Originally posted by eshmun
You only get diluted if you allow yourself to get diluted. When the capital raising/s come you just buy in proportion to keep your share in the company at the same level if you are neutral and at a higher or lower levels if you are bullish or bearish on the stock.
All this fear around capital raisings to construct mines is nonsensical. All investors should be concerned with is the EV after funding. If the EV represents good value you buy if it doesn’t you don’t.
As I said previously I will wait for the final funding mix to be completed before buying more. Once the funding is locked in the comparative value to other companies becomes far more visible.
Let’s call it $150 million (round numbers) of upfront start up capital.
$90 million banks and $60 million equity.
Current shares on issue 747,936,235
Issue $60 million in shares at say 7cents is 857,142,857 shares so total 1,605,079,092 SOI
So what price do the shares trade at with all this funding in place? Remember we haven’t bought more yet so it doesn’t matter. What matters is the EV.
If they trade at 7cents the company has an EV of $142 million.
If they trade at 5 cents the company has an EV of $110 million
Really depends on your view of these EV’s against other peer companies and the project itself.
8.5 year mine life, ~100koz/annum production run rate, LOM AISC $1,038/oz. Looks good value to me......
and I have used $150 million for the calculations above. The optimised study is saying upfront capital costs of $132 million including contingencies. My EVs are conservative to the upside.
Using $132 million. $79.2 million banks, $52.8 million equity you get.
754,285,714 shares issued at 7cents total 1,502,221,949 SOI
If they trade at 7cents that’s an EV of $131 million
If they trade at 5cents that’s an EV of $101.5 million. This looks pretty compelling to me.
@speculator101
I’ve been saying this for a long time but Bibra is not a GCY. It’s a virgin ore body with potential for early cash flow from laterite gold which can help offset stripping costs. It’s a simple ore body geometrically speaking with a much lower LOM strip ratio than Gilbeys. I warned you about the sensitivity of the Gilbeys project to the high required levels of material movement at the front end of the project.
I think this is a far less risky project and that is evidenced by RRL’s early interest which let me add may not be completely done with. Those comments about the Moolart well mill in the RRL quarterly address to shareholders makes me believe that eventually the marriage will happen in one form or another.
Where else can you see the Moorlat Well mill being utilised. If you can identify another junior with a low grade big deposit looking for a mill you might make some money out of them because I’d say RRL will be looking to utilise that mill in WA.
I think these developer stocks are some of the better opportunities for longer term wealth generation out there, just need a little patience and to time your buying along the way. Spread buying of holdings around milestone stages. You are overly negative of some of these development stories. You must be up quite considerably on GCY despite the set backs, why such a sour taste in the mouth?Esh
Hi Esh,
(firstly, due to my own fault of being a bit loyal, I have supported the company in very raising, meaning that my overall return has been much reduced, but... that is of course on me, so all good).
apologies if I came across as bitter, that was not my intent, more just to provide a viewpoint (with first hand experience on what CMM is about to undertake) and the facts about what has occurred. Even if GCY did not have the issues it had with rampup- it had already raised $150m in cash and debt, to build a $98m project! What was the other $50m for, well, pre-production, exploration, admin, etc. While I am very appreciative of your analysis of GCY, I actually think that your points were accurate, the company ands its contractor did not have a seamless mine schedule because, partly, the built the mine too quickly (but they did have small issues with blasting and total movement/stripping). As above, even if CMM has a pure, clean run at ramp up, commissioning takes time and money.
I also do not have an issue with dilution per say, and your point about E/V is correct, except that, in the current market, companies producing 100k of gold do not have high E/Vs. Even RMS only has an E/V of $150m and they are producing 200k+! So... does that mean that CMM should only have an E/V of $75m when it hits commercial production? Right now, the market is damn tough on developers.
Anyway, I think my main point was simply that what is needed $$ is not actually the full accurate figure. No company seems to want to put every number down on a presentation and say 'This is the actual amount of money we need to build, commission, explore and admin for 18 months'. The market would be horrified and probably crucify any company that did it, but.... at least it would be the truth.
As for the level of risk the project has, I very much agree with you, as you say even RRL thinks its a decent project. But... that is irrelevant in regards to what CMM has to undertake right now, and that is the complete a massive capital raising, at what I think will be a heavily discounted price to entire the big end of town. Even BLK could raise a heap of cash when they basically did a placement at 50% discount (to a share price that had recently halved as well).
For what its worth, I would buy some CMM, but... it has to go through what GCY just did, even trouble free, that is something like 18 months, with what in likely hood, will be a ramp up with some risk that as usual, miners always need more cash just when they are not supposed to.
@yatchy - all good mate. Very much understand, I just know that I am about as loyal a shareholder as one can be and to date, rarely does this convert into greater returns.
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