Note: the words "towards" in the RNS applies to the 500K raised from the equity placing.
Add to that the 750K potentially raised from the mass exercise of the warrants also issued today at 0.6p, and I'm pretty confident THAT is enough money to get Star Zinc into production by Q2 2020. And with a margin of safety.
Given reasonable progress towards the objective, that 0.6p exercise price (and higher) will of course be hit in the next few months, and the warrants will most likely get exercised (if only to flip them for a quick profit).
So in total that would make around 700m shares in issue when Star Zinc starts production. (Plus 3m warrants at 0.75p expiry 17/4/21 and 50m warrants at 2p expiry 12/4/20). Not as good as I wanted but not bad, either.
I'd also note that the new shares today have proved to be strangely sticky. Maybe that will change. Maybe that won't.
In short, good luck with your deliberations. I think Galileo are now in effect fully financed, and this is the optimum moment to buy what is simply a mispriced company. But that's only my opinion.
My take on it is that Galileo will now get to production from Star Zinc with about 700m shares in issue - as a result of today's placing and the future mass exercise of the warrants at 0.6p. Put together, the equity raise and the warrants will bring in about 1.25m pounds for the company, which IMO is comfortably enough. It probably even leaves a little money for exploration work at Kashi'tu.
To be honest, this isn't what I was hoping for - I was hoping that Galileo could get to production with around 550m shares in issue.
BUT, it is good enough, and IMO makes the shares a raving buy at this price. Now the uncertainty of finance has been removed, I think the share price will move back up to about 0.7p (i.e. warrant exercise price + @15% incentive margin) quite soon. It will probably take news of the mining licence grant and the Jubilee offtake to drive the share price through this barrier and up towards 2p, which is really where it belongs.
I got my timing a bit wrong here, and I'm irritated with myself about that. But this is still an acceptable result.
No, the shorters ARE most of the problem here, IMO.
In principle, I'm in favour of shorting. But this kind of "gang shorting" with the aim of destroying a company (including by highly dubious and possibly criminal means) does need to be stopped. And punished with serious time.
I like investing in companies which are debt free and which hold a healthy amount of cash.
IMO, this will become very important if and when the next recession strikes. A strong balance sheet more or less guarantees the company's survival in even the most hostile business circumstances, and it means that the company will then be in a position to buy up distressed assets on the cheap.
Still, Sylvania may be carrying a good thing a little too far. I assume that they must be thinking about expansion in some direction or another...
Yes, I'd also describe the current situation as a stalemate.
Except, it's not the end of the game. Time is working for the longs and against the shorters, who must pay the loan fee on the shares that they have sold.
Sooner or later I reckon about 15% (declared shorts + undeclared ones) of the equity of this company has to bought by the shorters so that they can close their positions. That is a hell of a lot of shares to buy!
I just don't see that Metro is in any serious danger of going bust, so IMO it's just a question of waiting the shorts out.
Yes, I can talk about Mexico as well. I worked on one big project there for a few months. There is a problem with corruption (and violence) in Mexico for sure, but nothing like Ukraine, which is truly mind-boggling.
I repeat, FXPO is Ukrainian, in all but domicile. You are entirely at the mercy of a Ukrainian oligarch - that is NOT a good position to be in. (Yes, I know a few of them rather well. FWIW, I've even listened to their proposals to list in London so they could offload the equity in companies that they knew were doomed to fail).
And Ukrainian judges in the "kha'istvenny" (commercial) courts are so corrupt it is beyond belief. I could tell you a really funny story about that from my own experience, but it's probably not a good idea on a public forum.
Honestly, IMO, sell your shares in FXPO and have a good time with the money. Or give it to a good charity. You'll be much happier in the end. You've got no idea what you're dealing with.
I didn't realise before your FXPO was a Ukrainian company.
I speak fluent Russian (and a little Ukrainian) and I worked in Ukraine for a few years.
Do you even begin to understand the total and utter corruption of that country? From politicians and judges down to policemen and border guards. It's far worse than in Russia, for example. Or, indeed, far worse than almost any other country I've ever heard of (and I'm something of a specialist in these matters).
IMO, putting money into a Ukrainian company is investment suicide. You might as well burn it, at least you'd have more fun.
I don't want to talk about the rival appeals of a full English, a continental, or even a dog's Brexit / breakfast on here.
I'd only go as far as saying that the vote in Parliament tomorrow will be close. And that if it goes one way I expect sterling to jump to $1.35 (pushing down dollar-earning shares like CEY), and if it goes the other way sterling will slump down to about $1.23 (pushing up shares like CEY).
That's "bad" volatility that I can do without. So I'm just going to kick my heels until it's done and gone.
Hi Total Trader!
Looking at the big picture, you're right, of course. The warrants should be good for raising another 750K in due course, as long as Colin Bird can get the share price back over 0.6p, and that would probably mean the company had enough money to get Star Zinc into production. So this MIGHT be the end of all placings for Galileo.
In your post you hit on what I believe to be the biggest risk this project now faces. Yes, Galileo will almost certainly be awarded a small scale mining licence for Star Zinc after all they have filled out all the paperwork. And yes, the offtake deal with Jubilee will be completed, and Jubilee will get Sable into production. And, indeed, yes the Ka****u mining licence (which runs out at the end of next year) will be extended as long as Galileo demonstrate they are making progress towards production there as well.
But what if there is a serious economic crash in the next few months, and the price of zinc falls through the floor (along with those of all other industrial commodities)? That, in my opinion, is where the biggest risk to this venture now lies.
Yes, management here is a mess - the 10(!) member board is full of mediocre incompetents, and both the CEO and the Chairman are on their way out, and it's not clear who will replace them, and when. That's scarcely serious for a FTSE 250 company.
Also, bad PR has created a situation where we can foresee a production guidance downgrade coming on Wednesday (plus a disappointingly high AISC number), thus encouraging sellers to front-run the bad news. That's dumb almost beyond belief.
BUT, Sukhari is still a world class ore body. Centamin is debt free and holding the best part of $300m in cash. And the current share price puts almost no value on the West African exploration assets (chiefly because management won't explain their intentions clearly). Oh, and gold is still trading at about $1500 per ounce.
So there is value to be found here. I'm not buying today, because there is just a chance that sterling will shoot up if we get a Brexit deal agreed in Parliament tomorrow. But I'll be thinking about it early next week.
I'd still love to see a complete change in the board of directors, though...
It's worth adding that if closing cash does come in at $28m (or around 22m quid equivalent), then that would represent more than 20% of the current mcap (about 105m quid) by itself. Which is crazy, in a rather wonderful way.
And there's the placing.
Disappointed - bigger than I'd expected, and at a lower price, and with warrants attached. All in all, far more dilutive than I'd hoped.
The only good news is that Colin Bird makes it clear that the placings proceeds will be used to advance Star Zinc and Ka****u.
You can now buy shares for 0.42p, and I know I should be thinking about doing so, as the company is way undervalued at this market cap. But right now feeling like I've been kicked in the testicles.
And what if there is no Vast Marange diamonds deal?!? What if Andrew Prelea (a proven liar) has lied to everybody again, and the Vast share price has been pumped to death by cross-trading from brokers and an organized group of insiders?
I've sold here and taken my profits, because I fear that BOD will become collateral damage if and when Vast collapses.
I still have time for James Campbell, but selling is the wiser and safer choice for now. Certainly, Vast's current mcap is beyond ridiculous - it's almost the same as Petra Diamonds!!!
The chances of the Fed cutting US interest rates by 0.25% at October Fed meeting are now over 90% (after some poor retail sales figures today). IMO, the big picture is still good for gold.
Personally, I'm sitting mainly in cash and waiting for Brexit to play out. If there's a deal, sterling may jump up over the next few days, pushing down the prices of dollar earning gold miners. But I'll be looking for an entry after that.
Some of the posts on this bulletin board remind me of the posts on the CEY board when Centamin was trading at its lows (around 80p).
"The time to buy is when blood is running in the streets" - Warren Buffett.
Well, plenty of blood around here...
(That said, I'm holding back until Monday to see how Brexit plays out, and if sterling jumps up in value).
I suppose this article can be said to be the case FOR investing in a gold miner with no debts and $300m cash! If you are of a nervous disposition, you may want to fortify yourself with a glass of whisky first...
You may or may not be right that FXPO is the bargain of the century, Nickel_investor. I haven't got a clue. Personally, I'm prejudiced against iron ore companies given that we're probably headed towards a recession.
You're obviously not seriously interested in investing in Fresnillo, so I won't bother writing a long post reasoning why I believe this share is currently underpriced and worth buying.
Hi Nickel Investor!
Your "figures" are completely misleading, as I rather suspect you already know.
Try including the recent improvements in the price of silver and gold in your estimates for a start. They make a simply huge difference. And the big capex investments that Fresnillo are making this year will pay themselves back many times over in years to come. You make it sound like it's money thrown away.
But, even if you're right, and ZIRP / QE and the rest of the alphabet soup can be kept going for a few more years, some money will still leak out of the system and go into indisputably hard assets, such as gold.
Given that a huge amount of debt currently trades with a negative yield, including that of Greece(!), I simply can't see the price of gold failing back by too much. IMO, we're in a new bull market for gold, and the current drift is just consolidation before the next step up.