Gordon Stein, CFO of CleanTech Lithium, explains why CTL acquired the 23 Laguna Verde licenses. Watch the video here.
The sp hit 34p in April on the back of people positioning for a binding offer, when that didn't materialise those people slowly sold out over the rest of the year and the so drifted down. We've just seen a similar sharp rise to back then so I expect the same thing is happening, if so we should drift up to around 30p and then again there will be a short window for a deal to be struck before people start drifting out again. If the sp is 30p then it makes an opening binding offer of 40-50p more palatable especially with the gold price holding steady above $2000/Oz.
Let's hope MC can indeed get an acceptable binding offer in q1.
Steady rises are good Connect, shows that some people are taking profits as the price rises leading to additional buying. the 200DMA is at 23p so let's see if it can work it's way to that by the end of the year.
Punter I could be wrong but I believe nominated "insiders" to the sales process are governed by the UK Takeover Code and are thus prohibited from buying or selling shares - though I don't know what the code says in relation to converting existing warrants.
Seingred, I shouldn't need to tell you that comparing assets based solely on the size of the resource is disingenuous at best. At least compare it based on NPV if nothing else, which as posted before is much closer than you'd expect. Not to mention that Nicaragua is a much more stable and far less risky jurisdiction than Africa.
Also, I wasn't aware that SHG are selling their assets? You wouldn't be making the mistake of comparing market cap to asset value would you? The stock market bears pretty much no relation to what companies actually do anymore, it is simply a vessel for paper speculation and has been that way since at least 2008.
The fact is noone here knows what these assets are worth to a buyer, it could be 20p/50p/£1/1.50/etc, no one knows until we get into a competitive bidding scenario and potential buyers are forced to put their cards on the table. ICB has as much chance of being right as you do. Besides at this point, I think we're all beaten down and hoping for at least 40p with anything more being all our christmases coming at once!
I'd caution everyone not to read too much into daily share price movements of an illiquid share (have we learned nothing?). Wait for confirmation of any binding offer before falling yet again into the Condor excitement/disappointment cycle!
Surrey, the price that the assets will sell for is unknowable, ignore all predictions as only the market can determine this. JM/MC are currently trying to enable price discovery through competitive bidding, but this will only really happen when the first binding offer is made public and subsequent competing bids come in (or not).
The share price (market cap) is not an effective valuation as LSE is general is losing liquidity. That does not mean the companies that list there are not viable/valuable, it just means investors are forsaking the UK stock market for other jurisdictions. AIM has suffered for this reason, and combined with huge disinterest in gold miners we have the situation where Condor has an NPV of $400m+ but the market cap is £25m. It is not a reflection of company value, it is a reflection of lack of interest in the stock/stock market.
Let the sales process play out and afterwards we can all debate how close the final price was to our estimations.
Seingred, the mention of Cardinal was merely to illustrate that competing bids appear once the first binding offer goes public. It's not the case that a deal is done in the shadows and that's what the assets sell for, that's just the starting offer. One of the issues with Condor's sale I think is that many interested parties think Condor will go under or whatever, and they will get the assets on the cheap. Well, if they then see a binding offer appear for $150m then they will be motivated to bid up to their estimated value of Condor's assets.
Also with respect to Cardinal, their resource though much larger was also much lower grade:
- NPV of $590m, IRR 33.2% (Condor upside case: is $418m and IRR of 54%)
- Capex required for mine build $414m (Condor UC: $160m)
- 1.13 g/t Au (Condor UC: 3.18 g/t)
So who knows. I think we all agree that the assets will get sold, but it's anyone's guess as to how much they'll finally go for.
Remember that when a binding offer is announced publicly it does not prevent other interested parties from submitting their own counter-binding offers, that is how the assets will find their market value, just as what happened with Cardinal a few years ago:
"Condor Gold shareholders should look to the example of Cardinal, a West African gold explorer where a similar situation unfolded. Against the backdrop of a rather lacklustre situation, Cardinal stock was trading at 25 cents in March 2020, when bid interest emerged for its high-quality gold assets. As sometimes happens in such situations, competitive tension between several bidders led to a series of bids – first 45.775 cents, then 60 cents, 66 cents, 70 cents, 90 cents, 100 cents, 105 cents, 107.5 cents, and the deal getting closed at 110 cents (even though someone else then tried to enter the fray with 120 cents). I continue to believe that the Gordian knot at Condor Gold will be cut through before too long because of the large gap between the company's market cap and the intrinsic value of the firm's Nicaraguan gold assets"
The reason MC and JM have rejected low-ball offers (and thus prevented them from proceeding to binding offers) is because:
a.) Publicly, they want a higher binding offer from which future offers will compete with
b.) Just on the off-chance that there will be no other binding offers, they want the only binding offer to be at a level they are willing to accept.
We need that first binding offer to be announced. Once it has, if it is at a level that is below the current market value of the assets then other interested parties will be incentivised to submit offers up to that level before the deal goes through.
JHC this board has descended into total lunacy. Some person even said recently "deals are done based on short term movements in the gold price"?! We just had the highest monthly close EVER at $2071 and people here are finding reasons why it shouldn't be any kind of advantage. My god, peeps here really are broken. Just sell out, for the love of gold, sell out.
The entire gold junior market is in the toilet. Let me say that again THE ENTIRE GOLD JUNIOR MARKET IS IN THE TOILET. So yeah, keep attacking Condor management, makes perfect sense. THE GOLD PRICE IS AT ALL TIME HIGHS but western financialised markets only want to buy ETFs, FANG stocks and crypto, they couldn't care less about gold stocks. This is incredulous given everything that has happen over the past 10 years, but it is what it is. Volume is so low it's pointless looking at the share price, there is no price discovery here.
We have a PROVEN resource with an NPV of greater than $500 million at $2,000 gold. It really isn't that complicated. MC and JM are both out there trying to sell the assets for as much as they can get, what's wrong with that?! I get that some people would want them to build but that isn't necessarily a path to easy riches either, many builds overrun and encounter problems, they would rather not take that risk. Maybe in hindsight they should have but who knows, explorers typically prove up a resource and then sell it to a producer to build the mine. Gold stocks should be flying but these are not normal markets, maybe they never will be again as CBs have forever broken them by perverting incentives with their monetary policy.
JM will fund the company until they find a buyer for the assets, at the best price they can get. No one knows what they will be and it's really not worth speculating. Either sit and wait or sell out now like Johnnytaffia.
Capex, yep I shared a chart of the long term gold price on another bb recently:
https://postimg.cc/nCDKzZCW
Some things to note:
- The exponential growth of the money supply
- The gold price tends to lag the money supply growth, then catches up (1973, 1977, 2008) and overshoots sharply before correcting back down
- However in 2019, right when the gold price was about to do the same, money supply growth went vertical and the gold price was slammed multiple times to keep it under $2000 (5500% on the chart scale, yellow line). Gold has attempted to move above this line multiple times over the past few years but each time is hammered back under.
A break out of the gold price above money supply growth this time (as happened in the past) would be an immense rise and would have huge consequences for financial markets - I think that's why it was kept under $2k, and now they're desperately trying to reduce money supply but there's no way they can get it back down to trend without causing a depression and financial crisis, so it looks like the gold price has to shoot up. 2024 could well see that happen.
JT, subtlety not your thing? Ok I'll be a bit more direct - it's called a stalemate. Both parties aren't willing to transact given the other's expectations. Stalemates do not last, but no one knows how long they last for.
Anyways you're out so I guess good luck for the future.
So all in all, my view is this process is incredibly frustrating (trust me I know), but the best thing to do is to stop looking at the daily share price movements and wait for the process to play out. We have our chips placed, the dice are in the air, we are waiting for them to land so see how the game ends.
IMO the problem we have is the gold equity space is currently in the dogs, despite gold being at all time highs - utterly crazy!! That is a sign to me that financial markets are basically broken these days, there is very little liquidity unless you're on a major index so then what value does market cap really have? Compare Condor's chart to other AIM-listed gold juniors such as OMI, RRR, CORA, etc, and they are nearly identical. So whilst we moan about Condor's management these other companies have seen pretty identical stock movement - so is that a reflection of management decisions/sales process/etc or wider market sentiment towards AIM-listed junior gold equities? I would guess the latter.
So what does that mean for us here?
I think it means that Condor's market cap is not a true reflection of the value of the assets, but with management looking to sell the assets, in effect what they are trying to do is to "create a market" for our assets in order to enable price discovery (just like when you're selling property). That means talking to all the interested parties to get an idea of what they're willing to pay. But, no one wants to pay more than they have to, so they say "look at your market cap, it's £26m so we'll offer that plus 10%". To which management say "Are you crazy?! Our NPV is $500m+ at the current gold price!!". To which the interested party responds "then why doesn't your market cap reflect this?", and so on.
I believe that's where we are currently and have been for the past 6 months (post site visits/due diligence/etc). However, I think the advantage that Condor has over the other gold juniors is that the sales process will become it's own market, once the first binding offer goes public. Then it becomes more like an auction, interested parties seeing others bidding don't want to let a good opportunity pass, so they throw in their hat and the price goes higher. No one knows in advance what that final price would be, it's all academic until the bidding starts.
Right now we are waiting for that first real bid, I think JM/MC are reluctant to accept a low binding offer as they may worry that they will give away these valuable assets that they have worked hard to develop on the cheap. Personally, I say trust the market, not the stock market but the "real" market. Start the bidding and let the "auction" occur publicly, then we will find our what the assets are worth, as they will sell for whatever they are worth, no more and no less.
The only other thing I can think of is that JM is convinced that the gold price is set to take off, and is holding back from accepting the first binding offer until 2024 when investment attention may turn back towards gold equities, giving all a big lift. Otherwise, why bother waiting? He has committed to funding the project for as long as necessary and the company is running as lean as possible to minimise opex, so we are not going broke...
simms mc stated in the last interview that they've had a few "low ball" offers that were rejected outright. clearly there is interest in the assets, the trick is to get the maximum offer possible given the current market. now, we have a silly situation where the gold price is at all time highs in most currencies (and very close to ath in the us dollar), but gold equities are dog **** right now, no one is interested and despite a slight (short term) improvement back in 2020/2021, it's been that way since 2012.
condor management need to sell the assets based on nav, not on market cap, which is what they are currently working hard to do. we will see how successful they end up being, but there is no doubt that at $2000/oz, the nav of the company is ridiculously higher than the market cap it's not even funny. this is probably true of most junior gold equities right now, but not many of them are proven up, permitted, construction ready and currently for sale.
my personal view is that they need to make a binding offer public, even if it's lower that they'd hoped. once that is public then the clock starts ticking for any other interested party to make competing bids (of which we know there are a few), and through that process we'll get some price discovery as to what the assets are really worth. i think management are holding out (or trying to encourage) a higher starting binding offer, but i think they'd do better to just let the process play out in public. if the assets are truly worth more then the offers will roll in up to that level.
Did seem like a long shot given Condor were negotiating a toll milling deal with Calibre senior management back in Dec 2021, even got so far as to present them with a formal proposal which obviously was not accepted. No idea why, seemed like a win-win at the time.
Ah well, good news that M&A continues apace in the mining sector.