Member Info for StarBright

It would be instructive to better understand the composition of GSF’s register. What percentage of holders are (in truth) there for the dividends? I guess there may now be some holders attracted by the apparent/notional “discount”, but that is only my speculation.

The positive thesis for GSF relies upon:

1. The company delivering on its operational goals, particularly in commercialising the large US projects and demonstrating that it can properly cover its dividends from operating cashflow

2. Income seekers returning, tempted by the promise of a well-covered yield in an environment of falling rates

3. DFM’s (perhaps aided by the recent changes in fund disclosure requirements) becoming buyers again. A major sub-set of point 2 I suspect, although the discount may also be an attractor.

If those three combine then a material re-rate is possible. Value-based investors have to remember that the key to success is (all too often) buying what others hate, and being prepared to buy whilst prices are falling. Not easy!

This is a good name to add to the shareholder register. It’s an actively managed fund from a major house, outside the cosy ambit of the smaller specialist insto investors seen to date.

A couple of v positive snippets from recent announcements regarding GSF’s US projects:

From the latest factsheet:

“ 21 containers have arrived on-site at the in-construction 75 MW / 75 MWh Dogfish project in Texas. The asset remains on track for energisation in February 2025. Similarly, the 200 MW / 400 MWh Big Rock project in California, remains on track for energisation in December 2024.”

From today’s RNS announcing that a 12-year fixed price contract for 40% of Big Rock’s capacity has been signed:

“Securing this contract is a significant milestone for the Company's cash flow. Based on contracts now in place, the Company's contracted cash flows will increase fourfold compared to FY24.”

Holders here need only to hold their nerve.

“Any hit will be another game changer” is an interesting assertion that should perhaps be examined.

When the outstanding Havieron drill results started to be revealed back in 2017, GGP’s market cap was about £15m. The discoveries drove the MCap as high as £1.5bn, around 100x! Shareholders through this period saw (despite dilution as SII increased from ~2.2bn to ~3.7bn saw life-changing gains; 30x even 60x or more depending upon timing.

What if the same happened today? Adding a similar discovery-led £1.5bn to GGP’s market cap would move it from £0.7bn to £2.2bn, generating a 3x return for shareholders.

Holders today should understand that GGP’s potential to create life-changing gains is significantly lower from a starting MCap of £0.7bn than it was from just £15m back in 2017.

In simple terms, finding a new Havieron next week won’t have anything like the same “game changing” effect on the sp as the first time around. I think it is wrong to imply otherwise.

Errr..... UBS "Resulting situation" per their TR1 is 0.00000%

100% agreed re your second para though. Lots of people got calls from their brokers...!

No - these are placing shares not Retail offer shares. Some (we don't know how many) of the placing shares went to discretionary fund managers who have routed them to client accounts. So they have ended up in the hands of bigger-ticket private investors.

Some UBS Private Wealth client accounts had access to placing shares. They took them because of the heavy discount and likelihood of exiting with a short-term profit. Which is exactly what they have done. I have quite a few friends whose DFMs called them when the placing was done to suggest that a short-term opportunity had come their way...

We'll never get to see a comprehensive breakdown of where the 3bn or so placing shares not accounted for by proper investors (Tembo and Firetrail are good examples) ended up. If a significant proportion went to spivvy DFM's (yes, UBS are a textbook example of spivvy...) then recycling them may be a material factor and we may see the sp back to the placing price at some point.

It's possible that the deal secured with Newmont was SO attractive that that SD and Cannacord chose to hold their noses and price/place as they did because it was the only way to get enough cash raised in time to get the deal done.

But it is also possible that Newmont have offloaded Telfer - which they clearly saw as unattractive - to GGP by exploiting SD's obvious desire to get to 100% of Hav almost regardless of price or the dilution of his pre-existing shareholder base.

If Telfer turns out to be far from exhausted (sounds possible, but not yet evidenced) and can generate the cashflow that will be required to fund Hav all the way into production then SD will deserve the credit that many here are keen to accord him. Too early to say in my view.

In the AdDoc, GGP say: “The Greatland Base Case estimates that a further A$803 million (approximately US$533.9 million) of pre-production capital expenditure will be required to complete the Havieron development.”

Without the deal, Newmont were due to finance 70% of this - roughly USD375m.

If I were going to were say that another poster doesn’t have a clue and is making themselves sound stupid, I’d want to make sure my own post wasn’t riddled with basic misunderstandings.

“There was only a 140 million shares issued to Pi’s in the placing”.

Wrong. 140m shares were allocated directly to unadvised PI’s via the Retail Offer. But no-one knows how many of the 3bn placing shares not yet accounted for went to private investors who are clients of wealth managers who were eligible to participate in the placing. I have several friends who took millions of shares offered to them via their wealth managers, basically because the juicy discount offered an easy opportunity to make a short-term turn. Don’t make the basic mistake of thinking that the placing shares only went to engaged institutional holders - they didn’t. By pricing the placing as he did, SD created a level of opportunistic demand from larger-ticket PI’s, many of whom may not be planning to hold for the long term.

“Wyloo adding again to 1,105,136,117 shares, raising their holding to 10.6% from 8.6%, when everyone thought they were just maintaining their 8% position”.

Wrong. Wyloo haven’t “added again”. They subscribed to the placing for the number of shares that will maintain their holding at 8.6% once the 2.7bn Consideration Shares are issued to Newmont.

@Bamps21, this is very simple. You assert repeatedly that Havieron is fully funded, but the Company itself says (in the AdDoc, p142):

“While the Company believes on this basis that there is a clear pathway to the Enlarged Group being fully funded to complete the pre-production development of Havieron, there are a number of risks to this including that: the proposed Havieron Banking Facilities may not ultimately be agreed and available (for example, due to bank credit approval not being obtained or the conditions precedent not being satisfied); the actual pre-production capital expenditure required to complete the development of Havieron may be higher than estimated; and the Enlarged Group’s available working capital and Telfer free cash flow may be lower than expected. Accordingly, no assurance can be made that further funding will not be required to complete Havieron’s development.”

Either you are wrong, or the Company is wrong. Which is it?

@Malva said: “A lot of telfer revenue can pay for havieron development but not all of it. That is why there is a debt facility with the banks”

Thank you @Malva. That is why @Bamps21 is wrong to assert that the development of Havieron is fully funded. It isn’t - it is going to rely on delivered success at Telfer and secured bank lending that is not yet committed. Thus GGP itself asserts only that there is a “pathway” to full funding.

@Bamps21, will you now accept that your repeated assertion is mistaken?

GGP is a fascinating company, and a story I've followed for several years. I'd be delighted to see it prove to be a huge success.

The "GGP community" though is replete with misinformation fomented by well-intended but unconsciously incompetent amateurs. Just looking here and GGPChat today I see unequivocal statements that:

1. 90% of the placing shares are "locked up" in safe hands

2. Havieron is fully-funded

3. 200koz pa with POG at USD2500 and a PE of 10 will lead to a share price of £0.12

Whereas:

1. The poster (inadvertently) overlooked the 2.7bn consideration shares yet to be issued, so there are actually 3bn or so shares that are not obviously "locked up"

2. The poster doesn't understand that pre-production capex can't (by definition) be funded by early production "...the first 300m will pay for the whole lot...". No it won't, the pre-production capex is hard cash required before any production takes place.

3. The poster doesn't understand basic accounting so doesn't know the difference between Profits & Earnings (for example) or understand the composition of AISC. Never mind acknowledging that the company itself is telling us that taxes and interest will both be payable before any earnings accrue to shareholders.

Posters here express disbelief that the share price is not multiples of its current 6p. If Havieron were fully funded, 90% of the placing shares were in safe hands and no tax or interest costs would apply to future profits then perhaps the sp would be multiples of what it is today...

The "GGP community" spent yesterday jumping all over what it saw as errors in the piece published by John Cornford. But the misinformation propagated daily by some of its own leading lights is far more egregious.

Gold AISC Margin Margin Ounces pa Annual profit PE Market Cap Shares Share Price

$2,500 $1,500 $1,000 £760 200,000 £152,000,000 20 £3,040,000,000 13,000,000,000 £0.23

AISC doesn't include interest costs or Taxes. Both have to be deducted before you get to "earnings" to which a PE multiple can be applied.

Amending/completing your first/lowest illustrations to show the impact on the range:

Interest @9% on GBP400m = £36m

Tax @30% on (£152m - £36m) = £35m

Earnings = £152m-£36m-£35m = £81m

x10 (PE) = £810m

/13bn = £0.06 not £0.12

And your high-range illustration:

Interest @9% on GBP400m = £36m

Tax @30% on (£304m - £36m) = £80m

Earnings = £304m-£36m-£80m = £188m

x20 (PE) = £3,760m

/13bn = £0.28 not £0.47

@Bamps21, what do you think “Pre-production capex” means?

I’ll help you out. It’s the capex required before ANY revenues can be generated. If s important to investors because it shows how much cash is needed before a project can become cash-generative or self-sustaining.

Once the mine is up and running (ie after the pre-production capex has been spent) it will hopefully be cash generative. And the cash it generates will help finance later LOM capex, for example if there’s a move toward bulk mining.

But for now the facts are that GGP has told us in the admission document that Havieron is USD533m short of being fully-funded. It hopes/plans to cover this funding shortfall with a bank credit facility that will be secured on its operating assets at the time, plus some cash flow from Telfer. Hence the company asserts that there is a pathway to Hav being fully-funded.

However it is not yet fully-funded, and you should accept graciously that your earlier statement is incorrect - not least because it is misleading to the many inexperienced investors who frequent this board.

You are dead wrong @Bamps21.

Here's what they've said: "The Greatland Base Case estimates that a further A$803 million (approximately US$533.9 million) of pre-production capital expenditure will be required to complete the Havieron development2. On 10 September 2024, Greatland Pty Ltd executed a non-legally binding Bank Debt Letter of Support in respect of which A$750 million (approximately US$498.7 million) in proposed Havieron Banking Facilities could be utilised for the completion of Havieron development, from the Banks (further information is set out in paragraph 2.8 of Part 3 (Information on the Assets, Market and Jurisdiction) of this document). The Company expects to be able to fund the balance of pre-production capital expenditure from its working capital and/or Telfer free cash flow, and therefore considers that there is a clear and non-dilutive pathway to the Havieron development being fully funded."

USD533m of PRE-PRODUCTION capex required, ie it has to be paid for BEFORE production/revenues. Term sheet only in place (will be subject to DFS for sure), so no commitment from banks at this point.

This is why the wording speaks only of a "...pathway to the Havieron development being fully funded". That's not the same as fully funded.

The reality is that GGP remains a highly speculative investment.

If Telfer and Havieron are both up and running in a few years time then the potential upside from today’s £640m market cap is massive. The deal that SD has unveiled will be seen deservedly as a masterstroke, and holders (well, those boarding at the placing price at least) will be richly rewarded for risking their capital.

But whilst the Telfer stockpile is a safe bet, it’s not so clear that there are millions of ounces elsewhere on site that can be mined profitably. Remember what Grant Samuel said in the Newcrest scheme booklet this time last year (1).

There’s still no DFS for Havieron; production is several years away at least, and will require a further £400m or so of capex that is presently unfunded.

So… If you believe that GGP can generate enough cash from the stockpile + as yet unconfirmed oz at Telfer to fund the remaining development costs of Havieron, and that Havieron will also be profitable then there is significant upside on the table. Some investors will prefer to wait for more evidence re what’s left at Telfer and for the Havieron DFS.

That the placing was priced at such a discount (I’ve shared my views on this previously…) will have attracted some “investors” seeking short-term gains only. There are c3bn newly-minted shares out there in unknown hands, some of which will have no long-term interest in GGP. Such sellers will be hoping that the retail excitement around GGP sustains sufficient exit-liquidity for them to depart stage-left.

TLDR; the “massive sell-off” is driven by the risks ahead, and the shocking under-pricing of the placing.

(1)Grant Samuel said: ”The value of existing mining operations at Telfer is constrained by its remaining reserve life and is further capped by its declining free cash flow profile over that period as a result of naturally declining grades and cutback investments. While Telfer has consistently generated EBITDA in excess of $100 million per annum in recent years, free cash flows have been substantially lower. Extensions will be required to sustain ongoing operations at Telfer beyond FY26 and defer its rehabilitation obligations. Studies to extend the open pit mining operations remain at very early stages and have not been included in the valuation. On the other hand, studies for additional underground mining fronts are more advanced but collectively would still mean a substantial reduction in scale at Telfer (as the open pit mine historically comprised over 75% of ore production at Telfer). The DCF analysis indicates that the Telfer mine extensions contemplated in either Scenario 1 and Scenario 2 are expected to be subscale and marginal contributors to value. Accordingly, the positive value hinges on the value of Newcrest’s interest in the Havieron project.”

Of the 5.2bn placing shares then:

675m to Wyloo

797m to Tembo

637m to Firetrail

That leaves about 3bn as yet unaccounted for. With the disclosure threshold at 3% then any holdings >312m should show up. I'm a little surprised we haven't seen a few more as that's only £15m per pop at the placing price. Perhaps GGP can't disclose these until they are formally notified, and there are a few more to come?

Wyloo added 675m in the placing, taking it to 1,105m as expected.

The new name is Firetrail who appear to be a Sydney-based investment boutique running AUD7bn across a number of Aus funds.

What’s needed here is a hint of another interested potential buyer…

No. The "...dichotomy between the share price going down when Avacta speaks and up when the Twatterati post..." is explained by the inconvenient truth that Avacta are subject to regulations that require them to be truthful, accurate and measured in what they say whilst the Twatterati aren't. Unfortunately the retail PI audience are unable (perhaps unwilling) to recognise this and calibrate their responses accordingly.