Don’t worry, this will be my last post before returning to Australia. With any luck it will be lost amongst the cheering before trading resumes on Monday.
I never expect to be a favourite of traders, but I always hope my input is appreciated by genuine investors, because a lot of effort goes into it. You’re welcome to speculate my intentions, but you’d be better served trying to counter any issues I’ve raised - especially if that’s the only way you’ll take any of it onboard. The only way I benefit is when someone alleviates my concerns, or realigns my own expectations. For me HC is a place for sharing knowledge, not an echo chamber for positive or negative sentiment. I have an extensive list of pros and cons for all my investments (built up over time), but I’m more likely to share whichever encourages constructive discussion.
To question of jealously, I held through the lows of 0.5c, so I’m benefiting from this run the same as everyone. I just prefer to make money on a success story shared by all, rather than the misfortune of inexperienced traders caught up in the hype. I don’t believe I have ever suggested that GMC won’t succeed, but the current excitement should die down long before they get there. There will be some traders who made significant profits, and the less fortunate who bought into hype at the highs and now have a long wait on their hands to realise their own profit. Just understand why you’re invested and have an exit strategy. The other day on the STT forum, I read about a young investor in way too deep on MUS contemplating suicide as a solution to his serious, but relatively short-term, problem. Who in good conscience wants to be a part of that story?
I did miss out on the most of the run from 0.6c to 4.2c, where I entered in the low 2’s (and did not sell) despite being emailed the recommendation at 0.3c. But at that time I was accumulating AVZ at 1-1.1c, and waited until last week to sell my first half - hence my being on holiday right now. I certainly hold no resentment towards GMC. And in that scenario, despite being well researched and very confident they would acquire Manono, I only allocated 5% of my portfolio initially, because it was still a very high risk investment. Everyone needs a set of rules. There will be times you could have made more money, but there will be far more times that you spare yourself a considerable loss.
My posts on the GMC forum may appear schizophrenic at times, but my opinion is constantly evolving as new information presents itself - as it does with most things in life. As a whole, I’m a champion of the Kupang Project, but a critic of GMC management. To hopefully make everyone feel better, here are some (balanced) pros:
1. Receiving the full additional $4m from the June placement is a big vote of confidence from people with more at stake than most of us. But despite how it appears at surface, they would have paid more to acquire the same position on market. Just look at the SP after afew days of good volume. The important thing is they want a position of that size.
2. DSO permits appear highly likely, as it has for some time. Anyone wanting to understand the process may want to browse the old Kupang Resources (KPR) announcements, or at least the following one. They received the recommendation for an export permit from the DKPM (Ministry of Mines and Energy) before going into administration. From there it appears to take up to 3 months for formal approval from the Central Ministry. There’s every chance this process could be accelerated for GMC, as the locals have already waited years for this project to get off the ground.
https://hotcopper.com.au/threads/ann-dkpm-recommends-permits-for-export.2477394/
3. Ignoring the project metrics for 4-8 smelters (if the DSO estimates are accurate, then GMC at least have enough feed for 2 smelters):
US$21.9m net operating margin @ 0.765 AUD/USD = A$28.6m profit (tax exempt)
At a forward PE of 10 (PE 20 could be considered high growth - i.e. 8 smelters in 5-6 years):
A$28.6m x 10 / 4034.4m shares fully diluted (allowing the $1m convertible note) = 7c per share
A PE of 5, which is perhaps more reasonable at this stage, would still give a price target of 3.5c / share. But also understand they more dilution may be required to reach production.
I’m invested for the FA, I just think this management needs to provide more solid evidence - or at least details on something as important as supply agreements for feeding the smelters - before the market can believe GMC has become derisked. Their word has not been very reassuring to date.
