Roundtable Discussion; The Future of Mineral Sands. Watch the video here.
I forgot to add that his 400,000 options mature on 1 Jan 2026 and is exercisable at C$2.60/share.
If you put 1+1 together, that means management expects the share price will be a lot higher than C$2.60/share by 2025.
Very interesting RNS chaps.
My take on this is that this guy is being brought in for a potential sale by 2026 (when his options expire). His background is about M&A and he will likely be the one leading any potential takeover discussions in the coming years.
My view is that management will now go full steam ahead to maximise the resource base and commercial production by 2024-2025 and look to sell then at hopefully a much higher gold price. Hold onto your horses!
Boombaby
I'm with you on the share price action. It's looking increasingly likely that we have a new floor of around CA$2.60 / GBP 1.50. This used to be CA$2.10-2.20 / GBP 1.20 a few months ago but the market is now pricing it higher given its producer status. PUR's share price re-rating should continue as it enters commercial production and releases the revised resource base.
I expect we'll be trading at GBP 2+ in 3 months' time, with GBP 2 being the new floor. PUR will be a slow and steady winner IMHO. A 35% gain in 3 months is nothing to sniff at. DYOR.
Here's a link to an analysis done by one of the posters I follow on ceo.ca
https://cdn-ceo-ca.s3.amazonaws.com/1fv0ilf-Pure%20Gold%20Mining%20-%20January%202021%20Anaylsis.pdf
He assumes there's a 500k resource upgrade, which is conservative IMHO. Based on his calculation, PUR could re-rate to CA$3.70 / GBP 2.15 per share in 3 months from now. My gut feeling is that we may get 1m+ oz in additional resource as they are still waiting for assay results for the existing drill campaign. So there will also likely be additional hits between now and March. DYOR.
Boombaby
This is the expectation when they announce the revised resource base at the end of Q1 2021. You correctly point out that none of the results from the 400 drill holes and 50,000+km of drilling has been incorporated in the previous resource estimate in Feb 2019. Based on my research, the company made 3 drill results announcement in 2019 and 5 drill results in 2020. All of them were high grade intersects. So we should hopefully see a significant re-rating of the resource base and extended mine life.
Nevermind, found it.
https://www.vaneck.com/etf/equity/gdxj/holdings/?country=us&audience=inst
They already own 16.1m PGM shares and are already at 0.51% of their allocation (Limit is 0.57%). It's amazing they got those shares for so cheap. I was expecting some pop in the share price given all the buying but I guess all the tax loss selling helped keep a lid on the price.
sasa
I have the same opinion. We could see renewed buying interest this month.
Has anyone seen what are the latest holdings for GDXJ holding? I wonder how many shares they have already bought since its inclusion in mid-Dec.
That's what differentiates investors and short term traders. Nothing wrong with either strategy but I am inclined to believe long term shareholders will gain more by holding onto their shares should PUR develop into the next KL.
PUR is already more than a 3 -bagger for me but I am not planning to sell any shares for another 4-5 years or if PUR gets taken over, whichever comes first. This is how you get 20+ baggers if you believe in the company's potential.
Happy new year everyone!
Luke
Thanks for sharing this research note. First time I come across this.
Good to get additional validation about the investment thesis here. My personal view is that ZNWD remains undervalued despite the recent increase in the share price. DYOR.
It's rather thin trading this week given end of the year season (only 844k traded yesterday). There may also still be some tax loss selling, which is affecting the share price.
I believe we could see something different in January as all those who sold may re-enter their positions in expectation of more drilling results and the resource upgrade at the end of Q1 2021.
dradrianc1
The company will provide a more accurate production guidance at the end of Q1 2021 .
However, management has previously indicated they are targeting production of around 60k oz in 2021, which ramps up to over 100k oz by 2023. If they hit more high grade mineralisation in the 8 zone next year, then I would expect production to be even higher. Given gold price is expected to increase over the next 3 years, this could not be better timing for the shareholders.
Every $100 increase in the gold price would bring an additional $10m in profit at an annual production of 100k oz production. Goldman Sachs has a $2300 price target for the gold price next year. ..
Trek
With regards to your point 1, my understanding is that none of the data from the 400 holes which were drilled since the initial feasibility study came out in Feb 2019 have been included in the existing resource estimate.
As for point 2, Eric Sprott previously mentioned that feasibility studies carried out by reputable consultants always tend to underestimate the numbers as they prefer to be more conservative so as to reduce the chance of misleading investors. I think there is a real possibility that PUR may eventually have a lower AISC than what is in their feasibility study as they enter into full commercial production.
Does the size of that bar matter? NO. What happens is that the mine is now operational and on time. Given we had COVID for most of the year, this is no mean feat. I know of two other companies which have had to delay their first pour by at least one quarter.
PUR has over 21,000 tonnes of broken ore, which will now be fed into the mill before the start of commercial production in Q2 2021. So we will have some revenue in Q1 as well.
Nice!
Roll in the $$$ from now on. Their balance sheet will be a lot more interesting next year.
They are targeting 60k oz in production in 2021. So that's around $67m profit assuming $1900 gold price and hence around $50m in free cash flow. Not too shabby!
They should then ramp up production to 120-140k within 2 years. This could be higher if they hit more high grade gold in the 8 zone next year.
They've taken down the countdown on the website.
Hopefully we'll get an RNS today or tomorrow regarding FP.
ksarar
The company has a DFS, which demonstrates the lithium project economics is several times higher than the current market cap. The market is finally starting to realise this as other lithium plays such as EMH have been on a tear.
I suggest you read the company presentation, which is available on the website.
grw90
Your analysis is almost correct.
Bacanora owns 44% of ZNWD but the NPV attributable to ZNWD should still be 50% of the project. So that's EUR 214m, which is GBP 194m. This is 10x the current market cap. Of course, we would have to factor in future dilution through capital raises to fund the equity portion of the mine development but at the same time, it assumes the lithium price remains fixed which is unlikely to happen as lithium should increase over time given the huge expected demand from EVs, etc.
ZNWD is a growth story made even more compelling by the improving macro outlook for lithium.
Hope that helps.
* I meant to say that the current share price reflects only the phase 1 mine. NOT that PUR is valuing the phase 1 mine...
Hi guys
Hope everyone had a nice Xmas! Here's a link to an article contributed by one of the posters on ceo.ca. His conclusion is that PUR is only valuing the phase 1 mine and the future upside potential is not priced in yet. This is also my personal view.
Happy reading.
https://ceo.ca/@buddy/pure-gold-mining-the-free-lunch-speculation-2021
BB
Yep, there's usually an arbitrage opportunity between LSE and TSX.
I expect thin trading volume today and the rest of the year. Let's hope for continued drilling and resource upgrade success for PUR in 2021! Merry Xmas everyone!