CMM

0.16%

$6.43 capricorn metals ltd

OMG, You make some reasonable points, although your concept that...

First 20 Last

Share
Profile

Follow
Crabshacker

23 Posts.

1

20/03/18

15:01

Post #: 31889575
Share

Originally posted by ohmygod ↑

I hope drilling is successful but the odds are likely to be a game changer either way.
My starting assumption is that the current feasibility largely demonstrates that the viability of the proposed mine is highly dependent on the price of gold. Small changes have a significant impact on the financial viability of the project. Apart from having a short mine life, the grade is hardly encouraging , the NPV's are quoted pre tax which is a worry, as is cashflows. Usually directors do this because they understand that on a real post tax, post royalty basis the projects look skinny and people will see through the deficiencies of the deposit and adjust the reward scenario accordingly.
Capex all up is probably closer to $160M including working capital to positive cashflow. If debt is 55% then split is Debt $88M, Equity$72M. Can a 7 year reserve mine life support a $88M debt.? Marginal given that lenders will want a 2-3 year tail of reserves after the debt has been repaid. Which means the lenders will work on a mine life of between 4 and 5 years for debt repayment. Obviously for lenders they want as much equity in the project as possible. This isn't a project which will get a high debt ratio.
With a market cap of $50M-$60 M, the company is in a tough spot. So what does the company do?
Step out drilling and hope for a miracle at the end of the drill bit. We can all see from the cross sections that the mineralised orebody dips on a consistent angle and the drill hole is targeting to intersect an interpreted extension of the existing orebody. Essential they are chasing the orebody at depth with a deep hole way out anther 500 metres along strike.
Big gamble. It might work and then again it might not.
The development thesis for the company rests on this drill hole. It it shows that there is high grade (+6g/t) zone at depth, then the case for a possible U/G extension after the open pit becomes a theory worth following. It would make sense to fund the company to infill drill the between the existing limits and the extension hole to find out what is going on between them. In that case the share price would jump, and the company can afford to employ a mining engineer as a MD.
Equity finance would become more readily available if the investment market believes there is a worthwhile upside worth chasing.
If it is more 1g/t rock at depth, then forget it as is too deep and low grade to be economic.
Then again, they might find some mineralisation somewhere else in the hole!
So yes, this deep hole could be a game changer either way.
My recommendation, Buy on the result of high grade gold at the bottom of this drill hole.

Expand

OMG,
You make some reasonable points, although your concept that "obviously lenders want as much equity as possible" is counterintuitive the more equity the less money they make, they actually want as much debt as possible.

CMM Price at posting: 7.5¢ Sentiment: Buy Disclosure: Held
2 Upvote

1 Great analysis

Reply

Top Stories

History-making uranium sample grades and an imminent drill run. Infini Resources is poised to transform in 2025

ACW

This biotech stock raised $11M in a risk-off environment. Its Alzheimer's drug could change the game

HMI

Global Lithium up 13% as it joins the ranks of battery metal players pivoting to gold

OAR

Chris Judd's Talk Ya Book: Orthocell building on 'enormous potential' with steady growth - and US push to come

Breaking news: New opportunities for investors & companies - HotCopper opens to capital raising!

There are more pages in this discussion • 25 more messages in this thread...

First 20 Last

Add CMM (ASX) to my watchlist

(20min delay)
Last $6.43		Change 0.010(0.16%)		Mkt cap ! $2.397B

Open	High	Low	Value	Volume
$6.43	$6.55	$6.42	$531.6K	82.04K

Buyers (Bids)

No.	Vol.	Price($)
4	205	$6.43

Sellers (Offers)

Price($)	Vol.	No.
$6.44	2986	24

View Market Depth

No.	Vol.	Price($)
1	135	5.570
5	14915	5.550
2	7023	5.540
4	10250	5.530
1	3000	5.520

Price($)	Vol.	No.
5.600	26965	9
5.610	9400	4
5.620	15379	3
5.630	13592	3
5.640	6546	1

Last trade - 12.40pm 04/12/2024 (20 minute delay)

CMM (ASX) Chart

OMG, You make some reasonable points, although your concept that...

History-making uranium sample grades and an imminent drill run. Infini Resources is poised to transform in 2025

This biotech stock raised $11M in a risk-off environment. Its Alzheimer's drug could change the game

Global Lithium up 13% as it joins the ranks of battery metal players pivoting to gold

Chris Judd's Talk Ya Book: Orthocell building on 'enormous potential' with steady growth - and US push to come

Breaking news: New opportunities for investors & companies - HotCopper opens to capital raising!

Featured News

Buyers (Bids)

Sellers (Offers)

Featured News

OMG, You make some reasonable points, although your concept that...

Top Stories

History-making uranium sample grades and an imminent drill run. Infini Resources is poised to transform in 2025

This biotech stock raised $11M in a risk-off environment. Its Alzheimer's drug could change the game

Global Lithium up 13% as it joins the ranks of battery metal players pivoting to gold

Chris Judd's Talk Ya Book: Orthocell building on 'enormous potential' with steady growth - and US push to come

Breaking news: New opportunities for investors & companies - HotCopper opens to capital raising!

Featured News

Buyers (Bids)

Sellers (Offers)

Featured News