Roundtable Discussion; The Future of Mineral Sands. Watch the video here.
Yes I feel the pain here too - but have to keep in mind that First Majestic Silver did some very thorough DD on the project and took paper at 50p level in payment for the SAG Mill way before the BFS completed. And they thought that was good value.. So at 29p now? surely this is a buy..
Need to see some substantial progress though and soon.. we have had 10 years of drilling and studies, how much more does it need before they can start building? Or start shipping some rock to La Libertad.. Its getting beyond a joke - the locals are producing more gold than CNR at $1900 gold, raking it in..
regards
T123
Thats a very interesting scenario I hadnt thought of Simms..
BFS released, Financing options looked at. To raise the equity portion of the debt, Condor enters a JV agreement with Calibre who take a 25% stake cheap. Calibre then conveniently subsequently signs a 30koz-40koz pa toll mill deal with Condor and the company has first production along with a nice earner for Calibre and an uplift on their stake in Condor. Would be a possible reason why John Seaberg joined CNR as an "advance party" to smooth that kind of deal..
So Calibre gets a stake in CNR cheap, CNR get the funds required to progress the project, plus first production as cashflow to tide it over till its own plant starts producing.. Calibre gets to eat both sides of the cake...
The only ones to suffer would be 1) Existing shareholders due to dilution of new Calibre shares but should see an uplift in SP due to toll mill.. 2) First Majestic who took shares at 50p for the SAG Mill find themselves undercut as it were...
Makes me wonder if FMS wouldnt want to fund CNR itself, thereby reducing its average SP, increasing its stake in CNR etc.. Could Calibre and First Majestic fight it out? All they need are the figures in the BFS to start the ball rolling..
Its an interesting proposition right enough. As I say, something has to give after the BFS is released.. its just has to!
regards
T123
I suppose my concern being that in the 2 year timescales involved till first production, anything could happen in Nicaragua.. assuming Condor decide to try to go it alone and dont sell the project, or dont agree a toll mill deal..
e.g
April 2022 - BFS
By Oct 2022 - Financing/Construction Decision and Appoint EPCM contractor
Q1 2024 - say 12-18 month build time for the plant/ramp up production..
Thats 2 years away from now in a country which could become unstable at any time due to regime change, sanctions etc..
regards
T123
Given the previous and even present nicaraguan links to russia, does anyone feel that this is a significant geopolitical risk, in terms of the company being bought out by a mid tier etc, or even securing debt financing? Ortega seems to have some putin sympathies, and thats a very unpopular view to have right now (understatement) - especially as a south american regime .. it does concern me slightly..
https://thehill.com/opinion/international/598158-a-hemispheric-threat-russias-interference-in-nicaragua
regards,
T123
Well something has to give here at some point very soon either:
1) BFS released - Calibre have the public figures to make a cheeky low ball offer (50p) for the company in an attempt to turn La India into a satellite feeder for La Libertad (hub and spoke) and stop the capex spend on the build of the plant at La India (angering locals in the process, no doubt)
2) BFS released - Condor have the financial proof and also the backing from president now to procure a finance package to build a plant at La India.. So if calibre did want to do 1) instead, they will need to be quick.. i.e if they dont want CNR to take on the debt financing themselves and incur the CAPEX debts..
3) If 2 goes ahead, Calibre now have no reason to delay the toll mill deal as they know CNR can finance themselves to production anyway.. and so a toll mill deal provides extra cashflow for both companies.. probably c.1000tpd for 30k oz per year
I think the delay to the toll mill deal from Calibre so far has been because they see La India as permitted and proven, ready to extract, high grade feeder ore for spare capacity at La Libertad.. in essence, by not signing it yet, they are playing chicken.. trying to force a situation where, with no cashflow and a weak SP, no debt/equity financing deal can be done without punitive dilution to MC/JM/Shareholders.. leaving CNR with no option but to sell the project cheaply and allow Calibre to reap the rewards..
With John Seaberg at Condor now, I very much hope he is not acting as their "insider" and providing BFS info in advance etc.. one would hope he is professional enough not to do any such thing..
Happy to hear other opinions on the various macavellian machinations that could be at work here.. Personally i just wish someone would get a move on and do something that puts CNR on the map, a cheeky bid, the financing deal, toll mill - whatever, I dont care now... the perceived lack of action/progress here has been torture for years now..
regards
T123
DDD - I think whats interesting for a lot of developing economies is whats happened to the Russian central bank in terms of foreign reserves. i.e they can be sanctioned overnight and suddenly not available to support your country during a crisis. The only other assets to use as hedges then are bitcoin (again can be sanctioned by restricting the bitcoin exchange wallet addresses as seen by the pressure on binance and coinbase for russia etc) or... physical Gold held in your own vaults. You can hold all the paper gold in ETF's you want, but if access is restricted / sanctioned to stop "withdrawals" - then truly physical gold held in country is the only absolutely safe way to hedge your economy (something a lot of people already knew, i.e Russia and China - hence why they have been physical gold buyers over the past decade.. where would Russia be now without their gold reserves for example.. ?
One would hope that other countries now get the same message and start buying physical in quantity too.. and perhaps a fire sale of russian gold might start that, maybe even drop the price in the interim but longer term, the cats out of the bag..
Blackrock have started buying/upping their stakes in gold companies - Poly and Centamin to name two so far.. a sure sign they are expecting to see PoG rise significantly soon..
regards
T123
With gold prices the way they are (and forecast to rise) I wonder what the appetite is for debt for projects like this, gold loans and possible streaming etc.. I would imagine MC and team will be taking their pick of the offers at the moment, to keep dilution to a minimum.. Toll agreement would be transformational for the SP, but then perhaps Calibre know that too.. if they are looking at this as a possible satellite deposit for their hub and spoke strategy, they wont want to do anything to increase a possible sale price..
Plus, with the new gold price forecasts, there surely has to be a flurry of increased M+A activity for projects like this.. A speculative bid from other parties after the BFS is released is also entirely possible.. This is a 100-150koz high grade low cost gold project thats shovel ready.. not too many of those around with gold at $2k..
regards
T123
Yes, and used for inclusion in the upcoming Bankable feasibility study too. There has obviously been a delay on these results due to covid backlogs etc. Hopefully the FS can still be delivered by end of March as promised despite this delay.
I would just like to think that after 12 years of drilling CNR might be in a position to actually sell some metal esp with gold at these levels and forecast by GS to hit $2500 by end of the year.. Its absurd here after all this time and work. Hoping the higher gold prices will push Calibre to maximise their throughput at La Libertad with ore feed from Mestiza..
regards
T123
April 2022 for F/S. How long for financing afterwards? Then 18 month build period until first production. Q1 2024 earliest? I think the point is that any remaining land that isnt required for construction, but is required for extraction, doesnt have to be bought (at a ridiculous premium) before end of 2023.. In other words, MC and CNR are not paying millions for land upfront that isnt actually needed until then! I suspect a CPO will be issued long before then as this is being built.. not a chance that the Nic Gov wont step in to remove landowners who could block this project. The community themselves would run them out of town first I suspect..
Its all eyes on the financing package that MC can negotiate - the level of debt to equity. Plus awaiting an announcement on any toll mill deal which could happen anytime from now till end of 2023.. Its getting there but more excruciatingly slowly than many other similar projects around the world.. my hope now is that by some crazy happy accident that CNR starts to produce just as gold fever peaks with PoG at $3000 with rampant inflation. At 100koz pa I could see £5 per share here in that instance.
regards
T123
That was definitely the impression that I got, yes - MC is in Switzerland looking at finance options before the BFS is released by 31/03. Capex of $125M for everything brand new, but MC was quick to stress that they might use other options instead i.e 2nd hand etc.
Still - assuming debt to equity of 70/30 - that would still equate to $36.5M or £26M.. At 30p a share, thats 85M shares dilution to raise the equity required.. which is quite painful! Hopefully they can reduce that with gold loans etc.. Plus I suppose they will still need some for working capital, drilling etc.. A toll deal would be useful but tbh Ive kind of given up on that now.. Calibre are not playing ball the way that B2Gold were intending to.. too much else going on for them..
regards
T123
ISAP - its a definite buy at 30p I reckon - the big telltale for me was that huge volume buying day in December as soon as the price dropped under 30p... that looked like the bottom.. and big enough to be maybe a few HNW's or institutions buying but under the TR1 levels as we havent seen any..!
The big unknown is still what price the capex raise (if any - if they got a toll deal going and could use the proceeds from that instead it would really reduce the equity raise reqd,) will be to build the mine this year.. we should know end of Q1/early Q2.. thats the key point for me - the level of dilution..But im pretty happy with 30p just now as a buy.. and then hold up to £1.5-£2 at first production next year.. unless a sale comes first, or gold hits $3k
regards,
T123
"Be greedy when others are spiteful" Isnt that how the saying goes? ;-)
I remember buying shares at 18p - think it was 3 years ago around this time -but if we were to see 20-25p again during an end of year lull, I will be very greedy :-) Yet quite spiteful too as I still hold a lot here :-(
regards,
T123
If Calibre wanted to buy CNR, why would they bother doing a toll deal that increased the CNR SP, and their purchase price by improving their cashflow etc. I also question why Calibres ex-CFO has just joined CNR to investigate finance options for the plant.. I continually used to think "the games afoot" with this type of info, but after 10 years of thinking that, I now really just want MC to stop playing games and take the foot out of his mouth..
regards
T123
Dont mean to intrude, but Jim Mellon probably just wants to buy all the gold in La India for his personal vault on the IOM as he knows where GBP, CAD, EUR, JPY and USD are all heading - hence he doesnt want a toll deal as it means giving away his gold to someone else.. LOL - he has spent the past ten years building his own producing mine so he can have both ends of the cake - a big slice of the company profits/dividends and first claim on all the gold it sells as the cherry on the top! ;-) He will be sitting down there stroking his cat and having the last laugh in a couple of years... He's the man.. with the Midas touch...
regards
T123
Honestly? The more I see the drop in the share price, the more I think that MC will make a toll mill deal happen as a prerequisite before funding for the mine capex is agreed.. why?
1) A revenue stream provides cashflow to repay debt, reducing the risk of some machiavellian banker seizing the project by demanding debt repayment
2) Any toll deal, will significantly increase the share price to perhaps 60-70p, and by raising the equity at this price, it will reduce dilution
3) MC has seen has % reduced considerably - he wont want to raise at 30p levels and dilute his holding even further.
Whether this prerequisite causes a delay to the financing remains to be seen - the full BFS is required beforehand anyway in Q1 next year.. John Seaberg didnt join Condor to run it into the ground, or see the project fail - he will come up with the best options for financing Im sure.. but Im almost certain we will see a toll deal with either Mako and/or Calibre to truck ore from Mestiza for 30-40koz per annum BEFORE any finance is announced..
In the meantime, what happens to the SP before Q1 of next year? 30p or below perhaps over the xmas/ny period... If so, I will look to get back in here pretty heavily. I sold out about 75% of my holding in the 45p range as I could see the placement coming and the timescales had been pushed back. Glad I did now.. but I still believe that MC and co will make this project happen.. its whether 2022 is also golds year to shine with persistent inflation levels etc that could be the winning combination of 1st production, just as gold goes exponential...
regards
T123
Just regarding PM prices - been fascinating to watch the movements over the past few days in precious metals - there is a real battle going on at the $1800 gold and $24 silver levels - either due a major break out or break down I think here - and my money is on the former... too much inflation news around at the moment.. Silver for $25 and Gold to $1900 soon (next month) I believe.. y
regards
T123
Looks like they are currently fishing for stops at the 900p mark.. If this dips below 900 i will just be buying even more, like them..
Anyone any feelings on what the Q3 Production report will show on Wednesday - good or bad? :-)
regards
T123
It does make sense when you think about it - ring fence the high grade mestiza pit as a separate operation to extract and truck the ore (its about 3km away), while building the main plant at La India and preparing america and la india open pits.. would keep both operations separate etc..
But as MC has always said it takes 2 to tango - needs Calibre or Mako to agree a deal to take 20-30-40k oz a year for CNR.. All to play for with gold back over 1800 again now.. lets hope the elections go without a hitch for everyones sakes..
regards,
T123