for plays into that. If we are negotiating on a better price, but one that includes paper, it will have some sort of effect on how we can get a payoff. A clean cash offer for the Nicaraguan subsidiaries will be easiest for us to handle, just paying off the inter company loans will repatriate tens of millions into the Condor holding company. I'm guessing that part paper in a Chinese entity has no appeal whatsoever, even if (on paper), the offers appears higher than a cash option. I'm dismissing any non-cash offer, or part thereof, unless it was part of a bid from a well respected Canadian or U.S. mid or large cap. In which case it might be taken seriously. A challenge for Condor would be if they received a part cash/part paper offer from such an entity, and had to compare that with a cash offer from the Chinese.
The offer is likely to be in USD and I highly doubt that anything less than $100m will get a hearing. On paper that would be worth about 40p pre -transaction costs and taxes, likely to lop a few more pence off its value. You then have to ask whether, say 10p, on current (rough) balance sheet NBV (of about 24/25p) is a sound payoff for about 14 years of investment - not really. So a buyer is going to have to do a bit better to get hold of a $1bn asset in a mining positive jurisdiction. Hence I come back to circa 50p. Excluding taxes\transaction costs I reckon that is around the $125m -$130m point. I think we'll need about $150m for around 60p; a stretch perhaps, but not impossible if we have two serious contenders for the prize.
I haven't posted for a while, but as we seem to be getting closer to the finishing line I'm sharing current thoughts. January did look like a stretch given Christmas, but February would seems manageable. To be honest a deal this quarter would warrant a celebration given how long it's taken.
Seems like the time to buy is now if you are not already in, given the SPs recent faltering.
I know this is a distortion, but a price to book of 2.5 is not that much to expect given that even in a depressed 2023 mining/metals industry it still averages 2.8:
https://csimarket.com/Industry/industry_valuation_ttm.php?pb&ind=108
Back to Condor. Will we get another hint of how close we are to a deal in the new year, or will the next update be a deal announcement?
Bear in mind that against December 2022 financials we have a price to book of about 1. Our market cap today is roughly equal to the balance sheet net assets. For me all we have experienced since 15p is a trek back to zero. The Santa rally seemed to fizzle before it started so I doubt next week's low volumes will do much for us, albeit you never know if there are one or two genuine buyers in the market. I've a feeling we might tread water for the next few weeks around these levels, although I would love to be proven wrong. My guess at the moment for year end is 25.5p mid against a 25/26 spread.
How about a bit of pin the tail on the donkey?
Price expectations for CoB Friday 29th anyone......
We aren't going to see 30p by CoB on Friday. I thought a Santa rally in the wider market might get us close earlier this week, but it seems to have started early and fizzled out today. There is still a chance for a push next week in the low volume sessions but it will take a single buyer with a good quantity of fuel in the tank to make it happen. In the meantime book value is OK as a basis for a robust move in the new year.
Hate to say it but I don't think Seingred is a million miles out. I'm thinking £120 - £125m, a bit more but not wildly different. Even that may well depend on how well PoG holds up above $2k. If it made a run at $2.5k, could see a split payout heading for £150m in overall value terms. However, at the moment it still feels like £125m max (say 62.5p) at the high end, and Seingred's £100m (50p) at the low end. Neither is particularly good, but for all sorts of reasons the gold/silver M&A market seems to be pretty flat at the moment. As I mentioned, a sudden rush to $2.5k might change a lot of opinions, and stimulate a sector-wide repricing. It's a wacky world at the moment and anything could happen.
My view is that the current market value is now pretty close to the book value of Condor's 13+ years of exploration activity. In other words it still represents no return from a company-wide perspective.
As for ultimate value I'm still thinking circa 60p, with perhaps a 40p payout up front and a 20p residual expectation over the next couple of years. That could well go up if PoG made a run for $2500 over the same residual payout period (assuming the residual payout is also tied into the PoG). I see this as increasingly likely as US debt levels increase and it looks more and more like the FED will monetise. I think the U.S. will devalue against gold at some point in the coming years and that, more than anything, will set the cat amongst the pigeons.
I'm struggling to see 70p+ in value terms over the next few weeks, but it could exceed that over the life of a split payout deal. As for the SP it does look like we have some solid buying underway. Momentum is with it at the moment and it would not be surprised to see it at 30p by the end of the week. We may also get a Santa rally due, if it's going to happen, in the next day or two. I believe Santa rallies are usually defined as taking place in the two trading days before Christmas, between Christmas and New Year, and a couple of trading days into the new year (I think!). A Santa rally could promote even more positive sentiment.
Gold is sitting at $2040 as I type. It looks pretty solid above $2000. Any more 'interest rates to fall in 2024' noises from the FED and other central banks and it could be off to the races. I don't think many have much of a choice. Interest rates vs. tax takes in many countries (especially the U.S.) looks pretty stressed.
The stars have aligned for Condor, and for a buyer if truth be told. It's the buyer who will make the lions share of Condor's intrinsic value over the next 5 - 10 years. I doubt if either bidder will want this opportunity to slip away.
I couldn't bring myself to name Arian. It took a good five years to recover the losses on that one, ironically using gold and silver investments that actually worked (Black Rock Gold & Silver helped a lot).
I'm up to the full £20k in each of the past few years switching more into an ISA. I've been holding over some loss making investments with the intention of offsetting against a CNR gain. A dividend based payout would thwart that strategy. I'll have some juggling to do in Q1 next year to avoid the tax problem. It's a better problem to have than a loss though....
I think we need to be careful comparing past expectations with today's situation.
If we had proceeded to build and operate a mine my own expectations were that the share price could achieve well over 100p, perhaps in the 130p+ area. With an increasing PoG, over the years perhaps even more.
The day the sale process was announced it was back to the drawing board. A recalculation based on average sale prices per oz of gold in the ground suggested 60 -65p was a more likely area, with equal possibilities of a slightly higher or lower amount.
The facts fundamentally changed in November 2022, and so did my expectations. If we get 50p+ it will be a disappointment. I'll get my money back and some return but nothing like compensation for tying up funds for 13+ years. It's not been a good investment but at least it's not going to be a certain Mexican silver explorer which really did cost me an arm and a leg.
My main concern is how the payout will manifest itself. Not all of my investment is in an ISA, some is outside that particular tax wrapper. I just hope I don't receive a taxable dividend and have to take an unusable capital loss, at least on the chunk outside the ISA. Now that would really grate.
So, if bidding does become competitive in the next few weeks we could end up with a scenario where a Western domiciled bidder offers an initial payout plus a delayed performance based residual vs. a straightforward cash bid from a Chinese operator. That would indeed make the whole thing interesting. In this sort of situation the SP could go all over the place, and it might even pressurise a Western bidder to match with its own all cash offer. This might well be the best outcome, out best chance of getting somewhere close to what the company is actually worth.
There are so many scenarios here. There are a few interesting weeks ahead.
As we debate the outcome, and wait for the white smoke, I just can't see any reason why the SP should not return to the low 30s over the next few weeks. 35p is just a guess at this point. It may well be a higher initial payout and a lower residual.
This report has only just found its way to me today so I may be out of date if it has already been kicked around on this board. For those that have not seen it, the report is dated December 12th 2023 and may well explain some of the new interest in the past week or so. It kicks around some recent history, but its main contention appears to be as follows (taken directly from it):
'Providing a target price is difficult given the circumstances mentioned above. Here's a guess.
For a bid to be acceptable for the board and major shareholders, it will have to consist of two components:
-An initial pay-off of no less than 35 pence per share.
-Performance-based additional payments that can take the total pay-off to shareholders to somewhere between 50-60 pence per share.
Last but not least, there is an additional potential outcome. Given the number of firms that have been circling this opportunity and with now not one but two potential bidders in advanced conversations, one bidder putting in an official bid could lead to counter-bid(s). A Chinese
buyer would probably make an all-cash bid, since Chinese shares are not generally accepted as an acquisition currency and given how cash-rich some Chinese gold miners are.
As ever, these are my conclusions drawn from following all the publicly available material on Condor Gold. There are no guarantees, and investors need to draw their own conclusions ahead of investing. However, the current facts do point in a certain direction. As the company's
CEO and 2.4% shareholder, Mark Child, said in a video interview on 6 December 2023:
"We continue to get new people interested as the gold price goes up. … The reason why we haven't reached a definitive sales agreement yet is really just the price. … We ask all shareholders to be patient with us. … The directors and chairman own 28% of the company, we all want to maximise the value for shareholders… We are now in very advanced discussions with two particular parties."
My view is that this is an entirely plausible scenario, even the prices suggested appear attainable, especially given the strengthening price of gold. 35p could easily be 40p by January with another circa 20p on top over the next two or three years. Ironically, this brings me back to my 60 -65p scenario of a year ago.
Assuming this is a possible, perhaps even probable, outcome, I'll revive earlier questions about how a distribution would be made, and what the SP might get to prior to an initial distribution. If overall value is, say, 55p, we could see the SP hitting the upper 40s until a distribution, before slipping back to what the market perceives as the residual (post initial distribution) value, expressed in marcap terms (SP). In other words 15 - 20p, depending on expectations of future payouts (less costs of maintaining the company).
As for the initial distribution, will it be a cash dividend, buybacks, or a combination of both?
It's starting to look like a wave of genuine investor interest vs. a P&D raid. Had sentiment in the wider market not been so positive today, we might well have seen even more pile into Condor. As it is I still reckon we are 4-5p below net book value and, optimistically at least, about a third of the potential market value; pessimistically marcap is only half the potential value outcome.
Those moving in now could make some easy money in the coming weeks if the deal finally crystallises.
An interesting development today. The one obvious point is that it doesn't take much to move the SP up a few pence, a point often made. Relative to the dozen or so daily trades that have taken place in recent weeks Condor looks positively liquid.
I've chewing over what the reason for a move at this particular juncture might be.
a) A P&D operation, leveraging the potential hard news aspect?
b) Relief that the looming funding issue (to a deal point) is now resolved. Were buyers put off by this in recent weeks? Are new investors reassured to see JM putting another big dollup of money in?
c) Is is leaky, leaky time? Is hard news of a deal closer than 'new year'? Could it be before Christmas or New Year?
d) Lack of anything interesting going on in the wider stock market?
e) Is word finally filtering out that the marcap of CNR is several times lower than asset valuation? Is Condor about to appear in a tip sheet?
I've no idea. We remain is a speculation world.
What happens over the next couple of days may well cross off one or two from the list.
Mid Jan looks a bit optimistic to me. My guess is March for the deal to be done. I'm not really sure how to interpret 'advanced discussions'. Does that mean 'advanced negotiations', or is it a case of more preparatory work in advance of negotiations? Are those discussions inside or outside of the bid process? Are we at the BAFO stage and these are the final two serious contenders, or are we still in discussions pending bids? Have bids been submitted and we are discussing details/issues etc. arising from those bids? I'm unclear how to read it.
As for the infamous 'in the bag' emoji. Is was never clear to me that was the intended message. It could have been a reference to hoping to getting 'bags of money', hoping to to bag a deal etc. rather than a suggestion that it had already pretty much been settled. In hindsight it's now obvious that the message never was that the deal was in the bag.
Christmas is almost upon us. We might get another 5 to 10 days of business being conduction before stuff shuts down, and it's usually mid-January before normality returns. Having said that the Chinese don't exactly celebrate Christmas and may well be OK pushing through Christmas week. I just wonder if MC/JM would be as enthusiastic. Nonetheless, a deal announcement could still be announced 'subject to contracts' prior to Christmas (an MOU/Heads of Agreement etc.), leaving the heavy (legal) lifting until the new year. Anything can happen.
In the meantime it looks like business as usual for the MMs, albeit the 15p level might appear sticky for a while. I have difficulty seeing the SP rise, or fall, too much in the current situation. A 45p share equivalent deal, while not as good as 60p, would still represent a big leap on today's market cap. Unfortunately, it's nowhere near the 100p+ many of us were hoping for a few years ago.
I'm guessing that this will be my last post until the 29th, subject to some meaningful news emerging. I just can't think of anything useful to say just yet. Even this post is riddled with speculation and assumptions, so time to shut up for now.
It might be a problem if the BoD shared specific details about prospective bidders, including disclosing prices, names, terms offered etc., although I don't see what the problem would be if they are investing blind. They question I would have is more on the lines of whether Condor needs any more money if the deal is a matter of a month or two away, and JM has just put in about 6 months of cash. The only real response to that is that the deal still might not happen, so cash injections still remain useful. Also, it's not entirely certain whether the offer to inject extra cash will actually be taken up. It could be that the news has been put out there in case bid circumstances change in the new year (i.e. we don't actually get a deal, in which case new money will become far more welcome, especially if JM doesn't want to increase his interest to the point where he has to make a bid).
I'm not unduly concerned by the suggestion.