Member Info for ElectricLion

Yes, dilution is a concern. The SP has been hit over the last year, first by political unrest in Nicaragua (now calmed down) and then an II fund going bust and selling off all it's assets. Raising money at this level would hurt. On the upside, the majority of the funding is likely to come from debt. Other options are available too, including selling some gold production in advance. The CEO Mark Child has a fair bit of skin in the game, so I remain hopeful that dilution will be minimised as much as possible.

Many irons in the fire, bit hard to tell which ones will actually occur.

Discussions underway with B2Gold. An NDA has been signed and they've tested some of our ore. Outcome of that could be a.) toll mining deal (generating very welcome cash for the company), b.) purchase of B2's old mine equipment (significantly reducing CapEx for our own mine build) c.) JV d.) full takeover or e.) nothing at all. Any of those could be announced at any time and all but the last should be positive for the share price.

Longer term, if no takeover, then we need to build a mine! That brings funding concerns and a longer wait, but potentially much greater returns in time.

We have until February next year (18 months from permits in August last year) to begin construction.

Last estimate I heard was $130M for the expanded 120k oz per annum plant. That's about 6.5 times our current MCap. And if we end up buying B2's mine, then you can knock off a fair bit. Raising that sum entirely through equity at this SP would be ruinously dilutive of course, so I imagine we won't do that! I don't think the MCap factors into loan or offtake agreements, so although the sum to be raised is large compared to MCap, it should still be attainable, and indeed possibly quite normal in the sector. Happy to be corrected by someone more knowledgeable.

There is only one question there, and the answer is that funds may also be raised by bank loan and/or forward selling gold production.

You seem very sure of yourself mb, however your theory is built upon a whole heap of speculation. It's certainly one possibility, but just one of many, and none of us here can say with much confidence what will happen. Sometimes it's better to admit that you don't know something than to claim that you do, and then be proven wrong.

Good presentation. A few notes I made:

Ideally scale up to 200k oz in time. I think this is the first time that this figure has been mentioned, although it's obviously a nice number which should get investors large and small quite interested.

200k oz could probably be done from day 1, for a company with deeper pockets, which would be attractive for any buyer.

Reluctant to raise cash at this share price, though there's a drill program ready to go if we can afford it and the market is likely to value it.

NDA signed with B2, so can't say much. They're still thinking about the toll refining. I would imagine that they're in the process of working out their whole policy with regard to their mines in Nicaragua, not just the toll mining deal with Condor.

No mention of funding construction, so this is still the elephant in the room for me.

However I would speculate that the decision to go for 120k oz from day 1 rather than 80-100k, despite the increased CapEx, would suggest that funding is not a serious problem. Time will tell.

Gold price at $1295/oz. AISC at $690/oz. Therefore $605/oz profit.

120k oz production per annum. Therefore $72.6m profit per annum.

Let's say $20m per annum goes directly on repaying debt.

Gives £40m net profit per annum.

Not sure what an appropriate P/E ratio should be, but 5 is conservative I would have thought. So £200MCap.

Let's say 100M shares in issue at that point. That's £2 a share and a 10 bagger from here.

ETA, 3 or 4 years I guess.

Now go a bit crazy and say gold at $1500/oz, 160-200k oz per annum, and a P/E ratio of 10...

Yes, this is all just theoretical number on a spreadsheet and yes, there's many risks and obstacles, and no I'm not saying it will definitely happen. But what the numbers do show is that a 10 bagger from here is not at all deluded, if we have a bit of luck and are willing to wait long enough.

Worth reiterating a point another poster (apologies, I can't remember who) made that the £20M mentioned in the special resolution at the AGM is a nominal figure. That is, the resolution is actually for 100M shares, at a nominal price of 20p (following the 20:1 consolidation from the original nominal 1p per share) a share, rather than £20M.

Correct me if I'm wrong, but capital expenditure doesn't factor into AISC, does it? So re-using existing mine infrastructure won't change the AISC. It will however lop off a good chunk of the ~$130M, or whatever it is, that was initially forecast for construction.

How do you get onto MC's email list nero? Or is it invite only? lol

I think that's a positive really - we have options, as you've listed. It's tough for us mushrooms being kept in the dark, particularly when the SP causes frayed nerves, but I don't think MC is short of options. If anything, it's just taking a bit of time to evaluate all of them and try to pick the best course. Highly subjective of course, but I thought MC seemed quite relaxed in the last interview. Didn't give the impression of a guy with his back up against the wall IMHO.

Not at all. Positive or negative is not a problem. I'm just interested in a constructive debate with rational investors who support their arguments with either evidence or at least a logical train of thought. Seingred's posts, for example, are often somewhat pessimistic, but he also raises some relevant points and he keeps us all well appraised of the political situation. Some others post the same tedious whinging over and over, and then go and lay it all at MCs feet. That is irritating.

We hear your concern. No-one knows. Wait for the RNS, or take action now. Up to you.

No wonder most lose money. MC is doing his job - running the company - which he seems to be doing pretty well under challenging circumstances. Having a go at him because the SP is down due to a large forced seller is not classy and moreover shows a fundamental misunderstanding of investing, full stop. Can any of you MC doubters actually tell me specifically what he should be doing differently right now?

What exactly do you want him to do?

Good spot. Exactly 100K less than City's last known holding. IIRC there was a 100K some days ago. Perhaps City trimmed 100K to increase liquidity before administration forced them to dump the whole lot.

https://www.investopedia.com/terms/m/mr-market.asp

Quoted Bid higher than Ask for a moment there. 19.25 vs. 19.00 according to dummy sells and buys a second ago. Sells now going to NT. Ask dropping like a stone. 18.5p...

Agreed. The 330K must be a sell. Fits the pattern. Do you think we'll get an RNS during the clear-out, or only when they're completely done?

Must be City Financial. We won't know for certain of course until it's in an RNS, but all the facts fit the theory so far.

This is an excellent buying opportunity IMO, didn't think we'd see these levels again after permits. Shame I don't have much funds to top up with at the moment.

I'm cautiously optimistic that Ortega is smart enough to avoid ruining the country. He's clearly not a very nice man, but it's the stability of the country we're mainly interested in, and I would hope he's got the political chops not to turn a crisis into a disaster.