Gldbrg.Gbl.Res Share Discussion Threads

[chipperfrd] 27/7/2015 23:04

chrisdgb,

Purely my personal view in answer to your question!

I have modelled the cash flows for the Seki underground only using the potential mining plan provided by Deloitte.

Obviously, much depends on the metal prices over the full 19 years projected by Deloitte. Here are my results using the current PoG of c. US$1,100/oz and PoS of c. US$14/oz with both kept flat over the entire 19 years (an altogether unlikely state of affairs!).

Current share price = 2p, MktCap = £49m. Forex at 1.5568, therefore MktCap = US$76.28m (but remember that some US$27m has been expended to purchase the Kara data which is not included in the following estimates). So one could use a rough current market valuation of the Seki operation only as c. US$50m.

Data from my model (at current PoG/PoS):

Discount Rate = 9%
NPV = US$208.8m
IRR = 44%

Summary of totals over 19 year operation (at current PoG/PoS):

Milled tonnes = 16.865mt
Recvd gold = 1.888moz
Recvd silver = 2.715moz
OP Revenue = US$2,009m (after deduction of mineral extraction tax @ 5%)
OP Costs = US$977m (Mining, Processing, Sales, G&A, Other)
CAPEX = US$143m
NPAT = US$798m

Chip

ps. same model, different PoG:
PoG ....... NPV
$900 ~ $78.7m
$1,000 ~ $147.9m
$1,200 ~ $275.8m
$1,300 ~ $343.9m
$1,400 ~ $409.9m
$1,500 ~ $467.5m
$1,600 ~ $531.7m
$1,700 ~ $595.4m
$1,800 ~ $661.8m
etc.

[chrisdgb] 27/7/2015 14:41

Interested how people view the company NPV versus the current market cap..??

[sloppyg] 12/6/2015 08:31

Thanks for feedback Chip

[chipperfrd] 11/6/2015 20:31

I found the AGM very encouraging.

Ken Crichton & Ashar Qureshi were both very forthcoming with answers to questions and they were clearly very focussed on ensuring that the underground project delivers on it's potential.

Clearly there can be no specific new data at an AGM before it is publicly announced, but my impression remains very positive. However, as with all new developments, patience is called for.
Chip

[sloppyg] 11/6/2015 11:49

Agreed. Non-exec buy at 2.8p and now a Director at 2.3p is not indicative of a lower impending placement.

Hopefully we are at or near the bottom.

[aaaaar] 11/6/2015 09:51

They did me well, averaged just over 7p and sold at an average of just over 80p.

[giant steps] 11/6/2015 09:21

O/T

AAAAAR, that one is back on my radar !

[aaaaar] 11/6/2015 09:15

The good old days when Griffin mining were waiting for their license!

Some of the old names are still posting there!!!

[giant steps] 11/6/2015 08:56

Hi chip, always watching ex-Hambledon although attention over
the last few years has been closer to arbitration stocks.

Hope to catch up on some more of your covered stocks.

Regards.

[aaaaar] 11/6/2015 08:46

Why spend £28k if the placing (assuming there is one!) is lower?

[chipperfrd] 11/6/2015 08:45

Morning GS.

It's a long time since we posted on the same stock.

Hope all is well with you.
Chip

[giant steps] 11/6/2015 08:06

RNS 11 JUN 2015 - Director buys 1.4m @ 2.3p

[chipperfrd] 10/6/2015 17:00

We will see what management have to say about it at the AGM tomorrow.

The recent downward pressure on the order book is being absorbed but there is no upward push-back in evidence.

Yesterday's double price monitoring extensions were unusual for this share and today the boundary has been pushed even further.

GBGR are still at the beginning of their Seki U/G project and, as we know, it will take until 2018 to come to full fruition, so they are very vulnerable to share price volatility until production improves and earnings growth becomes apparent.

With such poor sentiment across the PM sector I can understand investor patience being somewhat tested!
Chip

[sloppyg] 10/6/2015 16:40

I think the fall in the share price is now too signficant and too fast to not be linked to some upcoming material event.

[michaeljxox] 09/6/2015 17:32

Poor market sentiment towards sector as a whole can account for a chunk of the flatlining since 12/12 - associated with the decline in the pog. However, this does not explain the c.30% drop in the GBGR share price in the last 6-weeks.

Even taking account of the above and the dilution which has taken place since 12/12, it is rather surprising to see share price at these levels bearing in mind the advances made under the current management - e.g. reduced production & administrative costs: upgrading to plant and production process: CPR proven up Seki reserves, plus increases in indicated & inferred: SPFIDD assistance initiated: move to the main market with attendant stricter regulatory control: MID(MINT)award of right to seek sub-soil extraction licence re Kara: purchase of data re Kara and the work which has already been done towards obtaining a CPR and subsequent development of this substantial gold bearing acreage.

It is possible that the delay in announcing exactly how the underground development at Seki will be funded is because of the investigations and discussions currently in hand relating to constructions of shafts against extension of the existing declines - evaluating timelines, capex and cost ratio's. Could be seen as positive - management thinking on its feet and not merely pressing ahead with plane A, if plan B initially achieves a similar result in a quicker and more cost effective way.

There is little doubt that Seki & Kara between them have the potential to be a substantial gold find. The Assaubayev family have substantial stake (and considerable backing) in realising this potential and appear to be approaching the development of Seki (and subsequently Kara) in a competent and professional manner.

The above appears contrary to the recent decline in the GBGR share price , and it is possible that there is something negative coming down the pipe that the private investor (inevitably the last to know) is currently unaware of. On the other hand the movement in the share price could be just a market fluctuation - although, it must be said, rather extreme.

E&OE.

[sloppyg] 09/6/2015 14:05

The market is killing this at present due to the significance of the communicated funding requirements.

Ironinc that, depsite the efforts and achievements of the new mgt team during their tenure, no paper shareholder value has been created whatsoever.

Hopefully the pull back in share price will push mgt down a route of debt and other sources as equity at these levels will obviously result in significant dilution. Fear is that the current price weakness is indicative of where a placement may already have been set.

[vish65] 14/5/2015 13:37

hmmm which ties in with what Visor paid. Probably part of the discussions to get their subscription away. Fancy any further finance will also see Board support

[sloppyg] 14/5/2015 13:04

Took a few more myself off the back of that. Still have some fears about a discounted placement but if its good enough for a non exec at 2.8p I'll have a few at 2.35p !

[michaeljxox] 14/5/2015 12:44

Yes, very positive to see a non-ex board member purchasing shares.

AGM date set for 11th June @ 1500 - same venue as last year.

[sloppyg] 14/5/2015 11:14

So a non-exec picks up 5.8m shares at the placing price of 2.8p. Significant purchase and vote of confidence

[aaaaar] 13/5/2015 13:26

So many AT trades at nice round figures suggest to me that spread betting stops are being taken out, but then I still recall the 4p placing....

[sloppyg] 13/5/2015 11:15

The issue now is that any equity placed at 2p is going to result in significant dilution given the Capex sums involved here.

I am hoping Mgt may now be forced to go down the debt route initially until can get some equity away at more sensible prices.

The drip down in the share price however does make one fear those city conversations re. sizeable placement are in motion.

[vish65] 13/5/2015 10:26

Visor must be miffed paying 2.8p -but then for such a small amount must have had some assurance the balance could be raised, else why subscribe.

2p seems a distinct possibility

[adsyg] 12/5/2015 12:13

Get the distinct impression that equity raising at c.2p is in the offing.

[chipperfrd] 03/5/2015 09:54

Yes, I agree with your 3-5 year view adsyg.

Interesting that management are looking to evaluate a decline methodology rather than their earlier proposal for two large shafts for access to the Seki porphyry.

It would appear to make better economic sense if they are able to spread development Capex in a progressive way rather than via the larger upfront chunks required for the shafts approach.

We clearly have to remain patient regarding the Kara prospect as they are quoting a 12-18 month time-line in order to present a detailed economic model to MINT in order to secure the sub-soil mining contract. It remains to be seen whether they will opt to prove up a smaller subset of the overall Kara resource in order to expedite initial production from that source or whether they intend to go for a 'big bang' approach and attempt to get independent confirmation of the c. 9m oz Au that their own internal assessment came up with.

On the face of it, it would appear logical to try and get early ore from an initial pit at Kara in order to bolster cash flow for the Seki U/G expansion rather than wait for a more comprehensive CPR and mining plan formed around a more complete study.

It is all going to take considerable time but this company would appear to be well positioned for a recovery in PM prices. And with Kazakhstan having already announced it's intention to 'de-dollarize' in line with the other founding members of the SCO, the combined gold assets at Seki and Kara could well be of National importance in the fullness of time.
Chip