Sapan Gai, CCO at Sovereign Metals, discusses their superior graphite test results. Watch the video here.
It's a shame how this has slumped, but it's hard to see it as anything other than wider market sentiment and a bit of boredom. No change to the available information or risk profile (unless you count inflationary pressure on costs, but I doubt anyone's selling because of that).
Won't say much as I don't want to push Wasa's excellent posts too far down, but I did want to bump Sponge's interview back up: https://youtu.be/pum8tU7e6C8
For those of us who held through the recent periods of low info, it's brilliant having 30 minutes direct from Emma.
For me, the Ds are the standout: debt, dividends (and drilling). She seems absolutely clear about wanting the debt gone and doing it this year. Certainly makes our sums easier. But it was her tone on divis that got me most excited: “That’s always been my chairman’s objective, and mine too. He would love to pay a dividend. And you can look back at his track record when he’s done gold companies before – he has paid dividends, and that’s obviously what it’s all about… That is the objective.” This was in response to a question about dividends starting within a couple of years.
Sitting here with 500k shares, that's really tantalising. As Wasa's shown, earnings per share here will be healthy to start and then get very interesting, very quickly.
I'd certainly appreciate more communication too, but I'm here and holding and of the same mind as you. We can be confident they're working hard in their own interest, as they always do. Remember we only heard after the fact that they'd built their own gold room.
It also seems that everyone unnerved by the quiet period is out for now. And the rise the other day was a nice reminder that there's money sitting on the sidelines.
While we're bored, it's worth reading the May '21 broker note again. Poor comms while they improve the agglomeration, yes, but lots of reasons for optimism about the future.
(It's in the Media & Presentations section of the GRL site if this link doesn't work.)
https://www.goldstoneresources.com/documents/media/SPAngel-Goldstone-Note.pdf
Gold’s getting awfully close to 2000 today. Been a bummer lately, but don’t lose sight of the fact that this mine is in production. Not waiting on permits or finance or drilling results like so many other juniors. I’m confident we’ll get there, and at a heck of a price :)
I don’t think we can read anything into what’s going on behind the scenes. We already know they’re not great communicators, and part of being a PI here is knowing that you’re riding the coattails of their interests rather than them working in ours. They also have a habit of bringing good news to the market unexpectedly.
I think the share price has fallen with a mixture of boredom and pessimism and nothing particularly to counteract it (like better comms). But also think all the ingredients are here – resource, team, investors, permits, loan terms – and as they refine the process and get the yield up we’ll be away again.
I'd be interested to get people's insight into valuation once the mine is up to expected production. I haven't personally tried to estimate valuation before, but it seems relatively straightforward here. If nothing else, it gives us something else to talk about. :)
The latest RNS says (tucked in the About section) that full planned production for the Homase mine is 2000oz pcm at an all-in selling cost of less than $600.
With gold currently at about $1780, is it a case of subtracting the AISC from the gold price to get earnings? If we say that GRL will be making around $1,200 per ounce in profit, is there anything wildly off in that assumption?
If not, then $1,200 x 24,000 oz gives us $28.8m or £21.8m per year.
Do we say 8x for a reasonable P/E ratio? (AngloGold is currently trading just below 10x.) In which case, we get £174m, or 3x the current valuation.
And that's just to start. Other reasons to be cheerful: "The Homase Mine holds a JORC Code compliant 602,000 oz gold resource at an average grade of 1.77 g/t [my note: that's $720m at current prices]. This is confined to a 4km strike length, which the Company plans to explore, along strike and down dip, in order to expand on the known resource... The Company also holds the former underground Akrokerri Ashanti Mine, which produced 75,000 oz gold at 24 g/t recovered grade in the early 1900s. It is the Company's intention to commence exploration of this former mine in the near future."
Nice to see some sensible posts today. I find the recent negativity hard to understand.
Unless you're deramping (and points to sirspread for being so open about it), then surely we're making nothing but progress. Yes, we need an updated production plan for the sake of valuation. But take a step back, and just remember that we're now mining, processing and exporting gold to an offtake partner at low cost for near record prices, and have new funding for exploration across potentially incredible assets. Not to say we wouldn't all appreciate more info (when is that not true?), but with any sense of perspective, everything is progressing. The rubber is meeting the road as we speak.
As I say, just don't get the short-term negativity. Park your frustration with comms, take a step back, and this looks like a heck of a business to be in.
While the focus of the chat is on the placing price, am I wrong to read the offtake agreement as a huge piece of good news? Confusingly worded due to the corporate structure, and we don't know the price, but surely having found a 100% buyer for 10 years of production is massive from an investor confidence / de-risking point of view?
"Horizonte is also pleased to announce that Araguaia Niquel Metais Ltda ("Araguaia Ltda"), a member of the Company's group has entered into a conditional ten year offtake agreement with Glencore (with the obligations of Araguaia Ltda being guaranteed by the Company), where Glencore has committed to acquire 100% of the production of ferronickel from Araguaia for that period ("Offtake Agreement"). The entry into the Offtake Agreement is a key requirement of the Lenders and significantly de-risks future cash flows from the Project. The Offtake Agreement is conditional upon, among other things, the completion of the Glencore Subscription and the entry by Glencore into a direct agreement with the Lenders in relation to typical intercreditor matters."
Appreciate the pep talk, pickedpeck. I'm here and in ACP and GRL, and they've all been undeservedly hammered lately. AIM's a real education in how long it takes for companies to find value, but I think I've got long enough horizons, so I'm hanging on. As you say, if you feel you've found good companies in the early stages, that's how the big money gets made.
It's a funny thing – I probably wouldn't put as much money into them cold today, but when you've ridden the waves, you feel you 'know' a share, and can keep looking to the future. I'm not exactly happy, but I feel closer to the fundamentals and farther from the trading trends.
Extension of Gold Loan
GoldStone Resources Limited (AIM: GRL) is pleased to announce that Asia Investments Management Services Limited ("AIMS") has agreed to extend the maturity date on the US$3 million secured gold loan announced on 22 June 2020 (the "Gold Loan") to 31 August 2022 (the "Extension"). The Extension restructures the repayment obligations to enable the Company to ramp up production. The Company retains the right to repay the Gold Loan early without penalty.
Interest will continue to accrue at the default rate of 17% until January 2022, then will revert to the original interest rate of 14% until maturity. In conjunction with the Extension, the Company has agreed a repayment schedule for the Gold Loan and accrued and ongoing interest, as set out below:
Gold Loan payments (in kilos of gold)
October 2021: 5
November 2021: 6
December 2021: 8
January 2022: 8
February 2022: 8
March 2022: 8
April 2022: 8
May 2022: 8
June 2022: 8
July 2022: 8
August 2022: 7.4
In the event that any payment is not made when due in accordance with the agreed repayment schedule, this will be deemed an event of default. Any interest that is not paid when due will accrue interest at the default rate of 17% until payment.
Related Party Transaction
AIMS is a substantial shareholder of the Company, with an interest of approximately 27.71% of the Company's ordinary shares, and is therefore a related party of the Company as defined in the AIM Rules for Companies ("AIM Rules").
Accordingly, the Extension of the Gold Loan with AIMS, is deemed to be a related party transaction pursuant to Rule 13 of the AIM Rules and it is noted that the board of Goldstone considers, having consulted with the Company's nominated adviser, Strand Hanson Limited, that the terms and conditions of the Extension are fair and reasonable insofar as the shareholders of the Company are concerned.
- ENDS-
Now that the hubbub seems to have passed (and thankfully it could have been worse), I'd be really interested to hear from knowledgeable people about what's involved in developing an elution facility on site.
Obviously it will be great for the company in the long term, but does anyone have an idea of how long it takes, what it might cost, and any idea of the complexity?
Grateful to all the knowledgeable people on this board. While it's obviously not the day we were hoping for, I'm choosing to see the positives in the update and will hold on patiently.