Roundtable Discussion; The Future of Mineral Sands. Watch the video here.
Any comments on what the strong dollar is doing for companies like Condor who are valued in GBP per share? One would suggest that its making the company look very cheap( for what its got) to the North American market, e.g First Majestic Silver.. It just feels like something has to give here now.. fully permitted for extraction, very low capex, quick payback, potential for 150k-200koz pa of gold production for 20+ years.. yes it has geopolitical risk but so does almost everywhere else in the world atm..
Its a while away (18-21 months at least) but production and sale of gold in dollars, then converted to £, would make the EBITDA figures for the company very attractive, assuming the $ stays strong.. just a pity we are not producing right now, via toll milling to take advantage of the situation as it stands - A 30-40koz toll deal paid in dollars would do wonders for the £ cash position..
Of course the flip side is that the strong dollar does make it more expensive to pay CNRs portion of the equity raise for the project CAPEX.. a $30M raise would cost nearly £30M now, instead of £22M a while back with the $ at 1.4 to the £ :-( Wonder if that might make the better case for raising in the Canadian market as $CAD to $ hasnt fared as badly as the £.. and increase liquidity in TSX as well which I think would help the company too..
regards
T123
I think the point that MC is trying to make to any potential buyer is that currently the PEA is 150koz for a 9 year LOM. So producing about 1.4Moz over that time. But these epithermal vein systems have the tendency to run and run - e.g Limon and Libertad. By estimating a further 12Moz over the land package, what he is saying is that this is most likely a 50-60 year cash machine which will produce gold for decades.. its not like they have drilled every inch of the 600km2 land package and the best they can come up with is 2.4Moz resource - companies like Rio Tinto want a project that can add to / replace their depleting reserves of gold, plus with copper potential as well.. No one is saying that they are going to pay for the company based on a 14Moz resource, because that hasnt been proven yet - but there is a good chance that it does exist and building a mine at La India will be very profitable for decades for the company.. even more so if they buy Calibre as well.. cos lets face it, this is probably RT we are talking about - they are flush with cash right now.. CNR+Calibre are a couple of flies on the steamroller to them..
And the point of MC saying £1 to £1.50 is what he thinks this is worth currently? He is clearly saying that unless your bid for the company starts with a £1.XX per share, then please dont waste your time and mine... because we would rather just build the mine and have the profit all to ourselves thank you very much.. we know what we have..
regards
T123
RE the visit from Geologists etc, he said that with these types of visits," these things can either come to nothing or everything", pretty sure thats verbatim... but i will send on the MI webcast when it drops and you can all watch it too.. what he would say is that this team of 6 guys from various disciplines "kicked the tyres pretty hard"..
FWIW - I too now think that the 3-4 months for financing is in line with some kind of plan i.e if we get an injection of finance from somewhere via JV first etc, then we can use that to fund our equity portion. The thought was raised previously that a silver stream for the silver resources in the FS could be used as equity as well, along with gold loans for physical offtake agreements.. wonder if Jim would provide a gold loan for the project if it means he can add to his physical position for example..
Its all about the % split between debt and equity now - 70-30% still means CNR has to fund about $30M CAPEX which is a nasty dilution shock here for many - (although not catastrophic like others recently) but i think thats holding the SP back for now - we just need to know that split could look like..
regards
T123
They usually make a recording available a day or so later - I will post a link asap. Condor has put the latest presentation on their website - the slide to look at is Page 10. Projection of EBITDA for LOM is $1.136 billion at 150koz @ $1700 gold (not 2k gold as I said yesterday, apologies - goodness knows what the EBITDA becomes at $2k or $2500 gold :-0 ). $106M CAPEX for 100koz a year or $160M capex for 150koz per year.. the inference being that they run it at 100koz initially, then pay back debt and fund the extra $50M capex to expand to 150-170koz per year with underground.
https://www.condorgold.com/sites/default/files/presentations/Condor%20Gold%20Forum%20Americas%20presentation%20on%20200922.pdf
regards,
T123
And here is the Denver Gold Forum presentation (webcast) from yesterday as well..
https://www.goldforum.live/DGG/Condor-Gold-ad3ad0fb0e450f1b66c7a31d
regards,
T123
Some highlights from Marks comments today:
Fantastic meetings at Denver Gold Forum - the DGF webcast should be available later today.
They now think there is an additional 12M ounces of gold on the companys land prospects (it goes up a million or two every week, at this rate it will 20M ounces by XMas :-D
3-4 months for financing to be agreed..
A group of 6 geologists, metallurgists, mining engineers arrived in country and "kicked the tyres very hard." Cant say who they represent as they are under a confidentiality agreement. (But draw your own conclusions as to who could afford to send a team that size)
The SP should be over £1.. should be 5x what it is just now and would be if they were in North America
Excellent new slide on what the revenue from LOM could be at 150k oz from day one with a $2k gold price i.e over $1B
Lots of interest in financing the project due to low capex, quick payback given the high inflationary environment.
Very positive.. will be interesting to see DGF presentation as well.. It appears that they could finance this 10x over.. it wont be an issue..
regards
T123
https://events.masterinvestor.co.uk/events/master-investor-sector-focus-going-for-gold
MC presenting this afternoon if anyone cares to listen in.. hopefully get a chance to ask questions.
Can’t find a link to the Denver Gold Forum webcast yesterday though? Anyone?
Regards
T123
Jochen is the best interviewer - ten times better than the wooden puppets reading off a script at proactive with zero emotion or even interest in the company - and know nothing about mining. Watch and learn guys. Jochen knows the company inside out and asks the right questions of Mark. MC should hire him as the PR consultant! :-D
As he says the current SP is a joke for a company at this stage of development. He is buying more..
Good to hear progress on financing and several companies eager to lend to Condor in Beaver Creek already - wait till he gets to the big show next week..
I think MC is going to pull a huge rabbit out of the hat where financing is concerned... dilution kept to a minimum.. only thing is it might take longer to put together for multiple finance sources, private equity debt, gold loans, silver streaming arrangements etc..
Roll on next week - where we can submit our own Q+A as soon as the conference opens! Er 1st Question) How many NDA's are you currently committed to that have the initials R. T. ?
regards,
T123
https://www.proactiveinvestors.co.uk/companies/news/992346/condor-details-results-of-bankable-feasibility-study-for-la-india-gold-project-992346.html
No proactive video interview released yet, but expect thats because MC is in Beaver Creak..
regards
T123
I think what investors are still nervous about is the amount of dilution required at these SP levels to provide the equity portion of the CAPEX spend required to build the plant. A typical debt to equity ratio is 70/30% of the CAPEX (est of $106M in the BFS). The BFS hasnt changed that, but I would say that I was pleasantly surprised by the CAPEX figure being so low given inflation etc.
Couple of things here - the dollar strength has not been kind to CNR, as providing say $30M of equity is now quite a bit more expensive with a weaker pound. My feeling on this has always been, why not raise any required equity in CAD and place the shares on the TSX to provide liquidity on that market. 2 for 1 deal. Better exchange with the dollar, less dilution.
But anyway - if it does happen in London, raising $30M would require placing at least 100M new shares on AIM, so going from 156M to 256M shares.. thats a huge increase.. hence why I think investors are still nervous to buy in before financing.
What I would say, is that MC and JM both know this well and have skin in the game, MC certainly doesnt want to be diluted as much, if not more than the next s/h! As part of the deals this summer then, I think he will have been exploring every avenue possible to reduce this dilution. What might that mean? Perhaps bank debt plus gold loans, gold streaming, using existing assets like the SAG mill and land as collateral, all to make up the $106M capex without introducing too much dilution. Thats my theory, i would like to hear MC thoughts on this too.
In other words, I think investors are waiting to see the dilution levels before deciding to commit here.. for all the reasons above, I just dont think the dilution will be as bad as many fear.. but I could be completely wrong!
regards
T123
The slide deck is on the we website however the presentation doesnt happen till 9.30pm uk tonight (2.30 local time)
https://www.gowebcasting.com/conferences/2022/09/13/precious-metals-summit
Im not sure if you can watch live or will have to wait till tomorrow.. the previous days presentations are here for example
https://www.gowebcasting.com/conferences/2022/09/13/precious-metals-summit/day/1
regards
T123
Also, new presentation on website for Beaver Creek
https://condorgold.com/sites/default/files/presentations/Condor%20Precious%20Metals%20Summit%20120922_0.pdf
regards
T123
To attempt to break down a timescale for next steps (an impossible task with Condor now as we all know) here are some thoughts..
1) The BFS was delayed by 6 months for extra drilling, metallurgy tests etc. During those 6 months we know that MC was talking to various banks about debt financing plus gold loans etc. Would hope that this means he could now conclude a deal by end of this year, 2-3 months.
2) Unlocking the financing would then allow the EPCM (Engineering, Procurement and Construction Management) process to go ahead, ie use the BFS as a basis for a tender to build the mine. Now again, one would hope that the likes of Lycopodium, Hanlon Engineering (most likely) would already be preparing an offer to tender for that contract, so perhaps a further 2-3 months after financing, that will be announced. Say Q1 2023 (where have we heard that before)..
3) From the BFS, we understand that the mine build is projected to take 16 months - with a following wind it might well be a couple of months sooner as I think thats conservative.. most of these simpler mine build projects albeit in more developed countries, take 12 months. Plus the most important piece of the jigsaw is the mill itself, and they already have that. That takes us to mid 2024, which interestingly ties up with a recent research note.
4) MC will be looking to appoint an experienced COO to be involved with the mine build and start the pre stripping, local equipment and labour contracts etc..
Unknowns? What will the price of gold be in late 2024.. ? What will the politics in Nic be like then? Could we see a JV agreement before then, or an outright bid? I think MC would argue that any successful bid would need to be based on the PEA figures from Oct 2021, rather than the BFS on La India alone, as thats scaled down for quicker financing.
regards
T123
https://www.goldforum.live/DGG/Condor-Gold-ad3ad0fb0e450f1b66c7a31d
Next Tuesday 20th at 5,30pm UK - 20 min presentation at Denver Gold Forum
https://www.goldforum.live/DGG/Condor-Gold-ad3ad0fb0e450f1b66c7a31d
regards
T123
Mark presenting at Beaver Creek on Wednesday 14th Sep - 2.30pm MDT, which i think is 9.30pm for those of us in the UK..
https://www.gowebcasting.com/conferences/2022/09/13/precious-metals-summit/day/2
I will write more when I can about the figures today, but what everyone needs to realise is that the FS is just a base case to get the mine financed and built. In reality, with the mine completed about 12-18 months after financing, by that time the other pits will then be permitted, taking that up to at least 100koz pa. In time, the underground will then be permitted going up to 150-170k with extra capex paid for out of cashflow in those years when CNR is producing. And of course, what will gold price be in 2024 say?
Next big news is either in this order
1) Announcement from a major who has had an NDA in place in Condor data room (speculation its Rio Tinto) who may go for a JV to fund copper / gold porphyry exploration..
2) Bank Financing announced to show us the debt to equity split required for the $106M capex
3) Still an outside chance of a toll mill agreement for 2 years with Calibre or Mako - either used to fund drilling or permitting for open pits/underground quicker
regards
T123
https://www.bnamericas.com/en/features/nicaragua-miners-target-gold-boom-despite-sanctions
regards
T123
Just like to add that with the £ so weak against the dollar and forecast to get even weaker, British firms are going to look incredibly cheap to buy for the likes of FMS, Rio etc... currently CNR have a 2.4Moz gold resource and are valued at $45M dollars - substantially less than the money spent on drilling, permitting and studies to prove up the asset. As MC says, a lot of the majors are now cash rich and would be crazy not to look at replacing their depleted resources at these cheap valuations..
I just wish that MC had a golden share clause that prevented a major from buying the company on the cheap.. oh, wait ;-)
regards
T123
Awax - the copper mention from MC a few months ago in relation to a major in the data room was most telling ( and NDA in place so I cant say anything - but then in the next breath talks about Rio in Nicaragua) - never heard that before from him in the past ten years.. its whether or not that major has wanted to continue with discussions, potential JV / Earn in or not thats the interesting bit.. the mere mention of Rio being connected to Condor would do wonders here..
regards
T123
Nero - personally the impression I get from MC presentations is that the focus will be on permitting the existing underground resource and bringing that into the mine schedule first, rather than drilling new areas for resource expansion? If it could happen during the construction months (12-18 months from financing) - then you have mill feed for 170koz per year from day one of commercial production, compared to the estimated 100-120k from the open pits alone. Obviously thats subject to getting bigger motors for the SAG mill, plus maybe an additional ball mill etc..
So my money is on that rather than additional drilling to expand the resource.. but as always I think it will depend on the gold price during that time, and how high the SP goes (as a higher SP would ease dilution fears and allow more money to be raised in order to do all of those in parallel i.e Construct the mine, permit the underground and expand resources via drilling on Cacao or similar)..
regards
T123
I guess the point is that, as MC has said, " there is now 'nothing to stop this being a large commercial mine'".. so he feels that everything that can be derisked, has been completed.
However my concerns remain 1) Financing - the equity dilution required may well stop Condor from making La India a large commercial mine, but the option is there to sell the project as is and let someone with cash step into CNR;s shoes 2) Geopolitical situation in Nicaragua with Ortega's communist Russian leanings proving a bit too distasteful for the USA/UK and sanctions being imposed, or further civil unrest due to heavy handed police crackdowns on any protests etc.
First production is still estimated at Mid 2024, so they are giving 2 years for financing to complete and the mine to be built.. Who knows what price gold will be in 2 years with inflation running rampant and union strikes - feels like the 1970s here.. and we all know what the gold price did in 1980..
regards,
T123