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This welcome news underpins my earlier 2022 fair value of 250 p
I don't expect a dividend in 2021. Although they have paid the investment in above ground processing capacity, doubling mined volume will require significant below ground investment plus a significant increase in working capital tied up in the business. This is a rapidly expanding business. 2022 looks a better prospect for distributions.
When Zone III was last updated it added 50p to the DCF valuation. I don't have enough information on projected mining volumes and timings to run the model now. Let's wait for the next announcement. However it could well support a share price above 300p over the next 2 years. Even more attractive to a bid now.
An increase in the resource estimate for the new Zone II. I expect further increases in Zone III and good news on other future exploitable zones. This is rapidly becoming a major mining resource. The way this impacts valuation is in annual mining volumes - in 2+ years expect more than 2 Million tonnes - and mine life which significantly increases the DCF valuation.
This is now definitely a 250p stock, which would gel with the recent HNW stake building.
Griffiths is not technically an insider but nobody builds a 16% position in a thinly traded company with 2 market makers without the agreement and support of the BOD.
He has been building his position. Together with other insiders they now have, I believe, majority control. This could be a takeover defense, a prelude to a public to private bid, or a way of offering the right buyer control. Given the new licences and the significant increase in the last resource estimate which added 7 years to the life of the mine there is a chance of a bid in 2021.
If I was still MD of an investment bank I would be out talking to a few clients now the major uncertainties are out of the way and given the age of the BOD!
I think he is a private strategic investor who has taken an interest in a number of resource and tech stocks. I don't think he is fronting for anyone else or for a fund.
16% is quite a strategic position. Maybe he suspects or hopes to engineer a takeover
No idea - let's hope it is institutional stake building
I thought the RNS was positive. Good volumes, and better selling prices. I have run my model and come up with H2 2020 EPS of 9.5 c/ share on revenues of $55 million. Projecting forwards assuming Zone 3 mining of 1.1 million tonnes and a 150,000 tonne contribution from Zone 2 in H2 2021 and 400,000 in 2022 I get EPS of 25.7 c in 2021 and 31.0 c in 2022.
Converting to sterling and putting P/E of 10 - 12 gives me fair value ranges of 190p - 220p in 2021 and 230p - 270p in 2022.
So I will not be selling.
I think more likely to be selling odds to exercise options. No COO would be reducing now the mined volumes are going to double.
Anyone know why the COO is selling stock? He sold 45,000 in December at much lower prices. Probably just tax related, and he obviously cannot sell just before an RNS
I had 115/120 on current production based on improving economics of zinc and gold. I raised that to 160 based on the extension to zone iii. Zone . With zone ii, I think they can mine 1.3 million tonnes in 2021 and at least 1.5 million in 2022.
I am pretty comfortable that with a sane US president average zinc selling price should be at least 2,250 and gold looks to remain firm.
Ore grades from zone iii have been all over the place in 2020, but last assays showed zone ii to have more gold and less zinc than zone iii.
I will run the numbers later today but we have to be looking at North of 200p, evidence for which will build over H1 2021. This current price rise will see profit taking from short term traders and selling by those trapped in a stock they no longer want. Once those are out of the way I think we will see a fundamental repeating and a bullish broker note.
No Divi in 2021 as more mining means more working capital tied up but GFM should be awash with cash in 2022
I will update my numbers soon. However, a 30% increase in mined volumes should lead to a greater than 30% increase in pbt. Zinc and gold are currently doing well so if I thought GFM was worth 120 on current metals prices before it has to be at least 160 now assuming they keep ore grades constant.
I might get round to the model tomorow
So after I post a fair value of 100 - 110 Berenberg comes up with 105. Now 14 days after I raise my fair value to 110 - 130 based on improving net selling price of zinc Berenberg raise theirs to 115. You heard it here first.
Looking good with zinc above $2800 and lowest smelter costs in 2 years. Maybe GFM is getting closer to $2400 net which is a significant improvement on my estimate of $2200.
Zinc seems to be holding above $2,700 which is around $100 above the level I assumed in my estimates. If it stays in this area it will add 1.5+ pence to my EPS estimates, or 10p - 20p to my fair value estimate: raising it to 110p - 130p.
I think it is a fair estimate. They are a quality broker and it is not in their interests to pump the stock and upset their clients. If anything, with first broker note on the company, they might have erred on the side of caution.
I think it is a fair estimate. They are a quality broker and it is not in their interests to pump the stock and upset their clients. If anything, with first broker note on the company, they might have erred on the side of caution.
Panmure and Berenberg joint corporate broker, Panmure is nominated advisor
They must have been reading my posts: 105p price target