Member Info for StarBright

@Tex is correct, Van Eck made (public) noise in favour of Pretium holders rejecting the NCM offer.

https://thenewztimes.com/stars-aligning-for-pretium-as-shareholder-vote-on-3-5-billion-acquisition-by-australias-newcrest-nears/

For reasons I have discussed previously I think that NCM will want 100% of Hav, and will look to achieve this without having to acquire GGP itself. Adding the remainder of Hav will be likely presented (both internally and externally) as “organic” growth rather than acquisition by NCM - their existing 70% is enough to make this credible.

If correct this means that the constraints outlined in the AFR article won’t lessen the likelihood of a move by NCM for the remaining 25% once the optioned 5% has been taken onboard.

V interesting. Particularly that Allan Gray have made such a public declaration regarding support for further acquisitions. I understand that AG’s view was that NCM were overpaying for Pretium.

Thank you for sharing.

@larry10 - there may be some odd wrinkles around holdings disclosures here because the company is a non-UK issuer, and because AIM is not a “regulated market” (rather it is a “multi-lateral trading facility”). Don’t be too quick to assume that what you might expect for a UK company on a regulated market will apply here.

I agree with your observation that why they have bought the position is more interesting than how.

With a 20m share short they would need to lose £25/share, so sp would need to rise to £25.14. GGP’s resultant market cap (somewhere north of £100bn) would make it one of the top 5 companies in the FTSE100, and @MattyBoy1965 and family would be worth a little over £64m…

Unfortunately there have been many less credible posts on this board during the past few days, where some sort of paranoiac mania seems to have gripped the gaslit flock.

Complex situation if the Hav MRE update is considered not material to NCM (therefore not requiring disclosure) by NCM’s own disclosure committee. It’s probably material to GGP. Likely being fudged for now by keeping the update “in draft”.

To clear this one up as regards the UK code:

“6.1 ACQUISITIONS BEFORE A FIRM OFFER ANNOUNCEMENT
Except with the consent of the Panel in cases falling under (a) or (b), when an offeror or any person acting in concert with it has acquired an interest in shares in the offeree company:
(a) within the three month period prior to the commencement of the offer period; or
(b) during the period, if any, between the commencement of the offer period and an announcement made by the offeror in accordance with Rule 2.7; or
(c) prior to the three month period referred to in (a), if in the view of the Panel there are circumstances which render such a course necessary in order to give effect to General Principle 1,

the offer to the holders of shares of the same class shall not be on less favourable terms.”

Offer must be at or above the highest price paid BY THE OFFEROR (usually in the last three months) not the highest price paid in the market..!

I agree that it will be interesting to see what they use.

Here’s what NCM used in the Feb 2021 statement. It’s interesting to note that they had some different (lower) assumptions for Telfer because of its “…comparatively short mine life”, perhaps they will feel able to unwind these now?

Mineral Resources and Ore Reserves Assumptions
Updated mining, metallurgical and long-term cost assumptions were developed with reference to recent performance data. The revised long-term assumptions include changes in performance consistent with changing activity levels at each site over the life of the operation and the latest study for each deposit. Long-term metal prices and foreign exchange assumptions for Mineral Resources and Ore Reserves are set out in Table 1. For long mine life assets the gold price has been increased by US$100/oz for both Mineral Resources and Ore Reserves from those used for December 2019 reporting. Copper and silver metal price assumptions remain unchanged from those used for December 2019 reporting. The AUD:USD exchange rate assumption for long life assets remain unchanged at 0.75 and local currency assumptions for the PNG Kina remain unchanged. In consideration of Telfer’s current comparatively short mine life the gold price assumption has been increased by US$200/oz and the copper price assumption has been decreased by US$0.20/Ib for Ore Reserves compared to that used for December 2019 reporting. The AUD:USD exchange rate for Telfer, considering its comparatively short mine life, has been lowered to 0.70 for Ore Reserves and remains at 0.75 for Mineral Resources. Note that Havieron Mineral Resource uses the long term metal price and exchange rate assumptions. Where appropriate, Mineral Resources are also spatially constrained within notional mining volumes based on metal prices of US$1,400/oz for gold and US$4.00/lb for copper. This approach is adopted to eliminate mineralisation that does not have reasonable prospects of eventual economic extraction from Mineral Resource estimates. Note that the increased long-term gold price assumptions have been applied to re-optimise the Lihir and Telfer operating Mineral Resource and Ore Reserve and Havieron Project and Namosi JV Mineral Resource estimates for this reporting period. Remaining assets of Cadia and the undeveloped projects at Wafi Golpu and Telfer will be progressively re-optimised when the full supporting studies are updated and are currently optimised on the more conservative 2019 gold price assumption.

Table 1, Long-term Metal Price Assumptions

Mineral Resource Estimates:
Metal, Newcrest excl Telfer, Telfer
Gold US$/oz, 1400, 1400
CopperUS$/lb, 3.40, 3.40
Silver US$/oz, 21, 10

Ore Reserve Estimates:
Metal, Newcrest excl Telfer, Telfer
Gold US$/oz, 1300, 1400
CopperUS$/lb, 3.00, 2.80
Silver US$/oz, 18.00, 18.00

**Current Spot Prices, for interest:
Gold US$/oz, 1860
CopperUS$/lb, 4.50
Silver US$/oz, 23.60

All positions are closed at some point so the only difference between longs and shorts is sequencing. Long positions are opened with a buy and closed with a sell; shorts just see the order of the transactions reversed. Most traded securities have some short positions, especially large cap index components where there is volume. Retail PI’s have a tendency to massively overstate the impact of shorts. But price action is the ultimate truth in markets and - other than in the very short term - securities trade at the point where buyers and sellers are in equilibrium. As equity investment is ultimately about long positions - all shares have to be owned by somebody - it is long investors who drive pricing.

@Hydrogen - the idea that “…miners are being shorted sector wide across the board to establish a low base for instos to pile in…” simply isn’t credible. The shareholder registers of the major mining companies are already dominated by the usual group of insto investors - Blackrock, Vanguard, State Street, Capital , PIMCO etc. Who then would be orchestrating a “…sector wide across the board…” short attack on mining companies? Whose capital would they be using (the top 50 miners have a combined MCap of USD1.5tn, so significant capital would be required)? How could such a nefarious operation be co-ordinated across multiple markets, companies, shareholder interests etc? How could it be kept secret with so many needing to be involved? Why would insto investors (who are massively competitive with each other, and overwhelmingly focussed on relative returns) collude in the manner you suggest? Would they really risk their collective regulatory standing and reputations by engaging in a systematic attempt to distort price discovery and action as you propose? No-one with any experience of the institutional investment world would take this idea seriously I’m afraid.

Thinking something is not the same as knowing it, even if it feels like it is! As AA Milne said: “When … you Think of Things, you find sometimes that a Thing which seemed very Thingish inside you is quite different when it gets out into the open and has other people looking at it.”

Your second para proposing that Hav may be valued differently within NCM and GGP because Aus investors are too ready to dismiss NCM’s capability to mine at depth is far more credible/insightful/valuable. Thank you for this.

@Matty56 - it is prudent to expect the proceeds from the sale of the 5% JV interest to be taxable in Australia at the prevailing 30% rate. GGP reported accumulated tax losses of £24.4m as at 30 June 2021, some or all of which might be offset (depending on how they were incurred) against the sale proceeds in calculating the tax due.

I also agree with your point that the tax authorities might take an interest in the payment. A transaction at either an under- or over- value relative to FMV might be problematic for both NCM & GGP in tax terms. The safest ground for both companies to stand on tax-wise will of course be the independently assessed FMV figure, but I wouldn’t expect that to drive the outcome. The tax authorities won’t pay any attention to the broker estimate(s).

@Z - I think it’s also part of him signalling to NCM that GGP can and will proceed without the proceeds of the 5% should NCM elect not to exercise their option. I think this is good strategy.

Yes - inside 12 months to production from FS / decision to mine, not 12 months from now! I think this is in-line with what has been said previously.

Perhaps more interesting was his comment saying that they'd like to be fully funded and there's a "debt piece that cornerstones that". Perhaps a coded way of managing expectations for the net proceeds from the 5% option, and/or flagging that more than the previously indicated USD73m is going to be required..?

Interesting. RNS says: "Gold on carbon of 2,088ozs was achieved in Q4"

How much actual gold is this likely to be after the carbon is separated out?

Hmmmm....

Lots of info, but new definitions and presentation make it hard to interpret quickly vs the previous quarter. Especially for a non-mining-expert like me.

- What is "gold on carbon"...? I've not seen that mentioned previously.
- They appear to have switched various measures from "TPD" to "...in the quarter"...?
- They've now separated out "gold recovered" (appears to be the same as "gold on carbon") and "gold sales"
...etc etc

Careful reading / analysis / comparison needed before conclusions can be drawn. Let's see what this boards resident mining experts have to say.

@johnpwh;

- the 0.1p is very relevant as it is what SD, CT and other participants will pay to the company for each share they are ultimately awarded under the new scheme
- the table in the RNS relates only to the options held by AB. It is not relevant in any way to the awards made under the new scheme
- the exercise prices in the table (0.2p to 2.0p) are correct as they are, as is the column header 'Exercise Price (p)'..!

Some interesting (if rather reactionary..) views and misunderstandings here, as is usual..!

Here’s my interpretation:

The company has established a theoretical (at this point) “pot” of 26.25m shares that will be used for the retention and incentivisation of certain senior staff through a new long term incentive scheme.

- Shaun Day will receive up to 12m shares
- Christopher Toon will receive up to 2m shares
- The remaining 12.25m will be for other senior staff, and may not yet all have been granted. Some might be held back to attract new senior joiners etc

The awards are only “vested” (that is earned/released) if “…a number of performance conditions reflecting operational and shareholder value criteria.” have been met “…at the end of a three year performance period”. There are some valid examples of the type of targets likely involved already in this thread. The targets are set and assessed by the remuneration committee.

If we assume that the remuneration committee decides (in three years time) that Shaun Day has met all targets so should receive 100% of his award, then 12m shares will be issued to him in return for 12m * 0.1p = £12k. Effectively his acquisition price will be zero, but there are accounting/legal complications with issuing shares for less than their nominal value (0.1p for GGP) hence the odd but slightly irrelevant requirement for him to pay something for the shares. He must then hold these shares for another year before he is allowed to sell any. It is normal for schemes like this to allow for partial vesting if some targets are hit, but not others. So he might receive (say) 75% or 33% of the 12m at the discretion of the Remuneration Committee.

My view is that this is all ok. It’s a very “normal” looking scheme, and the amounts (shares and £) involved are consistent with what I would expect. GGP is already a big company by many measures (MCap £580m would get it into the FTSE250…), and is seeing the professionalisation of its management, which is always accompanied by additional costs like this. They could perhaps have given a little more colour on the nature of the performance conditions, but not all companies do.

Shareholders should recognise that the 25p share options granted in May 2021 now have little meaningful value given the subsequent decline in share price. Shaun Day isn’t responsible for the unwinding of the late 2020 spike when the sp got ahead of itself on the back of hype, market conditions and a motivated-but-price-insensitive buyer. None of this can fairly be laid at his door!

From our perspective as shareholders the scheme creates a minor (approx 0.65%) dilution. If you hold 1m shares, valued today at £143k then this has theoretically cost you £143k * 0.65% = £930.

The extension of the options for Alex Borelli isn’t entirely unusual, and is (frankly) immaterial to shareholders in financial terms.

RAMBO83 and his forerunner JOHNRAMBO are the best posters on LSE by a country mile..!

It’s a good note, and comprises an excellent summary of the situation and opportunity. Well worth a read.

But no-one takes Align’s paid-for output seriously, so don’t expect it to have any impact in the way that some proper research might.