Mariana Share Discussion Threads

[shavian] 16/5/2017 06:32

No harm in that Rath, but the recovery in both SSL and MARL over the past 10 days may indicate a more general acceptance of the agreement. SSL is on an unusually predictable growth pathway as indicated by its quarterly ounces and strong pipeline of coming production. I continue to hold both shares and am optimistic about the coming takeover.

[rathlindri] 15/5/2017 08:42

Sold half my holding this morning and banked a 72% profit. "a bird in the hand" etc :-)

[steeplejack] 13/5/2017 09:57

Current value of bid now 100.6p

[barrywhit] 12/5/2017 19:17

wisteria2, good luck. I have also sold out this week...

[wisteria2] 12/5/2017 11:44

Have sold my holding! as I am already a sandstorm holder !! eggs in baskets and all that. Good luck to all marl long termers and new, will still look in on what is a great thread.

[zedder] 11/5/2017 21:19

Closed at approx 99.8p.

[steeplejack] 11/5/2017 12:03

Value of bid currently 97.5p.

Extensive reviews of Tuesday's London presentation on the LSE board.

Suggestion that SSL might get passed 50% acceptance but not 75%.Then I guess,SSL triggers the takeover option.I'm increasingly beginning to think that SSL might squeeze home with 75% .This is a very fragmented shareholders list with a high constituent of private client holders.There's the irritation of assimilating Sandstorm shares,listed on a foreign exchange,that will encourage many simply to sell in the market and that stock will be accumulated and assented.I'm an inclined seller,the possibility of a counter offer appears to be receding but I see no hurry to sell.Logically,the current discount to the value of the bid should narrow,the nearer we get to the merger being consummated and perhaps Sandstorm will be able to convince the market of the merger's merits pushing up the value of the merger and the Marl price.

[pr0t0n] 11/5/2017 10:22

Well,

Steve Todoruk replied to my email last week.
I don`t expect to see Sprott on the shareholders list.
3.30PM London time is deadline.

[jimbowen30] 09/5/2017 13:43

Very strong quarterly results from SSL that read well.



Here's some commentary:

[mirabeau] 09/5/2017 12:48

Very nice RNS

[greenrichard] 09/5/2017 12:39

Anyone going to the proactive investors forum tonight with Mariana presenting.I happen to be down in London so have reserved a place. Should be interesting.

[greenrichard] 06/5/2017 14:23

Marl has been valued by Sandstorm at a minimum of £1.09p so I'd be chucking everything at it if it got back to 60p. With more drill hole results to come and the PFS later in the year, someone else will take this out if the Sandstorm "combination" fails to get the 75%.

[goldenshare888] 06/5/2017 12:20

John Cornford has taken his profit and sold MARL, looking to buy back in on a share collapse if they do not get 75% of vote and the deal is scuppered.


I agree with that strategy as too much risk attached to this deal going through.

Gold and Sandstorm shares falling further adds to the risk profile also.

If it's a NO, what price MARL, 60p?

[little alice] 04/5/2017 21:53

hxxps://masterinvestor.co.uk/equities/marianas-merger-sandstorm-gold-stack/

Excellent find.

Thank you for posting.

I agree with so much of what was written there.

Still holding. Still voting. Still adding.

[mirabeau] 04/5/2017 21:11

Thanks to John Cornford at MI for this excellent article:-




Does Mariana’s merger with Sandstorm Gold stack up?

John Cornford 04 May 2017

Among the four main ways to make money from mining gold or silver – exploration, development, streaming or financing a mine – it is streaming (or royalties) that can often be by far the most profitable.

I showed in my earlier streaming coverage how streamers tended to make much more profit from a mine than did any other participant. But from the would-be producer’s point of view, they are a much more expensive way to finance a mine than any loan or any third-party equity investment. And the streamer usually leaves the poor old owner to take the operating risk.

So what are we to make of it when a gold explorer seeks to turn itself into a streamer? As in the case of Mariana Resources (LON:MARL) who just last week agreed (subject to shareholder approval) a ‘combination’ with Sandstorm Gold (TSX:SSL).

MARL chart

Mariana Resources I have avoided mentioning so far, despite that its gold prospect at Hot Maden in North East Turkey is developing into a far richer grade, albeit smaller, potential copper/gold mine than is Solomon Gold’s at Alpala in Ecuador. That was because, even though holding shares myself, Mariana Resources only has a 30% share of Hot Maden, against local Turkish company Lidya who is managing the exploration. So MARL could never control how the prospect is developed, while its shareholders could never be sure how their interest might eventually benefit them.

And so it was turning out, with MARL’s £76m market value (at 59.5p) lagging well behind its 30% share (about £330m) of the $1.4bn NPV8 that a January PEA, conducted only 20 months after Hot Maden was first discovered, came up with for its initial more than 4Moz resource. This also exhibited a staggeringly profitable internal return of 153% p.a., against an initial capital cost of only $169m. Given that subsequent high grade drilling results have not been included in the PEA, that estimate is likely to prove rather conservative.


(Note that, while most of my coverage has explained why NPVs usually greatly exaggerate the true value of an owner’s stake in a mining project, in a case like Hot Maden’s extremely high IRR, where the initial capex is low compared with the NPV, the true value to the owner can more nearly equate to the latter because financing will be so low as not to require equity dilution or too much borrowing.)

Against Mariana’s 59.5p share price, Sandstorm has come up with 28.75p in cash, plus just under one of its shares (listed on TSX and NYSE) for every four Mariana shares – worth 110p at $1.28/£.

But on the announcement Mariana’s shares only rose to 92p, while Sandstorm’s fell by 10%.

So although Sandstorm thrives on its streaming – and this deal, due to Hot Maden’s rock-solid prospects, ought to be more profitable and even less risky than most – it obviously hasn’t attracted universal joy.

SSL chart

That is because not only is the deal not yet done, but also that its merits are considerably more difficult than most to evaluate. Certainly I myself can’t quite get my head around the difference between the profit shareholders could expect if staying with Hot Maden (as a minority holder) as part of an independent Mariana Resources (not to mention its other exploration prospects) and that to be expected if they share in the usual super-profitable streaming deal that Sandstorm says it hopes to sign with Lidya to help get Hot Maden into production (not to mention the other 155 streaming deals that Sandstorm now has and due to expand usefully in the next three years).

In fact Sandstorm has actually said that it only ‘hopes’ to convert what, with its existing holding, will be 37% of Hot Maden into a streaming deal. But it doesn’t look that simple.

Hot Maden’s high profitability will stem from the exceptional 11% grade for its gold and the equally exceptional 1.9% for its copper, which means that its mining and production cost is expected to be well under $400/gold oz. That means that as a stand-alone company it probably won’t need the likes of Sandstorm to supply its capital. Sandstorm mainly comes to the aid of miners who can’t fund their developments, in return for which they pay an immense premium (as my initial article on streamers showed) in the form of foregone revenues from their gold, which works out well above what a bank, or equity investor, would expect. In its latest year for instance, Sandstorm made a staggering $1,000 per oz profit by reselling what its streaming clients diverted to it – in a year when gold’s realised price averaged below $1,250/oz, showing just how low a price Sandstorm is paying for its gold streams.


So therein lies the rub! On Hot Maden’s exceptional profitability Lidya won’t need any such streaming deal. Sandstorm hasn’t as yet said that it has agreed any such deal – merely that it will negotiate once Hot Maden has passed various development milestones.

As a result of this uncertainty there appears to be plenty of opposition to the deal, not least from gold guru Sprott who is bullish on gold’s prospects and has a 4.5% Sandstorm stake. Sprott’s vote, alongside other naysayers, will be set against the 17% or so of its own and its shareholders that Sandstorm has secured to vote for the deal.

Bearing in mind the difficulty (without a lot of effort which, no doubt, brokers better paid than me will be feverishly going about right now) of working out the pros and cons for Mariana shareholders, it seems likely those major investors in favour are merely wanting to take their money now and run, rather than wait to see how the deal pans out in the unpredictable medium term. Other reasons for Mariana shareholders to vote yes would be removal of the uncertainty stemming from their lack of a control of Hot Maden, as well from uncertainty about Turkey’s politics. Sandstorm would also give them a 19% share of the 30% increase in the highly profitable streaming revenues it expects over the next three years – although whether that would be earlier than the profits they might expect when Hot Maden goes into production is yet to be seen.


Against that, Mariana holders tempted to stay with the shares (instead of taking their money and running) but to vote against the deal would be supported by the conspiracy theorists who are atwitter suggesting that Mariana only agreed to proposing the deal in order to flush out another buyer. They would also point to a recent hiatus in Sandstorm’s earnings which caused weakness in its shares even before the Mariana announcement.

And the attempted deal will certainly raise Mariana’s profile (although already listed on the US over-the-counter market) among American investors.

But other tweeters wonder why the parties want the deal structured as a merger (needing 75% shareholder agreement by each company) rather than as a straight take-over requiring only 50% of Mariana’s holders. That will only become clearer later when the date for a vote is announced.

So although the respective shares have behaved rather calmly since the initial adjustment (smoothed perhaps by automatic arbitraging between the various markets), I wouldn’t be surprised to see rather more volatility developing in the run up to the vote. Meanwhile, I have taken my profit on Mariana but would buy back depending on the extent of any fall if the vote is a ‘no’.

-

[bittorrent] 04/5/2017 17:21

Article here about Sandstorm, you have to register (free) to read it all:

[steeplejack] 04/5/2017 15:17

It's going to be interesting from here.The value of the bid with Sandstorm at 324 and an xrate of $1-29 is now just 93p.

[exbroker] 04/5/2017 14:58

The short interest is by the arbs who are long MARL in the share exchange ratio, more arb buying today which is why the deal is now on much less of a discount than it was last week.

[goldenshare888] 04/5/2017 13:47

Yes, Sandstorm looks set to open lower again today, thus reducing the value of the offer for MARL holders.

Many ways for the big boys to make money from this and not necessarily to the benefit of MARL holders.

Pleased to be out of it at the top and IF I want Sandstorm shares, which I don't, I could buy them cheaper on market (every day currently) by selling MARL @ c95p.

As GOLD falls further ($1229 now) the value of this offer will decline further, hence the SHORT interest.

[exbroker] 04/5/2017 13:40

Looks like the arbs have been doing more shorting than I thought, explains the share price fall, and that the terms have got tighter.

[stompy jones] 04/5/2017 13:19

Yes - that's it. MARL couldn't do it on it's own and - by the looks of it - couldn't get a buyer to come in at the right price. For MARL the merger is a neat bit of sidestepping to get round a frustrating impasse.

[bittorrent] 04/5/2017 11:21

Thanks Stompy, you make some sensible points. Marl might have taken it to production on its own but smaller shareholders would have been diluted right down by rights issues/placings. This might be the best we can expect.

[goldenshare888] 04/5/2017 11:11

Interesting Sandstorm SHORT positions disclosure!

[stompy jones] 04/5/2017 10:42

Honest answer.

First point is an astronomical take out price was probably unrealistic from the start: figures like £2.50 were always pie in the sky. There's a Sprott video from a couple of years ago and the charts of taken out explorers show that the take out price is not much higher than the share price highs.

The reality seems to be that multiples from that high point don't seem to happen and the bulletin boards are always left with posters complaining that they've been robbed.

Second point is at first the deal seemed over-complicated. But - after a little while and not thinking about it all the time - there is a elegant logic to it. It's a creative solution to an impasse and much simpler than some posters seem to think it is.

The trick is not to think about it and talk about it all the time. Let go of being a MARL shareholder and start to look at it from a different angle. Be like Glen: change hats.

Third point is it's all about getting a cash flow for Hot Maden with SAND as the pipe. It's like taking HM to production and getting a royalty for it. For the MARL shareholder there might be a higher bid from left field but in the meantime it's about getting a position in SAND at a bargain price.

I'm holding MARL for getting SAND shares at a knock down price and buying SAND on the market for 243p GBP if it gets so low.

That's the way I see it.