Member Info for StarBright

As I said, very much back-of-an-envelope and JFF...

This is about possibilities not probabilities. The broad point is that my quick'n'dirty model and finnCapp's more sophisticated version both support the potential for higher valuations. It's surprisingly easy to get to EV's in the low hundreds of £m's (ie multiples of where we are today) without stretching anything too thinly. I don't think we can conclude much more at this point, and I don't propose to disappear down the rabbit-hole of spurious accuracy.

I do agree re the time value of money (and I flagged this earlier!) although I don't think it will halve the NPV in itself as the timing impact would have to be disaggregated from any risk component built into the discount rate.

Ps.... Whilst market discounts to NPV's are the norm (and rightly so!) someone will be along shortly to point out that 4.2m oz of relatively deeply-buried gold at Havieron was recently accorded a market value of £1.5bn...! I don't subscribe to that view, but we do know that positive sentiment can drive pricing in junior miners. This one looks to have all the ingredients to me, so I'm happy to hold as I've said.

That marble may be too small to handle whilst wearing the kevlar gloves of courage..!

I'm very interested to get thoughts on the AISC. Could that be materially higher or lower than $1k? If so, why?

Thank you. Good catch.

With 345m shares, modelled SP is 66p not 60p.

All very much back-of-an-envelope!

I expect I'll get the chance BB2 ;>

Yes - all v promising. Good to get some "informed insight" into critical assumptions like AISC, tax & royalties.

*JFF, plugging these into my usual back-of-an-envelope model gives:

700k oz @ 1650 = $1.12bn
AISC @ $1k/oz = ($0.7bn)
Pre-tax = $0.42bn
Taxes etc = ($0.1bn)
Post-tax = $0.32bn
fx @1.4 = £228m
Shares in issue = 385m (based on potential dilution from current SP, thank you BB2..!)

Gives a potential SP (unadjusted for time value of money) of 60p @700k oz and $1650. finnCapp suggest that 1m+ oz may well be possible. Realised POG may well exceed $1650 too...

That means that the current price includes a reasonable margin of safety as well as the obvious potential upside from further drilling etc. All assuming that the project can be taken into production as envisaged of course.

I'm very happy to hold these, and am a buyer on weakness...

DYOR etc. I'm very happy to take comments/questions on the above.

BB2 - thanks for working through the issuance impact. Your figures look good to me.

The substitution of equity for debt was the reason for my earlier comment "...a lot more equity, which is dilutive for existing shareholders BUT indicates confidence in the project"

The indication of confidence - signalled by the desire for more equity participation - is obviously positive. But it is a double-edged sword if it means there'll be 100m new shares rather than 68m.

The potential for private placements is interesting. Existing investors (including myself!) will need to be prepared to step-up here, as there is a clause saying that - if the placement price is more than 10% below 30-day VWAP - the consortium will benefit from this.

Mines require risk capital, and companies are listed precisely for the purpose of raising it! But yes - it is somewhat disappointing that a greatly improved project appears to have been refinanced on terms less favourable for existing holders.

I'm positive too! And happy with the holding I've built.

Just need to be aware that ours aren't the only spoons in the soup here.

Sorry - IRR figs transposed. Should read:

35% IRR required, [60% IRR required]

A quick new vs old read-through of the revised term sheet shows:

New vs [Old]

1. $12.5m Equity, $12.5m Convertible [$6m Equity, $5m Convertible, $10m Debt]
2. 60% IRR [35% IRR]
3. Equity finance discount 10% to 30 day VWAP or lowest 60 day price, [8% to 30 day VWAP ]
4. Convertible coupon 8% {10%]
5. Convertible within 5 years [3 years]
6. NSR Royalty payable $3m [$2m]
7. Lionhead Fee $750k [$210k]

So....

- a lot more equity, which is dilutive for existing shareholders BUT indicates confidence in the project
- nearly all the detail terms improved in favour of the financing providers to the detriment of existing shareholders...
- ...other than the coupon on the CLN which is reduced to 8% (preciously 10%]
- Lionhead's fee increased from $210k to $750k

Assessing this company as an investment requires careful analysis of the financing side as well as the drilling results....

My read is that those close to this project think it is going to create more value than originally anticipated (hence their evident desire fo greater equity participation), BUT existing shareholders are going to receive less of that value than under the original term sheet.

Very much E&OE, further analysis / comments welcomed.

Agreed. Or even in seven days time..? I hope/expect that TP and SP Angel are out there talking the news to all the potential II’s on their client/prospects lists. It is still early for II involvement, but some - particularly perhaps the sector specific funds - might nibble now the two majors have volunteered such commitment. Those buyers won’t be put off by the “Loryser selling” narrative, but expect them to take a little time over due diligence / research before committing investors capital.

Yes - I think we’ll hear when they are out, and it is a shame that news didn’t accompany the RNS today. Maybe they do still have a few left. But “Loryser selling” has been leaned into here for months. If they’d sold 50k every time the phrase was posted they’d have been long gone by now! I just don’t see it as a credible explanation for today’s price action.

I’m just waiting for the first poster to tell us that the “MM’s are filling a big buy order in the background…” ;>

As is often the case, it may be simply that there aren’t enough buyers to push the SP north. Sometimes news takes time to be appreciated. Perhaps that will be the case here?

I’m not at all persuaded that “Loryser selling” (everyone’s go-to crutch when price action has disappointed in recent months…) is the explanation here. They only had 10m shares, and they’ve had years - including several decent spikes - to sell them. I doubt they would leave themselves until the last minute as posters suggest..

Less buying pressure than hoped for / expected may be a better explanation. Perhaps people have been put off by the obvious spikes in OMI’s price history. I suspect many AIM punters got hurt last time around. The idea that “everyone is over at EUA” isn’t credible though; I think that statement tells us more about its authors investment process/style than it does about OMI.

The announcement today is material. It will - at sone point - be better reflected in the price which is still much closer to lows than highs despite the obvious progress. I think patience is the order of the day. Investors will have to wait patiently for a little longer…

Degsy incoming.

Super news. Game on.

You’ve had months to buy this…

If there's a story to tell, the middle of this week when most capital markets desks will be fully manned is a good time to tell it. I am hopeful that we'll have something meaningful to dissect and discuss soon.

Lol Porks!

LisaH says "hi" btw ;>

Remuneration, not “renumeration”!

It’s almost as painful as Porky’s endless experimentation with apostrophes.

@Huncher1 - that’s why it is important not to be the early worm…

Tomorrow’s fish and chip wrapping…