Serabi Gold Share Discussion Threads

[tightfist] 29/3/2020 17:51

Hi Bomber,.Many thanks for your analysis of the situation. In post #5314 I mentioned that Greenstone have already had a bid waver (see 22nd Jan RNS) to cover the scenario for conversion in the event of significant GBP weakness. If the conversion price was to be reduced it would IMO entail a new waiver application, which if approved would then entail a further GM, a vote on increased dilution and a new Whitewash agreement..There is surely a limit to what further dilution Fratelli (and other investors) would accept? I have a sincere hope that we are at the end of that particular road, and that either Greenstone honour the 22nd Jan CLN RNS, or alternative funding mechanism is negotiated, as you speculate. I have not calculated what further equity/price Fratelli could take with a similar Whitewash agreement..Finally, I suggest that the Coringa licence timescale may now be delayed - there is likely a significant impact of CV on public sector decision making - but I hope to be proven wrong..GLA, tightfist

[bomber13] 29/3/2020 17:19

After Thursday’s clinical announcement of delayed full year results , delayed completion of the $12m convertible fund-raising , a delay to the final $12m payment for the Coringa mine , reduced production guidance for Q1 , suspension of 2020 production guidance of 45/- to 46/- oz , and the potential for a coronavirus effect on operations , it is good to hear some reassuring words from Serabi’s CEO in the BRR Media podcast .

We have a good chance of making up Q1’s production shortfall in Q2 , we have the mine camp already in voluntary quarantine from the virus , we have the ore sorter working “ terrifically well “ , and we have the CEO’s confidence that over 40/- oz of production is still doable in 2020 . We are also assured that Greenstone have not got cold feet and still wish to complete the convertible fundraising in Q2 , and we are hopeful that Equinox will grant a further extension on the $12m final payment for Coringa , which is due next Tuesday . Moreover , the Sprott loan , Serabi’s only debt , will be less than US$4m by end March and will be repaid completely by end June from cash flow .

It is indeed a relief to hear that Greenstone still wish to complete the $12m convertible after a short delay to see how the coronavirus effect plays out in Brazil in the weeks ahead . After all , they are Serabi’s second largest shareholder with 25.3% of the equity , bought at 72p in March , 2018 , they have a seat on the board , and their website mantra declares a longterm partnership approach to their mining investments . However , it is notable that in the podcast Mike Hodgson stopped short of saying they would complete the convertible on the same conversion terms , which , as we all know , were to be struck at a conversion price of 76p per share within 16 months from date of issue . As we also know to our cost , the Serabi share price closed the week at 46.5p .

Back in January when news of the convertible was made public , I recall Serabi’s CEO informally stating in an interview that the options open to Serabi at that time were this convertible loan from Greenstone with minimal dilution or a deep discounted rights issue at around 50p . Should Greenstone therefore try to reduce the terms of the convertible using the coronavirus as a reason , and to a level that no longer carried the support of the Serabi board , then an equity issue cannot be ruled out .

Whilst we can all do without this eleventh hour uncertainty , if the timescales given at the time of Coringa’s public hearing on 10th February have not slipped , we are hopefully due the grant of Coringa’s initial permit within the next fortnight . Since agreeing to buy Coringa from Equinox in November , 2017 for US$22m when gold prices were US$1275 , Serabi have increased the Coringa resource from 376/-oz to 541/-oz , and its targeted gold production from 32/-oz pa to 38/-oz pa , such that the IRR at a gold price of US$1450 and AISC of US$852 per oz is a whopping 46% . Bearing in mind that gold is now above US$1600 , and that , in any event , there was a 20% contingency in those AISC together with no ore sorter benefits taken into account , these are hopefully very conservative assumptions . Indeed , with Serabi's market cap now back to only US$33m , might Coringa plus permit not be be worth more than that on its own ?

Which is why , if there was to be an equity issue after the 34% fall in the Serabi share price in the last week , there should be no shortage of takers .

[tightfist] 29/3/2020 11:25

Hypothetically, if there were to be a 1:3 Rights issue I would take all my entitlement......

[tightfist] 29/3/2020 11:23

Hi Cotton,That strikes me as a bit harsh - if the RNS has misled would the share price have plummeted , particularly whilst PoG was buoyant?.Over the last 5 weeks situation has changed dramatically - Greenstone have elected to take time-out, Capex and drilling sounds to be in hold (prevent strangers potentially carrying CV entering the camps?), etc. tightfist

[loganair] 29/3/2020 10:06

If Serabi are really short of cash then they could go for a quick standard 'Rights' Issue, I for one would take up my allotted shares.

[cotton4] 29/3/2020 10:02

If the Greenstone CLN funds are several months away, how can they be used to settle the final acquisition payment for Coringa as outlined earlier this year?

''“We intend to use this funding, together with our existing cash holdings, to allow the Company
 to progress the development of Coringa,
 to settle the final acquisition payment in respect of Coringa,
 to settle the outstanding debt owed to Sprott Resource Lending Partnership (“Sprott”;) and,
 for general working capital purposes. ''

Were we not intentionally misled with this RNS?

[tightfist] 29/3/2020 09:43

Attention: Late Friday brrmedia posted a very recent interview with MH:hTTps://www.brrmedia.co.uk/broadcasts/5e7cdc7813bacc32cfd66d8b/serabi-gold-issue-of-the-2019-financial-results-and-update-on-operationsI found this VERY useful listening: As usual Mike sounds confident and upbeat and fields a number of gaps/uncertainties as best he can. However, the Greenstone CLN funds are suggested to be several months away, so emphasis is on negotiating another $12m consideration deferral with Equinox.......In normal times the "terrific" performance of the Ore Sorter would be a cause for celebration..... These days it's the use of the words "quarantine" and " camp" in the same sentence which are slightly more reassuring?.Good luck all, tightfist

[tightfist] 29/3/2020 09:22

Hi Sherry, Interesting...... sleuth tightfist guesses Vancouver (or Dr Google has a lot to answer for!).(FYI - in these extraordinary circumstances there was a UK government/FCA request on 23rd March that companies withhold their Interim results for at least two weeks - the SRB pre-amble may be trying to reconcile that request with Canadian SBI law?).An interesting speculation about RB as another potential source of funds - or could one of the Sprott funds purchase some equity within their mandate?.In any case, the Chilean billionaires Fratelli and their Family Office manager Bandanos have (if IIRC, PLEASE check this out) an average purchase price of around 120p (6p) several years ago, so I don't see them being bought out anywhere near here. .However, if I was a billionaire family in these circumstances I would seriously be thinking about acquiring my own family gold mine..... A good time to revisit the brrmedia Bandanos interview from November 2019?.NIAI. Cheers, tightfist

[sherry35] 28/3/2020 19:02

I'm hoping Ross Beaty takes a private placement position in SRB/SBI as opposed to a acquisition/merger made by Equinox. Serbai's financials will be needed to have the deal approved by the exchange folks which may explain the delay in releasing the financials.

Given the extremely low volume (95K traded shares) on the 2 day descend from $1.50 to $0.79 CDN, Serbai definitely has the goods given the hair cut in market value. I wish I was the fly looking down on the unreleased drill results.

DRILL THE PERMITS!!!!! Use directional drilling with geophysics capability. It's time for Serabi to do down hole geophysics.

[tightfist] 27/3/2020 22:12

Hi Sherry,Good to know that Equinox is unlikely to become strapped for cash, explains the background to the December Final Consideration deferral and maybe a Rinse and Repeat exercise?Possibly Greenstone are not in such a strong negotiating position; I would love to be a fly on the wall of the SRB virtual boardroom! One can imagine cancelling the Greenstone CLN deal, a new 12 month Anfield deferral (at what interest charge!) resumed exploration drilling and then possibly an Equinox farm-in. It's fun to speculate.Whatever, there are several options and at least the powerful Fratelli Concert Party are aligned with us.Have a good weekend, tightfist

[sherry35] 27/3/2020 16:30

AND ... don't forgot SRB was talking to majors about buy in drilling on the complex geological structures (lodes) like Cinderella. With Equniox being down the street from SRB/SBI, this would make logical choice for an investor and exploration partner.

I bet the fat cat investor has seen the latest drill results cloaked by the "black out".


DRILL THE PERMITS!!!! Use directional drilling with geophysics capability.

[tightfist] 27/3/2020 15:57

What seemed fairly innocuous in February looks dodgy in March - May be part of the reason for the hiatus?

[bullionbaby] 27/3/2020 13:51

I guess this only applies after the convertible is drawn down rather than just approved?

Security and Guarantee
The Company and its subsidiaries will grant a comprehensive security package over all of their assetsin favour of, and directly to, Greenstone. As a result of this security the Company and its subsidiaries will be restricted in their dealings with their assets, and the claims of other creditors of the Company against the Company’s assets will be subject to Greenstone’s security rights. In addition, the Company and its subsidiaries have contractually agreed, amongst other things, to limit their ability to incur other indebtedness, create security and deal with their assets

[tightfist] 27/3/2020 12:55

Right now I could live with a nibble-on-the-neck - as long as she was Chilean and her surname was Fratelli!

[borisjohnsonshair] 27/3/2020 12:26

Too right.

[tightfist] 27/3/2020 12:20

Dog eat Dog sadly comes to mind......

[borisjohnsonshair] 27/3/2020 11:46

No chance - it's business

[tightfist] 27/3/2020 11:31

BB,.A good simple summary. Three BBers were the only shareholders at the 26th Feb meeting. I certainly haven't seen the Conditions that are outstanding to/by Greenstone - but Sherry suggested they must be lodged somewhere..As a footnote, we have already added a LOT of value to Coringa - so if we exit would we negotiate for all our money back...... and some.....tightfist

[tiger60] 27/3/2020 10:44

The payment to Sprott is the first of 4 monthly payments starting at end of March

[bullionbaby] 27/3/2020 10:32

New here. Have had Serabi on the watchlist for a while.. Have I got this right?

On March 31st

1. They owe $12m to Equinox for the Coringa asset
2. They owe $1.16m to Sprott for partial loan repayment
3. Before these payments they will have cash of $9.6m

They were meant to receive $12m through a convertible note but it seems the terms and conditions of that note have not yet been met.

It sounds like from the RNS they are definitely paying Sprott this partial loan repayment, as they state they will have $8.5m after that.

So the uncertainty for me is the reason why the terms of the convertible have not yet been met? What has changed between 22 Jan and 26 March?

This convertible was put to a vote - has anyone actually seen the terms and conditions?

[cotton4] 27/3/2020 10:29

Boris

At what production level would be break even cash flow at current pog?

[swindon41] 27/3/2020 10:13

Problems come in 3's.......I sold out yesterday as v disappointed by delays in debt funding being sorted, unreported ball mill issues and lowered output guidance. One lesson in life for me has been trouble comes on trouble comes on trouble.in other words I'm expecting more bad news coming down the line, the tone of the RNS, and what's NOT included in it. No reassurance, just more uncertainty. Look at Covid19 figures for Brazil - going to hit the roof . Was in Rio and other cities/up country Brazil in February and based on what I saw re health and living conditions in favelas etc, the virus risks for SRB are now v high and can see closure of the plant for some time a possibility, DYOR just my opinion. Better options out there.