My post on ADVFN - Might be of interest3 Feb 2022 16:59
I was interested to read all the comments going back to the joint venture decision. I know a number of investors here and on LSE had reservations at the time. I can't recall precisely what I said at the time, but on balance I tended to support it especially as it was a great way to in effect move my investment in Ariana to a free carry situation from the cash payout. But I know that wasn't the case for most so the decision to support or oppose had to be more numerically driven. That is where the problem came. A poster on LSE, who is an Accountant, went through the projected numbers and tried to analyse the impact on the share price. I did the same and we met up to discuss the outcome. In fact we ask Michael if he would meet us to discuss them, but he refused. Probably understandable. The upshot was that we expected the share price to fall in 2021/2022 for obvious reasons due to income being cut from Kiziltepe given the reduction to 23.5% ownership to the mid 4's not back into the 3's though!! Once Tavsan was in production, which at the time we expected to be during 2022, we could see the share price recover to c. 8p and then grow from there. So that left us with the quandary, did we believe the Board would use the residual capital wisely to as they said at the time, " utilise its enhanced capital position to fund further growth of Ariana's business. The latter activity will involve the acquisition of new exploration and development projects either within Turkey or in other regional jurisdictions and provide for the advancement of the Co. through the development of other assets held in whole or in part outside of the arrangements contemplated within the transaction".
They also said the J.V. was capable of unlocking the full value of their assets in Turkey, which will also target the development of a future pipeline of high value production projects. "It is the goal of the Partners to become one of the premier gold mining companies in Turkey".
I attended that initial J.V. meeting with the Co. in London when this was all announced and there was certainly lots of enthusiasm about the potential. Kerim, Michael, Peter, P.G. etc. were all there. I came away thinking the J.V. alone could create a $300m company in the future and that sits nicely with Kerim's subsequent stated objective to grow the overall Market Cap. to $500m.
So even though I expected a period of weakness, which we have certainly had, I was confident that the future had perhaps near 10 bagger potential. And a result I supported the J.V. decision. What I should have done is taken notice of my own assessment and reduced my holdings in 2021 only to buy back cheaper. Hindsight!!! Perhaps that is what our seller is doing.
Given I'm getting the income and given I still believe Kerim will deliver, notwithstanding all the shortcomings I have recently expressed, I remain happy to hold and or add once I feel we have bottomed out.
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