Ryan Mee, CEO of Fulcrum Metals, reviews FY23 and progress on the Gold Tailings Hub in Canada. Watch the video here.
CCC I was thinking along the same lines. After the US + EU seized Russia's assets in the western financial system, I think it has kicked de-dollarization into high gear. That means if you're China sitting on just under $1 trillion of US treasuries then you'd want to diversify them into hard assets in friendly jurisdictions as quickly as possible, especially given the growing anti-China rhetoric we're hearing more and more of. There's only so many large scale assets of value for sale in the world that China can purchase using it's treasuries so it makes perfect sense for them to buy Condor's assets. And given that acceleration they might even be willing to pay more than they otherwise would have. This all could work out perfectly! Then again...
1.78m shares traded today, and we finished 14.29% up at the top of the day's trading range. Lots of limit orders hit today no doubt, probably a fair bit of overhang to get through before we get above 20p. Hopefully after such a positive day some investors will push their limits up to capitalise on the rising volume on the back of the news. After so much negativity hopefully we can start putting some of that behind us now and being more positive about the outcome here. Gold over $1900 and multiple competitive bidders is the best possible scenario for Condor - let's see what the coming weeks bring. Good luck to us all!
Frenchie I wouldn't waste your breath. The fact these posters feel the need to constantly insult the CEO of a company they are invested in says more about their lack of character and inability to take responsibility for their own investment choices than anything else. They need to blame others for their "misfortunes" because their "mummies" clearly didn't raise them well enough. Feel sorry for the people that have to put up with them IRL quite frankly.
Well well well it appears that book5 is indeed speaking truth. And to add, discussions involving Condor, the Minister of Energy and Mines and Shandong Zhaojin Group are ongoing so at a minimum there is serious interest from SZ. If book5 is correct and artisinal miners are being told to leave the concessions then discussions must be advanced.
All good signs but let's not count our chickens just yet...
Let's see
Personally I don't think we can imply anything by the silence Simms, we just have to wait for news. But there is a time limit to this process because:
- The sales process Hannam and Partners are running has a timetable, a first close and second close
- They raised £3.3m in December (US$300,000 of which goes straight to First Majestic to pay the balance of the SAG mill) which really needs to see Condor through the entire sales process. I assume opex has been cut to a minimum to make this cash last as long as possible but either the asset/company gets sold or they need to raise cash again.
- The Government want to see a mine built with the jobs and taxes created as a result, they do not care who builds the mine. I suspect Condor would be risking their permits if they do not demonstrate that they have a realistic path to building the mine. That means they need to sell or raise the capital and proceed with the build ourselves, I doubt they can afford to stall.
That is not an option. If we do not sell or have a viable plan to commence build then the Nic government will pull our permits. They must sell the asset or get funding to commence build, or they will lose everything.
Seingred, Sabina are obviously much larger and further along the route to production, hence why B2Gold bought them. What would be interesting to know is how much Sabina has spent on exploration before getting their project to FS level. The point is that Condor's upside case is nothing to be squaffed at, again for your benefit:
- Includes La India open pit + underground, and feeder pits
- Production rate of 150koz/year for 12 years
- 3.18 g/t for 1.47m oz gold
- AISC of $958/oz
- IRR @ $1700 gold of 54%, NPV (5% discount) of $418m (at $1800 to compare to the previous posts figures would obv be even better)
How many projects available to buy right now have these kind of numbers? Not many I'd wager.
"You say that cnr bfs was to give cnr the quickest route to profitability not demonstrate the upside to a potential aquirer. and here we are up for sale having spent a sum larger than the last raise on a mill . What does that say ?"
Are you asking me or is that a rhetorical question? Condor purchased the mill from First Majestic in early 2021 when the strategy was to fast-track La India to production (de-risk, permits, feasibility study, etc). I have no doubt that the board preferred to sell but since the market assigned little value to Condor based on it's exploration activities (owing to the gold bear market), they either had to sell at absolute bottom dollar or pursue production, with hopefully a bid coming in later. The decision to purchase the mill provided some advantages:
- It's the longest lead time item for construction so purchasing it early potentially saved 10-12 months (fast track)
- First Majestic, a major gold/silver producer accepted part payment ($3m out of $6.5m) in shares at 50p (a ~10% premium to the share price at the time), which demonstrated a vote of confidence in the company/project
Also, the mill would have to have been purchased regardless which would have been dilutive, either then or during the funding raise for mine build. As it turns out, they purchased when the market cap was at it's highest (~$60m) so in fact it was a very good decision in hindsight. Since they purchased the mill, the gold market has deteriorated (GDX fell ~40% only starting to recover some of this fall in Nov) and of course the US Sanctions on the department of Mines, which has made the possibility of raising the required capex far more difficult. You cannot blame MC for this, these events are out of his control, purchasing the mill made a lot of sense at the time as I've explained above.
Regardless, all of this is water under the bridge. What matters now is that Jim and Mark get the best price possible for the company/asset and then we can all move on.
(bah hit the submit button by accident, and stupid LSE doesn't support tabs so no indentations)
Some things to note:
- These numbers are purely based on the feasibility studies for each resource
- Sabina includes open pit + underground, Condor does not include underground
- Condor's FS was designed to provide Condor with the lowest cost route to production, not to demonstrate the upside to a potential acquirer
Obv the Sabina resource is very large compared to Condor, but the FS doesn't really tell the whole picture. The success of the sale depends on Jim and Mark's ability to sell it based on the upside case established in the Sept 2021 PEA:
- Includes La India open pit + underground, and feeder pits
- Production rate of 150koz/year for 12 years
- 3.18 g/t for 1.47m oz gold
- AISC of $958/oz
- IRR @ $1700 gold of 54%, NPV (5% discount) of $418m (at $1800 to compare to the previous posts figures would obv be even better)
These figures are more comparable to Sabina's since they are based on costs before inflation started taking off. Condor's FS takes this inflation into account but Sabina's does not, their costs are certainly much higher now.
We've got a great project here, get us $200m minimum please Jim and Mark!!
For those that are interested, here's my comparison between Sabina and Condor:
- Project jurisdiction:
- Sabina: Canada; Condor: Nicaragua
- Feasibility study completed:
- Sabina: Q1 2021; Condor: Q3 2022
- IRR @ $1800 gold:
- Sabina: 31.3%; Condor: 33.4%
- Post-tax NPV with 5% discount rate @ $1800 gold:
- Sabina: $1.1b; Condor: $146.07m
- AISC:
- Sabina: $775/oz; Condor: $1039/oz
- Production rate:
- Sabina: 223koz/year for 15 years; Condor: $1039/oz
- Mineral reserve:
- Sabina: 18.7Mt @ 6.0 g/t for 3.6m oz gold; Condor: 7.3Mt @ 2.56g/t for 602,000 oz gold
Some things to note:
I listened to a podcast yesterday with money manager and gold investment specialist Adrian Day (manages one of Peter Schiff's gold funds) and the whole thing is a great listen, but towards the end of the interview I heard some things that are very relevant to our situation that investors here might appreciate:
https://www.youtube.com/watch?v=BQFfj07UxDQ
Watch from 1hr 6mins, some highlights:
- Copper mines are typically large and take lots of capital and time to bring online compared to gold
- Permitting times are getting longer all over the world including in the US
- Streaming has become a much more common way of financing a mine build compared to issuing equity
- If you're building a mine you have to dilute, either at the mine level or at the company level (if you don't have the capital already)
- THE THING THAT THE AVEAGE RETAIL INVESTOR DOESN'T UNDERSTAND IS THAT A LOT OF THESE COMPANIES IF THEY ONLY HAVE ONE OR TWO MINES THEN THEY HAVE TO BET THE WHOLE COMPANY ON THE ONE MINE!
- Taking on a lot of debt is onerous for a junior gold company with only one mine/project
- There are many risks in building a mine and very few new mines come in on time and on budget
- This situation has got even worse in the last few years as inflation has increased
- The largest cost of running a mine is energy, the second largest is local (labour) costs
- Average grades of gold mines have collapsed over the past 20 years
I realise that trust in Condor's board and management is low right now, but we know that we have a proven, permitted and economic project that is ready to construct. That is worth a lot of money in it's own right, certainly more than our current market cap of £30m!!
We are all concerned what is happening behind the scenes as we are in the dark, but we have to remember that our board have a lot of skin in this game and are incentivised to sell the mine at the highest possible price. If Jim Mellon has decided he wants out now then his only choice is to sell the assets to the highest bidder (unless someone is willing to buy him out), we can rest assured that he is working hard to get a mutually beneficial deal done, the man is not an idiot. He knows he's got a valuable asset and it is unlikely he will let it go for fire sale prices.
Hold fast.
Gavlaa, yes could be. I was musing the other day that the sudden shift in strategy must have been triggered by something that was a fairly powerful incentive (for JM at least). I'm sure we hope that it was a real indication that the assets could be sold quickly for an acceptable price.
In relation to your other point, I think that a sale of the assets *may* flip into a takeover of the company's shares. But we'll see I guess.
Sent MC a message today asking if there was any non-market sensitive news he could share, he responded within a couple of hours. I won't post his reply without his permission but sufficive to say we'll have to wait until they're ready to update the market in due course.
Seingred the entire gold sector has been lifted by the rising gold price, Equinox has it's fair share of problems (not to mention $1600+/oz AISC due to rising inflation), they had a terrible year last year and some analysts are saying at current prices it's overbought. Could go higher based on sentiment and the desire to capture leveraged gains based on a rising gold price, but no guarantees. My point is even the great Equinox suffered as much as we did last year and is only now rising thanks to the gold price. This sector is fraught with risk, we should all remember that before leaping to insult the BOD here (not saying you did Seingred), but criticism is deserved and justified for sure.
I say the entire gold sector has been lifted by the rising gold price, but obv not Condor as we are currently stuck in this sale process with no idea how it will turn out. My only hope is that the rising gold price will increase the chances of a decent sale here and we can all get out and move on. A decent update soon would be most welcome.
As a side point, the asset sale of La India doesn't make much sense to me, as surely any acquirer would want the additional feeder pits for a scenario described in the 2021 PEA (150,000oz/year for 9 years) rather than the cut down FS scenario. And if they take the feeder pits they might as well take the rest for the exploration upside no (I doubt the remaining land package would add that much additional cost to the deal)?
Inflation is starting to hurt producers and really the gold price should be much higher. The 6 monthly gold price hit $1900 in 2020, adjusted for (official) inflation that would be $2130 today. Given everything happening in the world gold should be $2500+ but it seems the US still has it's thumb on the commodity scales, at least for now. But for how much longer, that is the real question...
DDD having not been through this process before I really don't know what to expect, so unfortunately not in a position to offer any experience-based insights. I guess if nothing else it will be a learning experience!
Your posts relating to intra-company debt are interesting, though have to admit also confusing! The £45m debt you mention, is this basically an accounting "trick" so that it won't actually affect shareholder value? For example, if the asset is sold for £145m , will the shareholders realise £145m in value or £100m?
Punter I'm not arguing that MC has "done a great job", clearly whatever else he has failed to unlock market value for whatever reason (whether his competence, wider market sentiment, etc). What I'm arguing is constantly ****ging of the leadership whilst remaining invested has to be the dumbest thing I've ever seen. So to answer your question "Why would anyone sell now at near rock bottom?", well if you think the BOD are a bunch of crooks then what makes you think you'll ever see a penny more? Sell out whilst you can no?!
Punter out of interest, would you have been happy with 50% dilution to secure mine finance? Would you have accepted the construction risks and possibility of time and cost overruns? And at the end of it, what if the market STILL did not value the Condor appropriately - what if we were still sitting at 30p whilst in production given the amount of dilution required to secure funding?
Obviously I am disappointed with where we are, but I'm hoping that MC/JM had a good reason to believe they could sell the asset for $100-$200m dollars as MC stated. Not the ending I'd hoped for but it is what it is. I'd take that over watch more years pass by and seeing the (current) value of my investment here halved just to start construction.
Get it sold, issue a divi and let's all move on.
You're right of course EL, done. Apologies for giving these fools some undeserved attention.
But seriously, I'm flabbergasted that there are people here that are so angry MC (and JM) didn't make them rich that all they can do is spend their time insulting them on this board! And the best part is, they are still invested!! Surely if you felt that way about the management team you would sell your holding and never look back? Unbelievable.