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hydrogen - thanks again for your second response at 1330. Includes some further risks which I will need to add, although, my gut feel on each is that they are quite small at present but I will need to keep an eye out. I'm assuming that you also consider that the potential rewards outweigh the risks we have identified.
Regards - RA
Thanks Hydrogen. Our posts passed in the ether so my re-post does not include your point on the strength of the relationship between GGP and Newcrest.
For what it's worth, I fully agree that the real key to our success is that the relationship remains strong and respectful; no-one wins when JV's fail. Even if it is decided that the final 30% of Hav should be sold to Newcrest in order to release GGP to pursue new fields, it would be important that the process of identifying Fair Market Value is performed in a Rational and non-confrontational way. I have seen too many really positive business opportunities/relationships fail through the "macho" bahaviours of one or both parties. That would be the time to employ an independent valuation enabling both parties to submit input as to why FMV should be high/low.
Maybe I need to add a further risk relating to the relationship failing between GGP and Newcrest. I would submit that it is relatively low at present as both GH and Sandeep do not appear to be interested in having a willy-measuring contest.
ATB - RA
Thanks all for the responses. mushroomkId and thelearner, I have tried to incorporate your comments regarding takeover, COVID and Gold price. Here is the cut down post (of the original post) with the updated assessment.
We’re all probably aware of the opportunities which this share brings:
Further good news on 23rd regarding Havieron.
Rerate of target share price by brokers.
Good MRE in second half of this year.
Results of Havieron Concept Study second half of this year.
Results of Feasibility Study early 2021 (hopefully)
Results of drilling which has commenced or will commence imminently on GGPs other tenements
GGP Takeover (hostile or arranged) by Newcrest.
Purchase of Havieron rights by Newcrest leaving the remainder of GGP intact to go search on other tenements.
Anything else???
However, during this time as the share price appears to stagnate, I am starting to wonder what I might have missed with regard to the risks associated with this share? What are the potential downsides? This is not a deramp, just trying to assess what and how big are the risks to my investment.
1. Next mining results are disappointing and show no further extensions – that cannot be a risk but surely just a missed opportunity – the SP is already where it is based upon what has already been found – it cannot be unfound.
2. Cash call by GGP management – unlikely as GH has indicated that we are well funded for the next 12 months (by which time we should have received monies from Newcrest for the 5% (if they choose to take it))
3. Hostile takeover at low price – not sure how that could happen.
4. GGP agrees to sell Havieron to Newcrest at lowball – again, not sure that GH could get away with this as significant questions would be asked. Considered that GGP could easily sell remaining (30%) of Havieron to Newcrest at Fair Market Value once Resource Estimate has matured significantly. Allows GGP to move on to finding other sites which is their sweet spot.
5. MRE results show very low amounts of Gold and Copper – surely we have enough info already, Investment Journey’s youtube pres provide an initial estimate of 15p for our 30% of Havieron. Even this estimate has been uprated recently to between 17p and 35p
6. Newcrest decide not to mine Havieron – surely this could not happen, Sandeep has already said that he would start decline immediately if he could.
7. The whole process takes too long and the GGP coffers run dry – GH has already said that he would not look to dilute if this were the case
8. Resurgence of COVID – will not make Havieron go away but could slow progress
9. Price of Gold drops significantly – no sign at present, the greater the risk to stock markets will only drip POG higher – considered as low risk
In my mind, the biggest risks to my investment are covered off by numbers 1 and 7 above. I am comfortable that neither is likely to happen, however the mitigation for both is already known and again, I am comfortable with the mitiga
I am significantly invested in GGP and, like others, am awaiting breakout (caused simply by market forces or new news). Sitting on my hands waiting.
We’re all probably aware of the opportunities which this share brings:
Further good news on 23rd.
Rerate of target share price by brokers.
Good MRE in second half of this year.
Results of Feasibility Study second half of this year.
Results of drilling which has commenced or will commence imminently on GGPs other tenements
GGP Takeover (hostile or arranged) by Newcrest.
Purchase of Havieron rights by Newcrest leaving the remainder of GGP intact to go search on other tenements.
Anything else???
However, during this time as the share price appears to stagnate waiting, I am starting to wonder what I might have missed with regard to the risks associated with this share? What are the potential downsides? This is not a deramp, just trying to assess what and how big are the risks to my investment.
1. Next mining results are disappointing and show no further extensions – that cannot be a risk but surely just a missed opportunity – the SP is already where it is based upon what has already been found – it cannot be unfound.
2. Cash call by GGP management – unlikely as GH has indicated that we are well funded for the next 12 months (by which time we should have received monies from Newcrest for the 5% (if they choose to take it))
3. Hostile takeover at low price – not sure how that could happen.
4. GGP agrees to sell Havieron to Newcrest at lowball – again, not sure that GH could get away with this as significant questions would be asked.
5. MRE results show very low amounts of Gold and Copper – surely we have enough info already, Investment Journey’s youtube pres provide an initial estimate of 15p for our 30% of Havieron. Even this estimate has been uprated recently to between 17p and 35p
6. Newcrest decide not to mine Havieron – surely this could not happen, Sandeep has already said that he would start decline immediately if he could.
7. The whole process takes too long and the GGP coffers run dry – GH has already said that he would not look to dilute if this were the case
In my mind, the biggest risks to my investment are covered off by numbers 1 and 7 above. I am comfortable that neither is likely to happen, however the mitigation for both is already known and again, I am comfortable with the mitigation actions proposed.
Can anyone provide me with other risks so that I might try to continue my Rational Assessment.
Many thanks and Good Luck to all.
RA
TMT - I agree that it is really hard at this point to determine what will happen to Havieron once NCM complete phase 4. At that point, an MRE will have been produced along with a feasibility study. (Although NCM already appear to be convinced with feasibility and seem to be struggling to identify where to start decline because they don't know the full extent of deposit)
On completion of Phase 4, NCM will be entitled to purchase a further 5% of Havieron at a "Fair Market Value". I'm guessing that NCM and GG will come to an agreement on FMV or will need to take this assessment to a third party. Whichever way FMV is determined, GG is obliged to sell to NCM 5% of Havieron bringing NCM ownership to 75%. Decision then is what to do with the remaining 25%?
Does GH argue that the remaining 25% is of greater value to NCM (per %) because that would give NCM full control and if so, does he decide to cash it all in or only cash in part and wait for the funding stream for the GG owned element starting 2-3 years down the line - either way the differential value(between selling all and retaining 25%) on GG books and impact to SP should be minimal as the value is either cash in hand or promise of cash in the future.
To make a smart decision, GH will need to look through the FMV and consider their assessments for AISC, MRE, Price of Gold into the future, Quality of the gold to be mined, depreciation used and the life of the mine. If he feels that the FMV is conservative, he will be minded to retain as much of the 25% as possible as that would be in the interest of GG and the shareholders, if he feels it's a good deal, he will be minded to sell all of Havieron and move on to other targets.
He will also need to consider what he might do with any cash (if he sells). Does he use it to start more detailed exploration in the other GG tenements and (independently) improve their value or does he distribute the cash to shareholders as a special dividend? Or a mix? In my mind, it is unlikely that the cash received for 5% will enable him to explore other tenements fully and also give a special divvy?
So many questions and variables, some of which will be answered over the coming months. Some will not be known for years - at some point, GH will need to make a decision/leap of faith based on his expertise/knowledge/gut feel and his appetite for risk.
What is true is that this share is probably the most interesting/exciting I have owned - the debates over size of deposits, other opportunities, flights in and out of a remote airfield, price of gold, poring over satellite pictures, geology, impacts of a worldwide pandemic, high level business decision making, JV Relationships and the ever-present threat of "News" - if it weren't for the debate over the colour of blankets in miners' accommodation, it could be straight from a 007 script.
ATB, looking forward to the next piece of news,
RA
Wll done BR, great site which should enable any potential new investors to comprehend what GGP is all about and where they are in their journey. I would suggest the addition in the FAQs of a question "How much is Havieron Worth?" against which you could place the links to the 2 assessments by Investment Journey on YouTube. It was only when I viewed the first of these presentations that I was convinced that GGP was not just "worth a punt" but was a sensible and considered investment. Thanks for all the work that you're doing on this.
Hello all. New to the board having stumbled across GGP having sold out more traditional portfolio fearing a second dip on the FTSE. During my initial research, I came across the initial presentation by Investment Journey, and along with the RNSs and presentations by GH and CB, and discussions on this board, i was convinced that the investment was worthwhile with little/no downside risk in the longer term and significant upside potential in the short term. Wish I'd been in from the beginning of the year. One element which is not clear in IJ's second pres is that (I am assuming) he is still assessing the other (non Havieron) GGP assets as having zero value. If this is the case, then the upside for GGP is greater than his calculations. Not a criticism of IJ as I think he's done a great job of bringing together the multiple variables which will all impact the SP. If you thought the updated pres was good, I would recommend you view the original as you will get a view of the conservative numbers which IJ has used in his calcs. If I remember correctly, the AISC which he has used is significantly more conservative than that used recently by Hannams. Great job IJ, thank you very much. Currently hoping that some of these more recent drills are going to reveal something which is market sensitive and GGP will have to release an RNS.
There is a link to the original pres at the end of the updated pres.