Member Info for StarBright

Agreed @Jerryspaniel. Have SVE disclosed anything about their other holdings? They have names on their website - Cora, Kefi, Ariana etc but no breakdown of holdings. They reported a "Trading Portfolio Value" of £13.7m as at 31 Dec '21, which indicates that the non-GGP holdings were worth around £2.5m.

Interesting. Starvest's mcap is £8m. Market value of 80m GGP is £11.3m.

In theory, buying Starvest shares gives leveraged (141%) exposure to GGP plus a free-ride on whatever else Starvest holds in its portfolio. Liquidity might be a cocern though.

I agree - they will look for a sale.

@notrader - algo or HF trades will go through the order book not via MMs. No trades today have gone through the order book…

100% agreed @Redirons.

That is also my interpretation. I think the (actually quite clever) mechanism was overtly intended to promote a co-operative approach regarding the 5%. I expect the JV partners to tell us that they have reached agreement. Both NCM and GGP will indicate that they are happy with the deal..

That doesn’t mean that all the posters on this board will be happy though!

@Mumbo_Jumbo, I disagree. If anything the 5% valuation will set a floor not a ceiling for the Mcap going forward. It will reflect what the jv partners know today. If drill results continue to come through positive, the value of the remaining 25% will continue to increase.

@DrRem - I’m no expert on commodities so unable to offer any tips I’m afraid. My observation was just a passing comment on the fact that tin has doubled in price in the last year, having traded basically flat for the preceding four years. Is it better to buy into a mining project before or after the price of the commodity doubles? If this deal had been closed a year ago we might have paid even less, and Brad George would be being lauded for his foresight buying in just before the price took off! But it is difficult to say with any confidence whether the price OMI has agreed is high, low or fair. I expect that the seller is telling its shareholders that it has secured a good deal too. If tin doubles again in the next 6 months it’ll look like a good entry point/price for OMI. If it goes back below 20k then less so.

@DrRem… why not wait until the sp is back to ATH…? Same logic applies ;>

I see this project as mainly relevant for management, as it will give them something meaningful to pursue. Who knows, it could turn out to be a masterstroke. Credit will be due to them for digging out a decent truffle if so.

Only USD1m to be expended in the next 24m is good news. If the project proceeds to phase 2, OMI should also have banked the expected final USD2m from the Anza JV (due Sept 2023). So this doesn’t look like too much of a rash gamble with the company’s existing/precious cash resources.

Holders here for the potential upside of the Anza project should just hold. No need to be perturbed by this. I view it as a shot to nothing. No immediate adjustment to share price (either way) looks fair to me.

@DrRemington - I would rather be the buyer of a mining project when the relevant commodity was at an all-time low.

I expect the JV partners to reach agreement on the 5% without (publicly at least!) rocking the boat that is sailing smoothly. The price* may be a little lower than some are hoping for, because future development potential will have to be “risked” one way or another. It may - as I have proposed previously - be better to consider the 5% as the last instalment of the farm-in rather than as an advance on the final 25%. But I am optimistic that the deal will be a material positive for GGP’s balance sheet, funding position and prospects.

The “Gated Feasibility Study to Execution” in q4 looks to me like the point at which the real excitement will start, because it is then that the project will be dressed to the nines for capital raising purposes. We will find out how wholesale capital providers (debt & equity) are prepared to value the project, and I am sure that NCM will throw all it has behind this. I think their own interests will be best served by maximising value perception at this point.

At the end of the day the only sure way for GGP to realise the “full value” of the 25% will be to hold that interest for the long term, and it has every opportunity to do this. It is possible that the recent hires indicate that this is the plan. In any case they will be crucial if/when GGP has to raise capital to stand its corner. If (as I suspect) NCM really really want 100% then GGP may even have an opportunity to exit at a premium. Q4 will present some big decisions for SD and his team.

*I will be surprised to see anything other than one straightforward price as the underlying concept of FMV is at odds with the idea of agreeing a formula to adjust for future developments.

Thank you @Speedy. I am interested by this because BAC is one of the largest holdings in a fund (Polar Capital Global Financials Trust) in which I hold shares. I understand completely that banks make mistakes and also that they haven’t always disclosed their positions properly, so have tried to apply a “reasonableness test” with an open mind.

BAC reported* FY20 net income of USD18bn in its last annual report, and shareholders’ equity of USD273bn. On the simple grounds of scale alone, the notion that BAC has a net exposure to the PoG such that its entire annual net income could be wiped out by just a 5-10% move in the PoG is unlikely. And BAC’s balance sheet just isn’t large enough to conceal an exposure >100% of shareholders’ equity. It would be like trying to hide a haystack in a sewing box. From the perspective of an investor (or a capital adequacy regulator...) BAC would be nothing more than a leveraged play on PoG if the USD300bn exposure were real. Remember also that JPM would have to consider recoverability of the asset in its own financial statements.

I looked a little deeper to see if (as suggested by by @Blindfaith01) this might be a hedged arrangement, in which case the net exposure could be substantially less than USD300bn, but I can’t see any evidence of this in BAC’s financial statements. BAC reports** gross notional exposures to commodity contracts (traded+OTC) of USD36bn for swaps, USD73bn for futures and USD49bn for options. These figures are the gross aggregates (assets PLUS liabilities) across all commodities to all clients. There’s nowhere in there to hide a USD300bn single-client single-commodity contract like the one described. And BAC’s market risk VaR*** (a measure of potential gains and losses) for commodities contracts shows average exposure of just USD6bn.

Whilst I am sure you have received (and reported here) the info regarding the USD300bn exposure in good faith, I ask that you re-examine it critically. It can ONLY be correct if there is an enormous collaborative cover-up within BAC and JPM involving the trading, accounting, risk management and compliance professionals of both banks at all levels of seniority. Also that this cover-up successfully conceals the existence of an exposure greater than BAC shareholders’ equity from external auditors and regulators.

The arrangement involving 800million oz of silver referenced by @Droverman would be worth USD18.4bn. This is more believable given the size of the sums involved.

I am - as always - v happy to look at this again if you have other info.

*Table 1 Pg50
**Note 3 Pg132,
***Table 44 Pg103 https://d1io3yog0oux5.cloudfront.net/_92190146074dbdd28317857fd60b4386/bankofamerica/db/867/9129/annual_report/BAC_2020_Annual_Report.pdf

Thanks @Speedy - I appreciate your contribution here. When you say short USD300bn, can I check I've understood this properly: a 20% rise in PoG would create a net loss (in M2M terms) of USD60bn for BoA, and a net gain of USD60bn for JPM?

@speedy - which banks do you believe are sitting on net short positions, and roughly how much in USD...?

GGP was heavily over-bought at the start of 2021, it isn't now. I've said consistently that it is net selling by PI's that has driven the price from 38p this time last year to where it is today. I have also explained patiently that shorting happens here (as with all shares), but that it isn't a long-term driver of price action in GGP. In simple terms, the >99% longs set the price other than in the very short term.

What I have maintained is nonsense is the conspiracy theory popular on this 'board - NCM/whoever looking to drive the price down, paid gangs of shorter trolls posting in collusion with the owners of the LSE bulletin boards, desperate shorters losing control, corrupt but colluding market-makers, trades “fired-in” in response to posts on this 'board etc. It has made for entertaining reading at times. But it is no more than uneducated speculation, and should be dismissed by serious investors.

@Canary3 - please stop mis-representing what I have said in your sad little search for recommends.

@Hydrogen, that would be the post I prefaced with: "I am a generalist not a mining expert so am posting these figures in the hope that one (or more) of the resident mining experts can confirm or correct as appropriate. Transaction details are not published in a consistent/coherent way, so I am effectively trying to summarise them within a common framework. Plenty of scope for error, hence this request. In particular I am keen to avoid pitfalls such as Au vs AuEq, complications around secondary minerals etc."

Hardly an attempt to mislead. A shame that it elicited only noise in return.

I plan to return to that thread/idea at some point when the noise dies down. The concept of a list of USD/oz figures from recent analogous transactions has merit. It would provide a transparent basis for a discussion on the potential value of the 5%. Along the way we can look at how posters here have misrepresented such transactions and ratios in the past to suit their purposes.

@Bamps21 - not negative at all! Very much all to play for, and a glittering prize available. A few hurdles to jump yet though. I am onboard for the ride through to FS at least, at which point I think there will be interesting decisions to make.

@SaS - not agreeing with the resident rampers here doesn't make me (or anyone else) a troll. @BiggL thinks GGP is overvalued, I think it is a decent buy at this price level for the speculative compartment of a portfolio. It's also an intrinsically interesting company / story. Poor signal:noise ratio on this discussion board though - your 13:13 post a prime example.

Maybe re 1, as they have history of going ahead with majority stakes elsewhere. I just think they'll have a go at securing 100%.

4 we just don't know yet. It will depend upon the price agreed for the 5% and on the CapEx detailed in the FS. If - for example - NCM want to go with block caving and a dual decline from the outset (or some other similarly expensive option, not my domain...) then the project might need significant capital on day 1.

Here's how I see this playing out. Very hypothetical, so not to be viewed as anything other than for discussion..!

1. NCM will want 100% of Hav because it will secure their existing interest & immediate (5-7yrs) future
2. They will agree a price for the 5% that the market will say is too high, and wizards on this board will say is too low
3. Post DFS everyone will know what is required to fund CapEx etc.
4. At this point NCM will take a firmer hold on GGP's nuts by requiring GGP to confirm that the funding for its 25% is in place
5. GGP will have been working to assemble a financing package comprising an equity placing and some bank debt
6. The equity placing will allow GGP to onboard institutional capital and partially de-risk its febrile shareholder register
7. NCM will offer an alternative - a proposal to buy the remaining 25% either in one hit or in tranches over time
8. SD & the GGP board will have a proper decision to make at this point

The biggest risk to GGP shareholders is that the DFS and ensuing vice-like grip on their balls arrives, and the financing package for their 25% isn't really a runner. This may not be down to weaknesses in the investment case - it could be an outcome of exogenous factors like equity market volatility / PoG / whatever. In this circumstance NCM will make GGP a lower "offer that they can't refuse" and fund the CapEx themselves against a 100% interest.

So I see GGP's main focus for 2022 as ensuring that they are 100% ready and able to front their 25% share of the "full" capex for the development of Hav when the bell is rung. This is why SD has recruited proper expertise at senior management level; they have to be credible as an investment proposition. If GGP has financing in place, it'll take a much higher offer from NCM to prise the 25% from their grasp.

I do not think that there is any real "imminent" danger of a bid. Both company's needs are better served by a trade sale of the JV interests at the right time. And any such bid would subject to horrible execution risk - as amply demonstrated by discourse on this 'board today - because of GGP's immature shareholder base.

I remain a happy holder and would be comfortable adding at the current price level if I wanted a larger position.

There are many other ways this might play out..!