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Real-Time news about Greystar (London Stock Exchange): 0 recent articles
March 25, 2008
Greystar's David Rovig Knows The Value Of Nose-Rings And Much Else Besides
By Alastair Ford
"At the end of the day", says Greystar president David Rovig, "gold is what all currencies are measured at". That sounds like the start of a very interesting debate, part economic, part philosophic, in which the merits of the world's relative measures of value are called into doubt. Just what is a currency worth? Perhaps it's simply what you can buy with it? But trade currencies and then travel across the Atlantic in either direction, and you'll notice that the price you paid for the money is in no way relative to its purchasing power at your point of arrival. And it's no accident, either. It's a deliberate policy of the Fed. So if the Fed is messing with the folding stuff in our wallets, isn't it worth considering holding a bit of the yellow metal ourselves, just to be on the safe side? And isn't it the case that dollars are in fact priced in gold, rather than the other way round? It would certainly be a fillip for fans of the long abandoned Bretton-Woods agreement if that were so. So if gold is still the real store of value, just as it's always been, then what better business to be in than making margin mining it out of the ground?
That's a quick in-the-pub-version of the classic gold bug argument, and, although trained economists can pick holes in it quite easily, the strength of the gold price at the moment is making more noise than any negativity from proponents of the dismal science. Because there's a further point to be made about gold - it's easy to understand. Gold is a metal that comes out of the ground. It's simple. It's not a credit derivative, or an equity with a nominal valuation quite different from its real one, it's not something you can print or issue more of on a whim, or manipulate interest on, or re-package and re-sell, and underwrite under another name. So far there haven't been any bankers who've gone bust going long on gold.
And David Rovig makes a further interesting observation: "the price of gold nose-rings", he says, "is up by only a tiny amount". In other words, the consumer buys gold in such small quantities that, although the price rises do get passed on, the current strength in the gold price doesn't hurt him or her in the same way as a strong or a weak currency might, or higher or lower interest rates might. Or the credit crunch might.
Even if the price of nose-rings is not something that one would think would have an immediate impact on Greystar Resources, all this wends its way back to a simple fact about the company: it's sitting on 10.15 million ounces of gold measured and indicated up at its Angostura project in Columbia. There's a further 3.4 million ounces in the inferred category. That's a resource base that most juniors with an Aim-listing in London can only dream about. It's reasonably impressive for Toronto too. And the discovery cost per ounce isn't bad either US$4.20. Compare that to a gold price dancing around US$1,000, and you can see why Mr Rovig likes talking about gold, nose-rings or otherwise.
He's got to get the money to dig it up, of course. But Greystar's long-standing London broker Ocean Equities is pretty confident that finance can be found. It could hardly be otherwise. With the notable absence of RAB, Greystar boasts almost every big London name on its share register, not to mention a few impressive North American ones. Any equity raising ought to be a walk in the park, even with the current market jitters. And banks must be falling over themselves to back gold projects, for the very reasons outlined above.
Still, that's all a little way away. Mr Rovig reckons he'll need an initial US$350 million to get a heap-leaching operation up and running, and a further US$100 million to put in a biox and leaching facility to process some of the more recalcitrant ore. The second, however will more than likely be financed by cashflow from the first. A scoping study has demonstrated that costs are likely to be in the region of US$270 per ounce, so there's plenty of margin on offer, and cash ought to come flooding into the company's coffers once the buttons are pushed. A feasibility study is ongoing, and fully funded, so we'll soon know for sure.
In the meantime, Greystar's shares have suffered badly in the market malaise, off around 25 per cent since November. One gets the feeling that perhaps they're in the classic post-discovery, pre-production slump experienced by many mining companies. But these markets are challenging for everybody, commodity boom or no, because although Greystar's product is gold, what it offers to the stock market is equity, and like it or not, one type of asset is currently a lot more in vogue than the other. "I think equities are like a coiled spring right now", argues Mr Rovig, meaning that they're about to ping back upwards. But he concedes, not without a certain self-interest, mind, that "probably the safe thing to own is the metal".
But another way of looking at Greystar's share price is that at this level Greystar makes a tempting takeover target. You'd get your advanced-stage gold in the ground for a back-of-the-envelope US$20 per ounce if you bought the company right now, and since Greystar's shares are still triple the value that they were trading at in 2004, when it first came to the London market, you might find some willing sellers. It's not something Mr Rovig is particularly considering one way or another, though. "I don't have any idea how to dress something up to sell it", he says, in bluff North American style. In any case, if Angostura wasn't in Columbia, where rebel movements, bandits and narcotics are headline news, it would probably have been sold a long time ago. That's to the advantage of Greystar and its shareholders, but more to the point, if a bid came in, the company would more than likely go into play, and the shares would more than likely hit some of their former highs. That would save Mr Rovig and his team a development job, and put smiles on the faces of investors all round - nose-rings or otherwise.|
|doobydave: At what price? With or without warrants? Very aggravating - I really wish they wouldn't do this.
Meantime, share price continues to fall off a cliff. Not that I'm invested - you in this rambutan, or just watching?|
|serpicouk: Minesites take on events:
Greystar Resources Gets Itself In Shape For An Approach By A Major
As our Canadian Correspondent pointed out over the weekend the reaction in the market to the positive scoping study at its Angostura gold project in Colombia was odd to say the least. Here was a study which confirmed that the project would produce an average of 395,000 ozs gold and 1.3 million ozs silver over the next ten years at a cash cost of US$276/oz after silver credits and the share price drifted down C10 cents to C$8.05. [...]
Upshot is that they feel take over speculation was built into the price in 2006 and has fallen back when that cooled. Costs in the scoping study were set at a maximum. Should get an increase this year for the resource associated with the open pit operation. And that the scoping study looked only at the more expensive, less favourable irr approach of a unified oxide-sluphide process because the larger scale operation would be more attractive to a major.|
|rambutan2: i think that if disaster was in the air then the share price would've slipped.
corrientes, hopefully you will be be congratulating yourself for being a genius share trader by the end of the month!|
|tinpotdik: so - who has got a handle on the life of mine cash flows, cap and op costs then? profit and share price. Come on - out with it ...|
|daviddunne82: There is a really interesting story - 11m oz gold and 50m oz of silver. Yet mkt cap is only £170m.
Next news flow should be scoping study by end of the month and then based on that start the BFS. I think the sell off has been overdone and if a few buyers start pitching in, this will get squeezed back to 500.
The share price has fallen on nothing but good news flow which to me is an indication of a value play - stay away from the herd. Dont think this will be short term but there is a long term gold producer hiding in here, either in its current form or having been taken out by a major. With that size of resource, the take out is the most likely|
|speed camera: I reiterate the thoughts of the second paragraph in my previous post - 335.
They're a dull bunch over here, present company on this site excepted. The rest are letting opportunities slip through their fingers like sand. Still the later UK punters wake up then the bigger the intervening rise in share price will be before they get in. We can only benefit.|
while Greystar Resources continued to build momentum for its plus 10 million ounce Angostura gold deposit in Colombia by adding C$0.35 to its share price to close at C$8 even.|
great news, these are excellent high grades and they are doing wonders for the share price - hope it's not just a case of cherry picking though.|
Greystar share price data is direct from the London Stock Exchange