Member Info for Jamesiecakes

Yeah

I’ve updated my thinking (and rough valuation calcs) to hard rock production come year end. Would happily be wrong though (and have regularly been wrong so far)!

I think Colin will need to pull a rabbit out to avoid another placing to be honest.

Cheers

James

Hi Andrew

I think the long stop date in the below is quite important;

MMP has agreed to commence construction (as demonstrated by the placement of an order for the CIL), as soon as possible but in any event no later than 1 November 2019 (with a long stop date of 1 February 2020). Construction installation work on the CIL is planned to be completed with commercial production being achieved by 1 July 2020 (with a long stop date of 1 October 2020). Commercial production is defined in the Collaboration Agreement as a being installation of a processing plant with a throughput capacity of not less than 29,000 tonnes per month (being 70% of the planned 42,000 tonnes per month throughput).

It would for sure be nice to get a clarification RNS on exact progress on the build etc

Cheers

James

From memory the price was the june average, this was stated in the original RNS

The comment was made in November’s JLP meeting , so last month would have been October?

So quite possibly Colin is blameless here, and it’s just been misinterpreted

And to be fair to Colin he has started to make the point clearer in recent interviews that the alluvials are cash generating at the business unit level but not covering all company costs yet

Hi CE

Any reason to speculate that mining of the “low hanging fruit” has started?

Cheers

James

Hi CE

How are you calculating the NPV?

Looking at the DFS the NPV was usd 28mm at 15% discount rate, which would mean around usd 22mm to xtr. However this included approximately usd 42mm capex which isnt being incurred now and hence the forward npv should be much higher at around usd 65mm (im guessing a bit on the discounted value of the capex) which would be approximately usd 50mm to xtr.

Cheers

James

Cyberiachas

Correct me if I’m wrong but selling the gold will have a big impact on the income statement, as the unsold gold hasn’t yet been recognised as revenue.

As the gold inventory HAS to be recognised at the LOWER of cost or net realisable value, it will be valued at below what it can be sold for (assuming the gold price doesn’t crash). My understanding is that the production cost (including taxes) has already been taken in the income statement.

As such the selling the gold will dramatically increase the profit and loss account when the surplus is sold, and will increase the company asset by the difference between cost and sale price e.g. when inventory is converted to cash.

Take a look at the full year report, as there is more detail there.

Cheers

James

Hi Mike

Im not an accountant so please take my thoughts on this with a bit if a pinch of salt!

My understanding is that unsold gold is shown on the balance sheet as inventory but is valued at the lower of cost (what it cost us to produce) or net realizable value (what we coukd sell for), page 35 of the full year report explains this better than me! With the balance of this account increasing by only £60k from YE 2017 to end of H1 2018 (despite our unsold gold increasing dramatically vs YE 2017) I suspect this balance includes this unsold gold and other assets (which were also included in YE2017).

There is also a nice bit about when revenue is recognized on page 36 of the full year report, which supports my view that the unsiold gold wasnt included in the H1 PnL numbers, so both cash flow and future income statements should benefit when this gold is sold.

Cheers

James

Hi Cyberiachas

Interesting comments, looking at the half year report i noticed the following which makes me disagree with what you have written that gold unsold is inluded in the H1 PnL.

Revenue is stated to be on gold sales including Nexus share.

the reported number of £460k is correct compared against whats reported for H1 gold sales (at an approx ex rate) in the quarterly updates.

Looking at the cash flow calcualtion there is no working capital adjustment for what would be a large increase in accrued revenue from Dec 17 close to June 18 close.

Interesting to hear your thoughts on the above.

Cheers

James

I don’t think you guys are comparing apples with apples, if you check the segment PNL it’s clearer (in my opinion)

Cheers

James

If you honestly believe that why do you not sell and move on, you still have 1/3 of your money, which I appreciate isn’t great but it’s better than losing 100% which is what you are implying.

What’s you logic of staying and whinging that the company is doomed?

Continued;

General points

G3E are considering expanding into India, UK, Southern Africa & Australia. This was only mentioned in passing (as it wasn’t a G3E meeting), my view would be even if G3E goes into a new area it will take time for GDL to benefit.

As per the 2015 (possibly 2016) AGM Randeep made a quote that he “would love to drill a Lifabric in the UK”, This to me is a very distant possibility but one that i always really like the sound of. It gives me that small bit of hope I might actually make my money back!!

The board do not see a risk that the loanees will not grant an extension as the debts, fall due.

The cost structure has been flipped on its head, with much more emphasis on variable costs. Basically the business is now right sized (not carrying a huge staff with zero work).

3 Rigs Drilling continuously (1 vertical well a month), or 36 vertical wells a year (dynamic changes if directional) should see the company break even on a cash basis (e.g. ignoring depreciation and other non cash items).

The G3E refinancing is expected in H2, more specifically Q3, however these things historically seem to drag so I’m not holding my breath here.

Conclusion

All in all the AGM was as expected, lots of promise but as always its around the corner.

My notes from the AGM;

The AGM was poorly attended, 3 individuals including myself (and I’m guessing one of those was Mr Chow). This poor attendance shows how unloved (with reason) GDL currently is.

China

China is going “quite well”

GDL continue to drill for CNPC (incl Petro China), with 7 Rigs currently drilling on CNPC behalf. The trend is that Greka are getting the more complex wells and this trend is expected to continue.

GCZ requires 147 wells drilled before YE 2019 (18/04/2017 G3E RNS has this at YE 2018, so hoping i heard/wrote 19 down incorrectly) GDL can expect to receive 75 of these wells (G3E can nominate a drilling co to drill 50% of the wells). As such GDL can expect roughly $26MM in revenue from this over the next 18 months. Interestingly this isn’t dependent on G3E raising finance as CNPC will carry G3E if required. Not much clarity on when this drilling campaign would start, the quote was something along the lines of “could be 1 month from now or a further 2 months from that”, however I took this time frame with a pinch of salt.

The GSS Lifabric campaign is dependent on when G3E sort there financing, there will also be various other work coming from G3E and GDG over the coming years (the great unknown is when).

India

ONGC demands got out of hand after the contract was signed, largely due to working capital issues (wanting GDL to purchase BOPs at around $2MM, prolonged payment terms etc). Resulting in the contract being unworkable from GDL perspective. There was a cost to GDL which was swallowed as 3 teams were mobilised (the numbers of teams is from memory not my notes so i could be incorrect here).

Essar still owe money, payment from them is starting to dribble through (immaterial value to date) and will be used to settle outstanding payables in the country.

No new work will be undertaken unless the receivable risk can be mitigated eg bank guarantees (from reliable banks). It was mentioned that both Essar and ONGC have tried to contract GDL, however the working capital terms were not acceptable. There is also potential work from Reliance and Coal India now that the latter can develop the Gas. I am not expecting anything from India anytime soon.

General points

G3E are considering expanding into India, UK, Southern Africa & Australia. This was only mentioned in passing (as it wasn’t a G3E meeting), my view would be even if G3E goes into a new area it will take time for GDL to benefit.

As per the 2015 (possibly 2016) AGM Randeep made a quote that he “would love to drill a Lifabric in the UK”, This to me is a very distant possibility but one that i always really like the sound of. It gives me that small bit of hope I might actually make my money back!!

The board do not see a risk that the loanees will not grant an extension as the debts, fall due.

The cost structure has been flipped on its head, with much more emphasis on variable costs. Basically the business is now right sized (no

I wonder if we will see a decrease in operating costs with Moz Gold no longer operating (and producing jack), and hence an increase in earnings. Will give us a good view of how profitable Sino are anyways.

Hi CE

I’ve always enjoyed reading your posts, so good to see you writing on the BB again.

The last RNS stated that on June 14 production was ahead of Q1 (1200 ounces), let’s say 1201 or around 110 ounces per week, if we add a further 2 weeks at 110 ounces per week we arrive at 1421 or a roughly 18% increase which should offset the decrease in gold price. So I expect progress on all metrics although maybe not spectacular!

Cheers

James

I will be there unless something comes up with work

I just spoke with Halifax, and they have restored GDL as a tradeae share (guess there system isn’t automatic)!!

So get buying :-)

Have you tried calling them?

Thanks fir the feedback H50

Interesting that he said a Royalty of 18%-20%, this was previously 15%-20%. Do you think the updated percentage was a throw away comment or that there was maybe a bit more behind this (possibly reflects how the negotiations are going)?

Were there any more Qs on this, that CB was able to answer?

Thanks again

James