RE: M&A15 Feb 2023 11:24
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.
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