Roundtable Discussion; The Future of Mineral Sands. Watch the video here.
@Bully, it just depends on the price and how big the resource is. As an NCM shareholder, I'd be happy with any price at 50p or below, and wouldn't care how they paid for it, equity, cash, or combination of the two. (As a GGP shareholder I wouldn't be happy with that price!)
I took your post (the part I quoted) as suggesting that it would be rather difficult for them. They've got more than enough cash already at the current SP, though obviously countering that, they'd have to pay a premium and it would deplete their cash reserves considerably.
I also agree with you that this is unlikely. I don't think GGP is on the market and I don't think NCM is prowling with the intent of buying.
@Bully "FOR NCM - they have a finite amount of capital they can invest. I don’t think they have the funds to fully buy GGP so would need to borrow or dilute."
NCM had US$1.7 Bn cash/cash equivalents at 31 December. Obviously they'd want to keep some cash reserve, but they could easily borrow another half a billion, or use an equity raising if they preferred, for the purpose of buying a major asset.
Their actions to date strongly indicate, IMO, that they are not looking to buy out our share of Hav or to fully acquire GGP, but it wouldn't be particularly difficult for them to do so.
@Bully "Junior gold mines are generally valued at around $250 per oz of gold for world class mines."
On it's own, this is not unreasonable. However, the recent Tropicana deal was more than 3x that. Obviously, Hav is different, but it proves incontrovertibly that not all junior gold mines are created equal.
Reasons to value Havieron higher:
1. We have funding so aren't over a barrel like many juniors are.
2. The CAPEX needed to bring Hav to production is far lower than many because of Telfer.
3. We're in the best jurisdiction in the world. Many others are in seriously risky or moderately risky jurisdictions.
4. We're partnered with a major. Many aren't. We aren't amateurs trying to put together a PFS like a certain company with an asset in South America.
5. We're partnered with arguably the best in the world at underground mining. Most aren't. That is going to make this asset more profitable than perhaps an equivalent resource being mined by someone else.
6. We're close to production, unlike many others which are sold.
7. IMO, this resource is unlikely to be sold, so the going rate for gold-in-the-ground is the wrong way to value Hav anyway. Your own comments suggest that you think the best value is to hold rather than sell, and surely GGP management is not dumber than you. There's a remote chance they are even smarter than you. So Hav should not be valued by comparison to other assets which have been sold, but by projecting our share of future cash flows and discounting them by an appropriate discount rate.
Depending on one's assumptions of the size of the resource, POG, AISC, CAPEX, cost of borrowing, and discount rate, I'd suggest we are significantly undervalued today. But of course, others may use different assumptions than mine. But I certainly do not think that $250/oz is the way Hav should be valued and so I do not think the current SP is where we should be today.
Part of the market agrees with me, and part doesn't, and that's how markets (and sometimes fortunes) are made. We will find out who is right in the coming years.
I will probably top-slice at 700 but probably won't sell out entirely before 900 or 1000. I like this share, but if we get to those levels it will probably be overpriced.
Of course, the demerger, if it goes through, will change the calculation.
@Strummer
Thanks for taking so much time to clarify. Obviously, I conflated "over-bought" with "over-valued" and as such missed your point.
I'd still say it's more a trader's concept than an investor's concept -- in my opinion, an investor would be more focused on over-valued. Investors can't look at value today (your 20p, for example).
But your original comment would have made a lot more sense if I hadn't conflated the two, and I either wouldn't have answered at all or would have answered differently. So the miscommunication is largely on me, and I appreciate you making it so clear this time that even I couldn't miss it. :)
I freely admit I'm not good at entry and exit points on my investments. I still think you are talking about trader concepts here but I think trading concepts can have their benefit in helping investors choose their entry and exit points. I don't doubt that I have some things to learn in this area. Funny because I work with people who seem to just have this down.
ATB.
@Strummer
Not sure I understand the hostility. I wasn't endorsing the thread you criticised. As a general rule, I've valued your posting, just disagreed with this aspect of this one.
Maybe you aren't being hostile and I've misread you, if so I apologise. Either way, ATB to you.
@Strummer
False dichotomy. There are more choices than you listed.
@Strummer "I need to hear from the people that pressed, and NOW bought back at 18p...
Thats who I can learn from.... decisive Investors, not traders, but those that really understand over bought markets..."
Sorry, but you're describing a trader. An investor looks at the long term value and says, "Today's price is lower than the value, and sufficiently lower to justify the risks and the time it will take to receive the value, and therefore I will buy and hold."
Now, maybe some investors believed the value proposition was no longer there at 37p, and good for them if that's their analysis. Maybe I was wrong in thinking that it was still there. If we are only at 40p in a year's time and 45p in two years, I'll think I got the value proposition wrong, and that I should have sold, instead of added at 36p like I did.
I still think I got the value proposition right. I still think I'm going to make very good money on that 36p buy. And that's good enough for me, because I have no crystal ball.
I don't think the shares were overvalued at 36p. I think there's been a market aberration (various theories as to why) that has caused them to be significantly undervalued in recent months. Investors can't predict when shares are going to be undervalued or overvalued by the market. Your premise is either that they can predict an undervaluing coming (and should sell and then buy back) or that 36-38p was overvalued. I reject both of those premises.
Good move, napth. ATB to you.
I'm still holding and you guys are making me feel smart :)
Every GGP investor should look at this. Kind of nice to see the picture of the boxcut. But don't stop at Havieron. Look a couple pages further at Red Chris. You will see a page titled "New zone of higher grade mineralisation discovered at Red Chris."
It's talking about the East Ridge Target. And if you look at the diagram, you'll see what that "higher grade mineralisation" is. 198m @ 0.89g/t Au & 0.83% Cu. Not too bad. That's "higher grade".
Now, look at the four new growth holes from Hav.
Northern Breccia
156.6m @ 1.1 g/t Au and 0.22% Cu
119m @ 1.0 g/t Au and 0.11% Cu
73.9m @ 1.5 g/t Au and 0.13% Cu
SE Crescent
72.0m @ 2.0 g/t Au and 0.02% Cu (from 1281m)
Sandeep Biswas says every hole at Havieron hits gold. Every new hole in the latest growth drilling actually hit "higher grade mineralisation" -- results comparable to (or better than) what they called "higher grade" at Red Chris.
I'll keep holding. You sell if you want to.
Good move, Tom, I don't think you'll regret it.
As Nige would have said to us, BoL.
@TomE, you don't have to fight off trolls. Just ignore and filter them. You're allowing yourself to be dragged down to that level. Don't do it.
Maybe I'm a friend that is honest enough to tell you that you are messing up and can be better. I really do wish you well.
And these are on notice:
Napth
Tymers
Daveri
TomE
and a few others.
Honestly, almost every night it's bashing and bashing other people. Most of you have posted things that I've really valued at one point or another in the past but I'm going to filter anyway if the personal attacks continue.
Of course, you may not care if I filter you or not, and that's your choice. It's your choice to bash people if you want. I'm done reading it. It doesn't mean I don't think you are intelligent or I don't like you. But there's this side of you that I really, really do not like, and it's ruining the board. My other option is to filter you all by just not coming here any more but I'm not to that point yet.
And please don't tell me the other guy did it first. We were supposed to outgrow "the other guy did it first" at the age of 5 or younger. Every one of us is capable of being the bigger man.
Disagree maturely, fine. Keep bashing people, fine. Do what you want. But I'm done reading the latter, and even if I'll miss your analysis in future, I suspect I'll survive.
LOL. Whilst you are up there, chuck them off the roof, too.
and no one learned anything.
You're correct, deserttrader, that particular broker note was based on a 12.4 moz assumption and a 50% risk factor. The risk factor, I believe, was based on the risk of it not being mined (close to nil, I believe) and the risk that it would not reach 12.4 moz.
The second risk was not negligible at the time but after the last drill results underscoring the bulk mining case for the breccia, and expanding the SE zone, I think the risk is now significantly lower than 50%. In fact, I think there's a significant "risk" that 12.4 moz is going to look ridiculously low by the end of the year. But again, I know nothing.
Hi, napth. You are right that NCM calls the shots on updating the MRE, but if they are doing that very soon, it's pretty much a certainty that GGP knows, and therefore we are in a close period.
Since the purpose of that infill drilling was to get to an indicated value, and we're told the infill drilling is done, there's no compelling reason I can see for them to not go ahead and update with an indicated value (and presumably, also a larger inferred value). I don't really expect it next week but I will be a little surprised if that doesn't happen by sometime in August or sooner. But I'm guessing, I know nothing.
@zoros, very nice post. One quibble.
"Broker forecast of 33p by September (PFS). Based only on 4.2MozAuEq. (And everyone knows there is yet more to be declared)."
The broker forecasts are based on assumptions of what the MRE will become, not on what is currently known. They tell you what those assumptions are. The 4.2 moz is not close to big enough to justify a 33p share price.
@l-a "GGP is not in a closed period assuming it is not sitting on price sensitive information at present"
Accurate -- but they might indeed be sitting on price sensitive information. For instance, if an upgraded MRE is to be released soon. Wording of recent announcements makes me think this isn't an impossibility.
I am NOT saying there will be an upgraded MRE and NOT starting a rumour. I'm just saying it might be a mistake to assume GGP is not in a closed period right now.