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CF I thought it was positive for us.
However, that link you posted regarding the La Arena II project, the grades are tiny and they have 5.5m oz M&I with $600 AISC?! I'm no expert but they must have spent a fortune to drill up and prove that amount of gold at those grades! And $1.36 billion in up front capital?! Just seems crazy given inflation is only going to increase. Perhaps this is mainly a copper project.
Anyways, all this M&A activity is only good news for us. I think Jim is playing hard ball big time, he wants top dollar. We just have to wait and see if he can get it, but as the gold price remains at these levels and more deals are getting done, it's looking more and more likely!
Https://resourceworld.com/pan-american-sells-peru-gold-mine-for-us245-million-cash-upfront/
"Pan American Silver Corp. [PAAS-TSX, NASDAQ] said it has agreed to sell its 100% interest in La Arena SA, which owns the La Arena gold mine as well as the La Arena 11 project in Peru to Jinteng (Singapore) Mining Pte. Ltd., a subsidiary of Zijin Mining Group Co. Ltd. Pan American is selling the asset for US$245 million cash up front and a US$50 million contingent payment.
The La Arena property is located in the La Libertad province of Peru and is comprised of the La Arena gold mine and the La Arena 11 project. Since acquiring the mine from Tahoe Resources Inc. in 2019, Pan American said it has added 535,521 ounces of gold through exploration, and extended the mine life from 2021 to 2026, with the potential for a further expansion."
Err...!!!
Must have been in Turkish Lira because a share price of £28 in 2011 would have valued the company at £28 billion, which is about £40 billion today (accounting for inflation)!
I think that's what kids refer to as a "full send"! 🤣
Momentum is building, but if there were a leak we'd see the sp jump straight to the offer price! So I conclude this recent rise is probably PIs building positions due to:
1. The much higher gold price
2. Recent publicity regarding the sale process
I do also wonder, everyone here that was moaning constantly about the time it was taking to do a deal, had MC/JM agreed to a low ball offer would those same individuals now be moaning that they sold too cheaply?! Probably! :D
Barnard I get your frustration, but this idea that production=better share price is just not so clear cut. Look at HUM, multiple operating mines, multiple jurisdictions, yet sporting a market cap less than ours!!!
Personally, I couldn't care less whether we build or not build, I want the share price higher and a liquidity event to exit. If the board believes that that will more likely be achieved via the sales process then so be it.
Let me put it another way, what if rather than embarking on the sales process 18 months ago, they announced the fund raise to start build, built the mine with no issues, and was now producing gold, yet after huge dilution and taking on debt, the market cap was actually less than it is today? You'd be fuming.
Nothing is clear cut in equity markets these days.
CF not only that but the FS used recent inflation-adjusted costs so recent cost increases are basically "priced in". Makes a big difference as some gold operators are seeing costs rising faster than the gold price.
Jim has always been bullish on gold, I expect his investment here was him hoping that gold would rise to $5000+ before selling out. Sadly that didn't come to pass, but I think he still retains his bullish view on gold.
So, with that in mind, what would Jim prefer coming out of this sale process? A decent wad of (depreciating) cash that he'd just have to reinvest in gold miners? Or a nice stake in a solid gold producer where he can keep his exposure to the rising gold price? Perhaps even a seat on the board? As we are entering a commodities bull market it would certainly be a nice place to be for the next 10+ years of the cyclical bull market in commodities.
To that end, perhaps he was angling for calibre to buy condor since they started this sales process? We'll find out soon!
I don't know, how hard would it be for Jim and some billionaire PE chums to whip round £100m?! Not that hard I imagine. Must be tempting when the gold price is on such a tear. 12 months to build then sell the producing mine for at least £200m.
Surely that has to be part of their negotiating strategy, even if he's not seriously intending on following through?
Yes gold making very strong moves with 5 out of the last 6 weekly candles very green, rising from $2024 to $2260 currently. I wonder where this short term bull move will move to before hitting serious resistance.
And of course adds potential rocket fuel under the junior market. Come on Condor, make the deal!
The gold price is $500 higher than when the company first announced the plan to sell the assets in Nov 22. The NPV of the upside scenario was originally stated in the sale teaser doc as $418m @ $1700/oz gold price.
So what is the NPV at $2200/oz, given the total LOM profit is now $1.6 BILLION vs $930 MILLION?
The longer they drag this out the more they're going to have to cough up! $100m? Don't make me laugh!!
Surrey, potential acquirers might make the argument that the avg share price for Condor over the past year is around 20p, why should they pay much more than this? Two points stand out to me:
1. The NPV of the assets (depending on scenario) considering the avg gold price over the past year is in the many hundreds of millions of dollars. Even accounting for cost of mine build, the net value is many times higher than the current share price.
2. If the acquirer were to attempt to buy enough shares on the open market to attempt a hostile take over, what would the resultant share price look like (I would suspect it would be far closer to that of option 1 above).
I think the reason that negotiations have taken so long is due to the simple fact that these potential acquirers thought they could purchase Condor's assets at bottom dollar, and it's taken some time to get to the point where they have accepted they are going to have to pay "fair value". Now, what exactly fair value looks like we will have to see...