Member Info for TakingMyTime

"If he was worried about a buy out from Rio then he did the right thing and played us down but he will also be rushing through a deal with us even more so hence his curb on enthusiasm"
Not necessarily. Takeovers can be easier when there are fewer entanglements. A deal with (or for) GGP could remove one entanglement. I don't think it's indicative either way.

You do realise that if everyone who reads this board sells all their IAG shares it probably won't move the SP at all? Maybe 0.05....

It's rather a BIG company and the institutional investors don't rely on these boards for their investment research, oddly enough.

"What would you advise?"

Steal their yacht, sell it, and buy GGP shares. Since you didn't do this today, you will suffer all night from FOMO.

Why will people never ask advice until it's too late?

@Jerry
Here's a pretty useful "layman's terms" article on share buybacks: https://www.investopedia.com/articles/financial-advisors/121415/stock-buybacks-good-thing-or-not.asp

As always with investopedia it's US-centric but the logic is sound. Most of the "cons" listed would not apply to the GGP scenario we've been discussing. The only potential drawback to buybacks that they mention that would hold any weight with me is that sometimes the short-termers / traders benefit more than the LTHs. If the buyback is gradual that's less of an issue.

The other concern I have about buybacks is that they are tax efficient and don't have the costs of administering a dividend, but they do not necessarily have a proportionate impact on share price. Due to the relative illiquidity of AIM shares (and even as active as GGP is, I think this applies), you won't necessarily get the boost in SP that you'd expect from the buyback. It doesn't give new investors a real reason to buy, but it does give existing investors a reason to sell into the rise in SP.

This has been argued round and round, of course. From a purely selfish perspective, since all of our shares are held in SIPP & ISA, I'd prefer the dividend.

Here's hoping Hav is big enough that this decision must be made someday.

This is an NCM annual report. They have nothing to report about Scallywag unless there is a farm-in agreed. They aren't going to drop clues about it, if a farm-in is agreed GGP has a responsibility to announce it, not let their partner drop clues.

They could theoretically have agreed a farm-in / JV on Scal and decided to announce it with the NCM annual results. In practice, that would be most unusual. A farm-in at Scal might be a huge thing to GGP but right now it would be completely speculative and not particularly a big thing for NCM at all. So there's no reason to make a point of announcing at with NCM annual results. If / when such a deal is agreed, it will likely be announced by GGP, not NCM.

Hav, on the other hand, is a huge deal to NCM as well. And, there's a deal. So it won't be all that surprising if there is important news about Hav. I don't really expect it, I just expect some "It's going great, really great, people don't realise how huge this is" comments. That might be enough to generate some activity in GGP shares, but I'm not really expecting any major new announcements tonight, nor am I really expecting a huge market move tomorrow. Could be wrong, of course. If there is a move, I expect it to be up.

It's a good question, Prospector. I hope no LTH want the company to be hamstrung for cash. It would be great to have plenty to drill all we want (though with too much cash, you can lose discipline on targeted drilling).

So there's a lot to be said for retaining a lot of funds for growth. But there's another drawback -- if the share price is too low, someone like Rio or some venture cap firm comes in and buys us out to steal our share of Hav, Scall, etc. So boosting the SP might be important, too.

My view -- money for further exploration is a higher priority, but if there's enough to pay out some dividends as well, I'd do that. I'm hopeful that Hav is big enough to do both, but with emphasis on exploration. Others might have a different view, especially those who want the SP to be high because they've been waiting a long time and want to cash in. We do have LTHs like that and even a small dividend would be a boon to them, so it's something the BOD should consider. The BOD work for the shareholders, after all.

"Hoe else does a company share its profits out amongst shareholders??"

Share buybacks, which in theory increase the price. Shareholders can then top-slice and the income is taxed as capital gains rather than dividends, which is more tax-efficient in the UK tax system (as it stands today).

Share buybacks have their own inefficiencies, however.

@Jerry
" If GGP start paying a dividend I shall either reduce my position significantly or get out completely. It’s a massively inefficient way to distribute excess capital to shareholders, and at this stage of the company, inappropriate"

1. In Paddy's scenario (1p / year dividends, essentially risk-free, you'd be able to sell at a price in excess of 20p, probably 25p.

2. We'd be in a different stage of the company if that happened, wouldn't we? This would effectively become an income-producing share with a significant upside if we had further good finds.

3. In that scenario we should be returning capital one way or another. The only exception would be if we had a big hit elsewhere and decided to use the funds from Hav to mine it ourselves, which I'm not sure I'd believe in.

We do this every quarter, don't we?

If you don't own this all day but buy it five minutes before the close, you'll get the dividend. If you own it all day but sell it five minutes before the close, you won't get the dividend. What you do on the ex-div day does not matter. Buy, sell, trade, sell your body on the streets for shares, it doesn't matter, if it is on the ex-div date it has no impact on whether you get the dividend.

You must decide before the close today if you want the dividend or not, and act accordingly. If you want it, hold or buy. If you don't, sell.

Thank you, appreciate the response.

Ok, I read the article in the Telegraph. I've read the investor presentation, read the annual report, checked out the board of directors. The investment case seems on the surface to be solid. The share buyback plan seems a reasonable approach to deal with the discount to NAV. The discount makes it appealing.

Anything else you all would recommend I read before deciding? Any concerns of which I should be aware? Other than the spot price dropping, is there anything else that is a potential risk here? This strikes me as almost a hybrid between a uranium etf and an investment trust. Is that a fairly accurate description, and if not, why not?

I noticed the discussion a while back on the swap deal, one person calling it free money, another objecting. Does the company do that often, or is this kind of a one-off?

Would appreciate any thoughts anyone here has on my questions. Thanks!

Make your assumptions:
1. Will Hav be 5 moz of Au, 10, 15, or 20?
2. Will NCM buy 5% of Hav from us after the farm-in, 10%, 20%, or our entire 30%?
3. Will NCM (or someone else) just buy out GGP entirely?
4. Will we hit another find like Haverion at Scallywag? Half as big? Two deposits as big? Nothing at all?

Most of these things are just not predictable. We can look at the evidence we have and guess that Hav is going to be more than 5 moz, but it still might be closer to that than to 10. The rest is a crap shoot.

So there's no way to predict the price 12 months from now, really. But on the most conservative estimates (Scal is a bust, Hav is 5-7 moz, NCM only buys 5%, no other finds yet), I expect we'll be on the verge of Hav producing enough to give us all the money we need to explore all over Western Australia and also pay small dividends every year, with the SP perhaps in the 15-20p range. If any other good things happen, and there are many that could, then it could be much, much higher.

@Jambo
But it's a "we hope it will be 5moz", not a confirmed 5 moz.

And my point on the costs of mining is not just that it's going to take a chunk out of any future profits. It's that the future profits might never show up. Do they actually have the cash to bring the resource to production, or will they eventually have to sell it at a fraction of its worth simply because the cash isn't there? How does an investor in De Grey know that they aren't going to go the SXX route of a great resource but not having the business plan to make it work?

I don't know enough to answer that. But when I look at the recent investor presentations I see a lot about the resources and nothing about a plan to get to production. They showed $27m AUD and another $5m being raised by placement at a huge discount. Maybe there's a good plan and maybe there isn't but I'd say there's significant risk of running out of cash or major dilution or some other unfortunate event before getting to production. I'm guessing that's somewhat built into the price.

I don't see that with GGP. The risk that this will not be mined is almost nil. The risk that GGP won't have the cash to get to production is also close to nil. From that perspective we're in a much better place.

De Grey might be a great investment, I've not looked into it enough to know, but as for it being comparable, I don't see it. They don't have an NCM tie-up. That takes away a big chunk of the value of our asset, but in return, it means we are almost certain to realise our share of it.

Can't dig it up too soon, have to leave it down there for a while so the POG can go up for a while first.

"I will probably be shot for asking this but..........

Have they actually found gold ? If so, why is the SP not much much higher."

You actually invested here without knowing the answer to that? No, you won't be shot, the world needs people like this.

Friday might have no impact at all. I'm not counting on it.

On the other hand, NCM might indeed give an update on Friday that would drive this forward.

Matters little to me, it's not going to take us even close to where I want to be before selling.

Hard to compare.
-Hemi is fully owned.
- 5+ moz is a "corporate goal" -- unlikely to be anywhere near as big as Hav
- It's under significantly less cover than Hav
- I don't think there's significant copper or other byproducts at Hemi
- They want to become a gold producer, which suggests a lot of CAPEX is coming.

I don't think you can really compare the two.

"Could we be staring at the abyss of 12p, drifting along aimlessly in our own Sargasso sea."

Could be. If we fall into that "abyss," GGP would still be my best investment of 2020 even if we plunge the depths of that abyss. Chances are we won't but if it happens, I'll look at my portfolio, shake my head, and say, "Woe for the days of 14.6p, when will we see that again?" And then the MRE will come out and we'll never see 14.6, we'll fly through it to above 20p, and then the dratted MMs will be holding it back from 20.5p and the warrant holders will cash in and maybe even drive it down to 18-19p. And we'll pine for the days of 20.3, and wonder why it isn't at 24-25p.

I could be wrong, of course, DYOR, etc, etc.

@ProfQ "Obviously I'd love the MRE to be 20 million oz and the effect to be 5p per million, and the same at Scallywag."

Wouldn't we all, LOL. With more to come at Goliath and Panorama, right?! Always plan conservatively when possible and be pleasantly surprised.

The problem is that some of us invested in oil because we believe oil has a future (spare me the "times have changed, a bunch of old people" rhetoric, times haven't changed that much and the replacements are all very speculative). The market temporarily destroyed the value of oil (because of COVID) and thus the value of our oil investment took a massive hit.

While we were down, Looney accelerated the move away from oil, so we aren't going to fully benefit from oil's recovery. We're now invested in a company that is going to be devoting major resources to renewables. Sorry, but I didn't want to have increasing exposure to renewables, they are speculative, I had enough exposure to that already. The balance of my portfolio has been tweaked and become more speculative without me doing anything or having any say.

So, I could sell my BP, but I'll take a loss because of the timing of when this was done. Well, I will be reducing my holdings, but now timing is difficult. Do I ride the recovery here in the hope of recouping my losses and in the hope that the Greta Glimmer that BP has gained overrides the diminished benefit from oil's recovery? Or, do I bail now, accept the losses, and get into Exxon? I don't want to go into a speculative small oiler, this part of my portfolio was supposed to be safe and produce a reliable income for the next ten years.

So although times change and Looney may have done what is best for BP in the long term, his timing and speed is satisfying to those who have decided "green is moral" and "the faster the more moral", but it's certainly detrimental in the medium term for some of his shareholders and I am not impressed.

The first rule of investing is don't buy high and sell low. With oil, he's sold low. The depths of a Covid crisis is not the time to announce that you are disposing of substantive underpriced assets. If he'd waited until things recovered to make the move then there'd be a better argument.