Gippsland Share Discussion Threads

[robjm66] 21/9/2009 11:43

It looks like Chalice Gold could be a new partner for Gippsland so i thought i might as well post up this information. Seems investors and directors (at CHN)have a lot of confidence in their prospects looking at the share price increase and the directors actions.

Robert

Eritrea
"The Company has applied for three prospecting licences in the northern part of Eritrea in an area in which a number of base metal and gold deposits have recently been discovered including the Bisha VMS deposit located in south-western Eritrea and the Zara gold project located immediately to the south of the three application areas. The Company is currently in negotiations seeking to joint venture the project to an ASX listed exploration company with activities in Eritrea."





"A program of geological mapping, rock chip sampling and BLEG stream sediment sampling undertaken over the original Zara Gold Project tenements has identified several previously unknown areas of interest that will require priority follow-up. Extension of these surveys to the equally prospective northern and southern permits is expected to identify further prospects of interest."





Robert

[robjm66] 18/9/2009 21:57

Plenty to say about Gip posted a thread on Hotcopper called the good news but hardly anyone was interested enough to read it let alone reply. Maybe if i had titled it the very very bad news it would have been extremely popular.

Think a lot of people will not be lifted out of their doom and gloom till the share price "shows them the money" was tempted to post a link to the Samaritans on the hotcopper board but thought everyone was so depressed they might not see the funny side.

Robert

[shadowchaser] 18/9/2009 20:44

Yes, Rob .I thought it was oldish news ,probably re-hashed ,but quite frankly with so little to say about Gip except ''Show us the money''it's proving hard to retain interest .

I think I'll take[yet another ]back seat break!

Hasta luego,amigo

-SC

[robjm66] 18/9/2009 20:18

Not due to go on stream Shadowchaser they seem permanently stuck somewhere between the exploration phase and development phase where the tantalum and niobium is concerned though the have had a little bit of luck with rare earths.

They are permanently all over the internet like a rash and have a PR man on the board and pay commentators both in money and shares to comment on them. I believe that the grade of ore is 40% of other mines will believe their "unique recovery rate" when i see it which may be never.

May have mentioned them here and there one or two hundred times Lol.

Robert

[shadowchaser] 18/9/2009 15:27

Biggish article in Moneyweek this week ,highlighting Tantalum production due to go on stream in British Columbia ,Canada ,an alternative to the tainted supplies from the Congo that Rob is always banging on about.
Apparantly ,excellent progress is being made in developing a Blue River project with 14million tonnes of indicated and 19 million tonnes inferred resources.
Commerce resources TSX:CCE is the firm developing this and may be an alternative for MarkS to consider if he's still jaundiced over GIP!

The grade of ore is only 40% of other mines but they are banking on a unique recovery rate of 90% [against the usual 45%]
The telling point may be :
''They are FINANCIALLY STRONG and have been in the Tantalum industry for years''

[I don't know ,but I seem to remember way back some one may have mentioned this or a similar lower grade /substitute supply....then again ,perhaps not?

-SC

[shadowchaser] 18/9/2009 11:02

GIP----True, but of course if 'The Messiah''turns it round ...

All will be forgiven!

It will be interesting to see just what happens now; will he turn out to be
just a very naughty boy?

-SC

[joan of arc] 18/9/2009 10:47

Well done Mr Gandel. Having got the price down to 3.4c I would call that game, set and match!

[robjm66] 18/9/2009 09:33

Issue will be kept open for one week longer. The closing date is now 6th of October. Blame postal strikes this with the "support of the underwriter" Lol.

Robert

[shadowchaser] 17/9/2009 11:49

Mark, that's certainly a VERY valid point.

In comparison ,the search for the Holy Grail was a less prolonged and arduous trial.

Let's hope it will not be long in coming ....

-SC

[marksnsparkle] 17/9/2009 10:42

I'm not taking up my rights, simply because I don't want to tie up any more cash in GIP until I at least have a ball park date for the financing

[chipperfrd] 16/9/2009 18:25

JoA,

It is quite likely that some holders may well be selling a proportion to cover their take-up of Rights - it actually makes perfectly good sense on a short-term view but causes the share price to close down to a level where the advantage disappears. So I don't believe we are seeing any specific manipulation - just nothing much by the way of promotion by the company.

In any case, until we get progress on the off-take and funding the share is likely to remain depressed. However, IF the project gets a go-ahead then it becomes a very different ball-game and our take-up of the new shares will likely be vindicated.
Chip

[joan of arc] 16/9/2009 17:29

Me too. Although I had to organise a CHAPS payment myself through the bank and what with the lousy exchange rate anything below 100k original shares hardly makes it worth the while. If Gandel is as devious as some seem to think then watch that the share price is not manipulated down to pursuade the maximum number of people to not bother to do anything so that he can sweep up as many as possible.

[shadowchaser] 16/9/2009 16:43

Yes ,Chip,me too---Forgive the cliche-but all things considered ,

on balance it's ''In for a penny,in for a pound''

Cheque sent to broker today....

Probably the biggest act of faith since I got married!

Lol!

-SC

[chipperfrd] 16/9/2009 14:27

Just for the record. Having weighed up the pro's and con's and reviewed the probability and economics of a putative AD go-ahead, I have decided to take up my maximum Rights under the offer.
Chip

[robjm66] 16/9/2009 00:15

Yes Chipperfrd's posts have been good most admit he can really crunch those numbers i would need all my fingers and toes to work all that out and about six months.

JoA once Gandel has control it will then be in his interest to start to look after the share price and investors. He may well break up Gip and sell the parts but you can be sure he will get a good price for them.

Having looked at the way he operates he seems to get what he wants one way or the other and what he is going to want is to make pots of money out of Gip not just a small profit (small profit in his eyes).

Robert

[hiijinx] 15/9/2009 18:46

good posts today, and thanks chip for sharing your detailed analysis

[chipperfrd] 15/9/2009 14:38

Just a further elucidation regarding how I arrived at some of my variables:

Ta price:
I believe the GFC has disguised the true long-run picture for supply/demand. When Talison closed they effectively shut-off 30% of primary supply and even though this effect has been neutralised by lowered economic activity thanks to the GFC as stockpiles are run down, over the longer-term this 30% short-fall will have to be filled.

Talison needed c. $90/lb to make their mine economic so although Coltan from DRC, et al, has provided a price cap during these economic lows, the demand for 'clean' Ta for the wide range of applications for which it is essential must (IMO) eventually provide a price at which supplies will become available.

Ta and Sn production targets:
These look perfectly reasonable given the publically available data on grades and recovery. We have not been able to read the BFS for the AD project but must assume that the output numbers given out by GIP are based on the BFS document.

Cash Costs:
I used the $11/t figure given by Seymour Pierce in early 2008 because it is very unlikely that they would have quoted such an important metric without full assurance of it's accuracy. However, although oil prices were high in early 2008 it is probably wise for us to use a more conservative figure going forward. So I will adjust to $15.5/t until further notice.

PER:
Always a difficult one as experienced investors will tend to favour specific numbers depending on sectors. In my experience over many years, x9 has been about right for market perception of base metal producers. In the case of GIP, Ta may well be seen in the future as more desirable than many of the more industrial metals (REOs are another case in point). And we also need to factor in the considerable extra earnings from Feldspar from c. 2014. If/when the market factors this in then potential earnings growth may improve the market multiple.

Interest on debt:
Bit of a guess at 4% but chosen in the light of German/Egyptian links and strong impression given of low-cost funding. Perhaps I have got that wrong and in any case I rather expect rising interest rates in the years ahead. So IF this project is indeed to go ahead then the sooner the better this deal gets set at (hopefully) a good fixed rate.

I think that will be enough from me for now.
Chip

[chipperfrd] 15/9/2009 14:08

JoA,

Unfortunately, Gandel is the wild card. At least we knew with the previous BoD where they were trying to head because their entire futures were predicated on success with GIP. Gandel has fingers in lots of pies and may well involve GIP in M&A to maximise his bigger picture. So I have just tried to focus on their main asset because everything else is opaque.
Chip

[joan of arc] 15/9/2009 13:56

Chip - I agree with you - they need too much. I like your figures. Clearly some of them are probably too conservative or Gandel wouldn't be in this.
Once the financing is setteled I think he will look to break up and sell. I would estimate that his exit strategy is based over about 3 yrs. Only question is what other tricks does he have up his sleeve to shaft us poor ingnorant PIs?

[chipperfrd] 15/9/2009 13:31

JoA,

What I failed to include in the above post is the possibility of further equity dilution from the 540m in issue after the Rights. Clearly any further dilution would have a pro-rata impact on the EPS. However, once Gandel has scooped up all the surplus Rights perhaps he will be less inclined to see more shares being issued.

As I have already implied, I cannot really see how the equity portion of the debt could be raised via a share placing - and if that route was to be taken, then it would cancel the corresponding strategic dilution in Ta Int.
Chip

[chipperfrd] 15/9/2009 13:21

Thanks JoA, that is precisely the type of feedback I was hoping to get!

IMO, the 20% equity component of the funding remains a big issue and only looks feasible if there is a direct stake taken in the OP company. My derivation of 20% came from that x5 assessment of 'fair' price - but of course it could be far less generous.

If we change the resulting 80% attributable to GIP which I used in my model and switch to a 40% stake by the strategic investor then that changes the GIP attributable to 60% of Tant Int. The impact on the model (if all else remains the same) is a 2012 target of 24p (based on a x9 PER on earnings of 2.7p).

If we drop the PER to x6 (which would be very conservative for such a long-life operation, then the target becomes 16p.

If we further flat-line Ta price at $42/lb then earnings drop to 2.3p and target share price becomes 14p.

I believe the Tantalum and Tin production numbers are fine.
Perhaps the realised Tin price needs a discount to LME to allow for processing costs downstream. But I notice that the total revenues arising from my model for Tin (over 10 years) do exactly agree with numbers produced last December by GIP. So I have not been inclined to impose a discount.

OP costs could be stressed by increasing from $11/t. If I shift them up by 50% to allow for higher fuel costs, et al, then the bottom line then shrinks to EPS of 1.6p (SP of 9.5 @ x6 PER).

G&A and Sustaining CAPEX could well be conservative in my figures but I reasoned that they looked about right given the size of the company and the relatively simple operations. However, if we double those costs then the impact on the bottom line is then EPS of 1.4p (SP of 8.1p).

Interest charged on the loan at 4% may be too low. Doubling the rate to 8% (although this is a government bank and they are supposed to give Egypt favourable terms) drops the EPS to 1p (SP of 5.7p).

Now, I am not sure we can consider this a 'worst case' scenario with all these adjustments but at least it does indicate a return on shares bought at c. 1.7p in the Rights.
Chip

[robjm66] 15/9/2009 13:16

Yes thanks for you hard work Chipperfrd you have boiled down the critical issues for holders.

Robert

[robjm66] 15/9/2009 13:14

Gandel can manipulate the price by selling and buying on the ASX Joan of Arc. Suspected he has capped the price in the past and bought when he thought the share price is too low.

He has done such a effective job that i suspect he has actually been supporting the price slightly recently because it looked like dropping too far. How many people are going to realize anyway, how closely do holders not on this and other Gip boards follow this share even if they are holders?

Got to hand it to Gandel he is playing this beautifully would not be surprised if he sits on news or downplays it till after the share issue is closed then a bit more time so it is not too obvious that he has pulled a fast one.

He is not the first person to play such games...


Think the developments will have a impact on the Share price but as for when that might be down to when Gandel decides it is the right time.

Robert

[joan of arc] 15/9/2009 12:43

Rob - if you are right then the share price should go up again tomorrow (or at least this week) when people realise.

Chip - I appreciate your hard work. What happens when you stress test your model, eg the investor pays less than 5 times annual profits, PER is less than 9, tantalum price stays constant over the period, etc. I guess I am also trying to get at how extreme the scenarios have to be before it is no longer a worthwhile investment for us punters. I know it is an n-dimensional problem but I would appreciate you further thoughts.