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Khrysos - I think it's actually even more nuanced than that. If NCM and GGP can't agree a number, and then their not agreed numbers are more than 10% apart, the independent chooses one or other of the numbers (so not saying what FMV is, just choosing one of 2 options). It seems a bit of a peculiar approach - but I suppose, if they can't agree a number, it prevents either side going ridiculously high or low as it risks the independent going with the other's number almost by default. I think game theory would suggest you go close to but slightly above/below your number (if you believe your number is about right...)...anyway, I hope they can agree a (big) number and we can keep moving quickly onwards on exploration and development!
When the farm-in/JV was agreed the FMV for 5% was considerably lower than that which will be agreed/landed on early next year - and we have got to the 5% option point much faster than envisioned in the original agreement and NCM want to take their option - so all good news on how we have got to where we are.
Whilst there is a nervousness around what the number will be and what that means for share holders, i personally think that the number landed on is less important than the progress made already and the statement made by taking the option means for the future. Obviously I want the number to be big - and it will be a big number by most reasonable standards for a realtively small (but developing) gold explorer/developer...whether over/under 'valued' we will all have a view - but directionally it just happening is a major positive, I think.
Ricky - I agree, I think they will agree a number that at first glance looks a bit low to GGP shareholders and looks a bit high to NCM shareholders. Then team GGP will factor into their thoughts increased certainty to mine, lower annual opex/capex and that it was always part of the deal, and team NCM will factor in benefit of having the additional reserves and volumes directly on their books + greater ownership of the full chain from Hav, through Telfer to market. Net net the mgmt will have delivered in interests of all shareholders.
BiggL - I think you are interpreting the report incorrectly. You need to consider GGP as both an explorer AND a developer at Hav (and actually a minority stake holder of a major miners asset) not a junior explorer - that's part of the reason the JV was such a big win for GGP as they went from junior explorer to partner/mine developer much faster than typically seen - hopefully that cheers you up.
Speedy - agreed! For me the key thing here is that NCM is taking the option - massive vote of confidence for the mine. 30% of a big number is a big number and 25% of a big number (+ a chunk of early spending money) is another big number.
Speedy - how much? I will see if I can negotiate a way into the negotiations for you...it will just be an email to info@xxxxx but if your offer is big enough who knows?
Seriously though - I expect the FMV numbers to be just that, numbers vs. numbers with add on clauses. But who knows, maybe they will allow some customization?
Merc - I agree, I'm not going to guess at a number for the 5%, but I honestly think if it covers the loan + a nice chunk of future opex and capex it will great for us as it will take out a load more risk around funding, becoming the eventually 25% owners of a massive mine. If the 5% number comes in lower than some think it should then I'm sure the SP will be impacted in the short term - then everyone will get their heads around owning 25% of a soon to be producing, massive gold mine that will likely still be providing ore for telfer in 25 years time...
Speedy - I understand the concept, just I don't think it will play out that way. There's only one buyer in this negotiation and it's in their interest to pay a sum and own the asset (5%). If I were NCM I would argue that GGP could enjoy future upside on their 25% and that the mechanism was designed to allow NCM to get up to 75% (without future liabilities on that) well before exploration is finished and production.
Everyones - I believe it is NCM's option so don't think delaying it is something anything GGP can do.
More importantly I think expectations need to be managed. The 5% buy-in option is obviously to NCMs benefit - but remember it was part of the overall deal that brought NCM into the picture . One could argue that they got in for a steal for the first 70%, and that the 5% is an extension on that (though better weighted to GGP than the preceding 70%). Though I revised my initial view that the 70 (or 70+ 5 at FMV) was giving away the GGP crown jewels now I better understand that we would be nowhere near where we are, in terms of becoming 25% owners of a massive mine, if we hadn't done the deal - in fact we might have had to have flipped the lot for a low price given the difficulties we would have had with funding if going alone...
Ynwa - but, I personally don't think it matters (for 5% negotiation) whether the formal mre2 is actually published or not as both parties will have a very good idea what's in it, as for FMV the price needs to reflect what a buyer willing to buy at and seller willing to sell at given access to their available information.
I do find it interesting that if a third party is called upon they would select either/or of the FMVs submitted - i'm sure someone could right a game theory thesis based on this mechanism alone! However, I actually think NCM and GGP will work quite closely to come up with their numbers - so hopefully come in within 10% of each others.
I would personally not expect to see future payments contingent on what happens/is discovered in the future. It could happen, and would be a very equitable approach, but I'd be surprised.
lseo - good point - a lot of juniors would love a clear path to a buy out! GGP is unique because of the scale of what's been found/to be found - hence concern of current shareholders of not getting full value if a takeover happens too soon.
Jiffy - I hear you - we usual get 75-100 each month on premium bonds - never had a big win though ... not a lot but better than current account (0% I think I get on that!). I sincerely hope, and believe, GGP will turn the corner and the trek up to 24/25 (broker numbers based on just a fraction), then to 30+ (based on Hav area drilled), will put premium bonds to shame - then further drilling/low cost mining + gold price + the other areas we own + real scope for an indication of 20 years+ at 5mt+... The ultimate potential may well be at some of the numbers mentioned on this board (£1+), but I'd be/will be very happy to watch the trek up and think the underlying asset(s) support that development...