George Frangeskides, Chairman at ALBA, explains why the Pilbara Lithium option ‘was too good to miss’. Watch the video here.
Hi Speedie,
I have a spreadsheet model I use to calculate earnings. The inputs for GGP are a 3MTPA operation, 3.3 g/t, 85% recovery and USD 800 AISC.
Using those figures and for 100% of HAV, every $100 dollar increase in the gold price equates to circa AUD 41mil (GBP 22m?) in annual earnings.
Today is a good day to bring up earnings. Our current market cap is GBP 315m. At today’s gold price, 100% HAV earnings would result in gross yearly earnings of GBP 319m. Yes, 1 year earnings is higher than our market cap….we don’t own 100% and still need to acquire it $, but that’s pretty incredible even for 30% which will soon be mined. Some folks don’t seem to understand this…and the above figures are still based on the starter mine without any value in the growing resource.
Bamps, I agree with the sentiment, and recall the PFS used a copper price of $3.50/lb, and today we’re at $4/lb. This should in effect reduce the AISC, as the copper profit is built into that number already. We can’t add the copper profit on top; if you were to do that, you would likely have to use an AISC excess $1,100. Make sense? There was a good chart somewhere in a GGP slide which broke down the AISC but I can’t find it, that would help to understand how much effect a higher copper price would have in pushing down the AISC. My hope is that a copper price $4 and above will fight against inflationary pressures, thus leaving us with an AISC in the $700s per oz.
Sharket, agree to use the market cap. Which is why with 100% of HAV, there is a conservative case to estimate a share price excess 70p (3.5b market cap) based on a realistic P/E ratio (lower even than Northern Star or Fortescue).
Our current market cap is AUD 675m.
With 100% of HAV, first full year earning will be in the region of AUD 600m at today’s gold prices. Caveat this is gross, no debt repayments etc.
Fortescue and Northern Star have price to earning ratios of 14 and 21, respectively. Do the math.
With 100% of HAV, figures of 50p+ become quite realistic in relatively short time frame.
Those who have been in for several years know that when momentum hits, this share moves fast. One day the market will reawaken, realising that funding is in place, the decline will be nearing the ore body, processing plant ready to go, etc. And this is with 30%..
If we do get back 100%, the figures become eye watering. At a 3MT operation, todays gold price, AISC $800, 3.3 g/t grade and 85% recovery, the annual gross profit is likely around today’s market cap. Mind boggling. Rick Rule talks about gambling with explorers to get your 10 bagger, but if (‘when’ IMO) the pieces fall in place, you’re potentially sitting on a derisked developer with the potential to 10x if we do in fact buy back the farm. Still with all to play for in terms of growing the resource, increasing MTPA, organic growth, etc etc.
I’m with you there Nap. I added circa 1.5m shares from 7.5p down to 5.9p, obv took a break during the recent run up. About time to start again, this is a conservative 80%-120%+ return over the next 12-15 months based on the starter mine alone, with all left to play for. IMO.
Don’t really care about the MRE, more interested in messaging from Newmont in Q1 next year onwards.
I enjoy these discussions on PE ratio and future income.
Goodness me, on 100% of Havieron and a $3k gold price and 15 PE, we’d be doing a Mickey on the 3mtpa operation alone (these calcs are purely on gross profit btw).
100% of Hav on a 7mtpa operation…I’m afraid to even put that in the spreadsheet!
Agree with James - NCM did everything they could to suppress the asset value and/or avoid any price discovery event.
Those days are over, SD and Wyloo have come in this past week to state there will be no big liquidity event before FS.
This is why I anticipate a steady but quick rise back to 10p. The market had their hand slapped iro a cheaper entry (raise during cross listing), so it’s get in now or miss the boat (sound the barge horn).
He titles it Mining Industry Costs, but seems to only talk about Horizonte capex budget overruns on their 100% owned greenfield project in Brazil, and seemingly limited liquidity options which will result in further dilution (circa 85m shares in issue at the start to 325m forecasted to allow further funding).
We’re almost to the orebody, processing plant is begging for it. I don’t see the capex comparison, if that’s what he’s alluding to. Of course capex for a 3mtpa operation will be more, but so will the NPV and IRR, and no effect on timeline.
I would be interested in a discussions on actual operating cost increases, as I do think there could be a nominal increase, but again we are fighting back with copper revenue built into our AISC per oz. Folks seem to use an average LOM AISC figure of $800/oz, which I think is logical/conservative. The copper price as contained in the PFS is still around todays spot price, but gold price higher, hence margin per oz is improving even on the 2MTpa plan.
And as Bamps alludes to, we’re going to have some nice surprises in free cash flow during the early years due to higher than avg grades.
Maybe I’m daft, I just don’t see the comparison…then again, neither does the author.
Chalice released a scoping study, pretty much using inflated commodity prices (forecast) in order to get a better NPV, plus high capex, market saw right through it. It will be a success story, but it basically flagged to the world that they are in the orphan period for the next five years barring a sale..
Meanwhile, little ol GGP about to go mining…22p with all to play for.
I for one appreciate this topic MH, as we’re now knocking on the door of production and P/E ratio discussions.
Let’s use your £90m figure as earnings. ASX average 3 year p/e for miners is 13.3, which would get us around the 22p mark I believe.
22p with all to play for…
Would be interested to see what p/e ratio others might use..
Let’s hurry up with the cross listing, there’s a load of angry Chalice investors ready to put there money here!
Why do people think a collapsing China (doesnt even allow free capital flow), Russia, India are going to create some type of quasi co-op central bank or currency..
China has $850b in US treasuries, Japan $1.1t, UK $650b, India/Brazil over $200b each. All have been generally increasing in recent months.
Shaun shouldn’t be communicating with gang leaders, not a good look for the company…
I’m not sure why any potential raise this time around, with the cross listing, is seemingly the straw that will break the camels back for some. What if he raised at 7p today (slight premium) and demonstrated it would be ‘accretive’ or required for a bigger FS - would that be ok?
Speedy, don’t know much about Silvercrest but GGP have approx. 30x more shares in issue than Silvercrest.
Thus assuming there are 20m shares sold short of GGP, that’s circa 0.4% of the float.
In your Silvercrest example, it seems 5 million shares short would be circa 3.4% of the free float.
A Canadian listed company (Alaska property) hit 560 meters at 1.22 g/t, including 85 meters at 3.5 g/t. They have a £70m market cap, and finished down 4% today.
The market hates junior goldies, worse than it ever has. It won’t always be this way…but it’s a problem.