The new JV in a nutshell1 Dec 2020 19:13
Those of you who know me, may also know that Goliath was/is my baby, i think it will be the jewel in GGP’s crown, needless to say, when i read the RNS on Sunday, i was seething with anger, bordering on rage (takes deep breath and composes self) but instead of having a tantrum about it i made a cuppa, and began trying to work out why GH had just given away our next best target after Scallywag, for essentially peanuts.
After reviewing all the evidence/clues, and pondering on it for a good 36hours, i have whittled it down to just 2 logical explanations....
1) GH is going to hand over the remainder of GGP on a silver platter, at mates rates, to NCM, before taking a seat on the BOD.
Arguments against: GH has played fair, and by the book for the 4-5 years ive been here, he has always looked after PI’s, and his (considerable holding) at all times. And after chanting “we look to return maximum shareholder value” for the last 24 months, he would be scalded for the rest of his career if he pulled something like this.
So I dont think its that.
Ok so why then? Why not drill a few million quids worth of holes and then put it up for sale if we strike, or why not park it on the shelf until Havieron is producing revenue? Both good options imo and how i DID want it to go.
So whats scenario 2?
I think this....
Scallywag has absolutely smashed it, its another havieron, or better, GH is hell bent on proving it up further as a 100% owned deposit, with a view to selling it, or the whole Co. in the next 3-5years time, for a substantial sum. With this in mind, he knows all of his time, and remaining balance sheet is going to be focused on an aggressive drilling programme next year to flesh it out, and the year after that, money will start to trickle in from havieron to complete infill drilling to get to MRE (still 100% owned)
So in his mind, in 2years time, we could have a 25-30% share of a producing mine, for arguments sake worth £2.5bn, and a Tier 1, 100% owned IOCG deposit at MRE stage, potentially worth anywhere from £3bn to 15bn depending on AISC, finance and infrastructure requirements.
And at this point, he is going to want to sail off into the sunset. So does he just leave Goliath and BH on the shelf to gather dust, or does he throw a third (albeit reduced) line out to the water, to try and catch another big fish and boost it even more, he knows (if Scallywag is now priority No.1) that he cant afford a drilling campaign on it next year, or probably the year after, and he’ll be gone after that.
I think NCM fought for Scally to be in that JV and GH has stood his ground, knowing if we really want to get to sill numbers, we need to hold 100% until much further in the process.
Clues?
- deal has obviously been discussed for weeks, scally results delayed by weeks (coincidence my a**)
- drill rigs were called back to Kraken on more than 1 occasion
- GH’s ultra bullish comment in recent interview on Scally
- if Scally was dud, why
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