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Real-Time news about Gldbrg.Gbl.Res (London Stock Exchange): 0 recent articles
They seem to have at times a somewhat opaque and unstructured reporting style, which is a shame as the underlying story looks to be first rate IMO. Decent PR and a regular clear set of management reporting to shareholders would I think help the share price despite the aversion to Kazahkstan by mainstream western investors. I have dipped my toe in the water here after having been out since the Hambledon days and am looking forward to their ramp up over the next few years.
|sloppyg: A much needed update and the oversold position looks fishy to me. Cynically I do wonder if details of some of these "advanced discussions" re funding price leaked and the company felt obliged to get this interim RNS out to stop the rot. I am sure they were hoping to have concluded funding discussions by now and then announce everything.
Hopefully, as chip stated, they can manage the funding gap with debt but fear the share price decline may allude to some limited equity raising....soon find out.|
|sloppyg: Chestnuts - don't buy the de-listing argument as have always had a significant holding and would not have bothered with the hassle of moving to the main market which is far more onerous regulatory wise.
That being said the share price demise is now in the territory where it seems likely, as Vish stated, that we are simply waiting for the bad news to come out.|
|sloppyg: The problem is the company have documented how many millions they need to fund seki, of which next to nothing is coming from ops.
AFR have gone on record stating they will fund any gaps but I am sure they did not intend to fund the entire amount and the move to the main market was supposed to get new investors on board. Issuing equity at these share price levels is going to obviously result in significant dilution.
Need some clarity in this respect from the company or else not sure where the share price could end up.|
|sloppyg: Obviously great news that major shareholder will support this one through.
Do sense however that this was issued to support current share price and to alleviate any funding fears in the current climate. A sort of big brother is in the background in the event that funding conversations break down.
I guess the dilemma is how much debt/equity as too much equity at current share price is obviously going to cause signficant dilution.|
|sloppyg: I think the fall in the share price is now too signficant and too fast to not be linked to some upcoming material event.|
It would be hugely speculative to try and work through just what the ramifications of all this might be.
My first thought, as someone who spends an inordinate amount of time analysing PM producers, is: just how complicated it will become to carry on doing 'apples-to-apples comparisons' once the world comes off the USD standard. All the FOREX rates will make the task hideously difficult to keep on top of, rather than just using the general default of most miners, which is currently the USD.
However, in terms of gold/silver prices, arbitrage should tend to keep global prices common, relative to local FOREX rates. So individual projects will, as ever, boil down to the same economic factors, ie. actual profit margins achieved, sales v costs, et al.
So, on the face of it, and for GBGR specifically, as long as they can actually sell their product at the reining world price, nothing should change. Their earnings should determine their ongoing share price and those earnings will be dependent on eventually achieving target levels of production/sales at a level of overall cost that result in sustainable profit margins to adequately reward all stakeholders over the fullness of time.
In itself, I do not see why Kazakh de-dollarisation should actually change the investment proposition for GBGR as long as profits can be repatriated without exchange controls or other negative hurdles being placed in the way of UK-based investors.
We do appear to be facing a world that looks imminently likely to have a major financial upheavel. Whether that radically changes the investment environment for Asia-based businesses is a moot point. I would certainly hope not. But I guess we do have to pay close attention to all the moves that we are likely to see play out as the world comes to terms with a new Bretton Woods type reset, this time with a completely new cast of players.
|j4yjaybee: It's a strange one isn't it? Management started so well with timely positive information. However this seems to have slipped in 2014.
It started as being available early 2014, then quarter two, then quarter three. Yet here we are 7 days before the end of quarter and still nothing.
What is even more strange is were not dealing with some tin pot outfit. When first engaged a time line must of been given and they must of been aware of the information available.
So what has happened?:
1. Management estimates were wildly over egged and management are waiting for other positive information to soften the blow.
2. A significant amount of additional drilling needed to be carried out at the request of Deloitte to verify managements estimates.
3. There is simply too much gold and too many zero's and their brains are frazzled!
I like 3 but think 2 is more likely.
I didn't understand why management made the statement originally. If it turns out to be nearer 2 million than 6 million the market will show disappointment. Whereas if they just verified the 2 million the project would have been significantly derisked with the share price responding accordingly. From recollection the share price increase was only 8% on the day of the announcement.
Time will tell, hopefully soon! Good luck to fellow holders.
A few thoughts!
I accept that it is wise to never underestimate the potential for additional share raisings - and the consequent dilution of earnings per share. However, I do not necessarily accept the argument for 50% of the U/G capex from equity.
Of the $130m capex required, we are advised that it is primarily required over the first 4 years. So on the assumption that it is split as follows (2015 -$42m, 2016 -$28m, 2017 -$29m, and 2018 -$10m) we can have a stab at estimating overall cash flows.
For 2013, OPCF was $7.3m, investment was -$7.5m, and financing was -$0.3m therefore net cash flow was -$0.4m.
This was based on revenue of $42.4m from sales of 29,712oz @ $1,426/oz. However, the contribution from U/G only occurred from June onwards.
We still await financial and operating data for the 6 months to June 30th 2014 but it would appear likely that full year production for 2014 will be close to 40,000oz @ c. $1,300/oz (ie revenue of c. $52m). This should result in OPCF of c. $18m.
The level of investment spending will largely depend upon the commencement of U/G capex spend, but for the sake of this discussion I will assume that the capex spend is as estimated above and that 2014 investment spend is -$7.5m (as in 2013).
GBGR raised $23m cash in early 2014 so the overall cash flows for 2014 may well look like +$18m - $7.5m + $22.2m = $32.8m.
Leaving gold at $1,300/oz going forward. 2015 should see c. 44koz sold for an OPCF of $24.2m with investment of -$42m and debt repayment (EBRD) of -$5m, so -$22.8m (leaving cash of $10m).
2016 with c. 46koz sold for OPCF of $29.9m, investment of -$28m and debt repayment of -$5m would result in net cash flow of -$3.1m (leaving cash of $6.9m).
2017 with c. 58koz sold for OPCF of $42.9m (U/G only, lower tonnage, higher grade only, improved recovery, lowered costs) with investment of -$29m, resulting in net CF of $13.9m (cash now $20.8m).
And finally 2018 with c. 61koz sold for an OPCF of $45m, investment of -$10m and net CF of $35.1m (cash at $55.9m).
In other words - bulk of capex achieved without additional recourse to equity!
But 'many a slip between cup and lip' so the above estimates may well be significantly worse or better depending on a whole host of variables - not least of which is gold itself!
Then there is your point about the companies estimate of $1b in free CF over 22 years @ $1,200/oz gold, and the need to discount those FCF's to arrive at a suitable NPV.
I have a bit of an issue with this because I have found that in general NPVs tend to be far too conservative. Over 43 years the compound annual growth rate for gold (CAGR) has been 8.4% using the current price of $1,300/oz. So although cash itself will undoubtedly decline over the Seki LoM, I believe the average CAGR of gold (and the uplift to earnings) will in all probability counter the falls in currency and therefore neutralise the usual NPV discount.
At a PoG of $1,300/oz I estimate that FCF/share pa could well run at c. 1.8p and a long-life mine could well earn a decent market multiple of 10-15x it's FCF. So I would be a bit more optimistic with my share price assumptions for Seki U/G alone.
One way or the other we should be able to adjust our estimates 'up' or 'down' with 2014 interim and final reports, plus the results of the Seki and Kara CPRs. We shall see!
|sloppyg: Trying to get a feel for potential high level long term valuations per share of Seki in isolation so interested to hear thoughts.
By my way of reckoning we currently have 2.2bn shares in issue valuing the business today at £66m. U/G capex is estimated at $130m or £75m. For arguments sake lets assume this is funded 50% equity and 50% debt/cash from ops hence, at todays share price, a further 1.2bn shares will need to be issued giving a float of 3.5bn shares.
The annual report states that projected free cash flow from seki over 22 yrs is estimated at 1bn or c.£600m. Consequently with 3.5bn shares in issue this would cap the value of Seki at 12p per share.
However the reality is that the free cash flow should be discounted to provide an NPV so we are talking a value per share of anything up to 12p with no obvious upside but clearly some risk.
So a 12p upside cap on Seki alone.......doesnt sound massive considering the share price would discount so more likely say a value rane 7p-10p.
Any thoughts ?
Gldbrg.Gbl.Res share price data is direct from the London Stock Exchange