Columbus Gold Corp CGTFF

Moriarty onto Something?

[123buyholdhope]

goldstd69 - Thanks for alerting to the Moriarty article. It certainly uses numbers that would make a CBGDF shareholder very happy.  However, I had not really given much consideration to the idea that NG and CBGDF might work together to sell the entire FG project. On consideration it raises a very interesting possibility. As I have said in the past NG’s history shows they like to build mines by themselves. Relatedly, NG also likes to buy out partners as low as possible. CBGDF CEO Guistra also knows this and he does not strike me as either a miner or a negotiating push over. I believe he has been and is trying to place CBGDF into a strong negotiating position with NG. As Moriarty indicates having the Eastside project developing fast also gives CBGDF some negotiating strength, along with having apparently at least three months before deciding whether to fund their 45% portion of the FG mine.

This joint sale idea encouraged me to look at NG’s recent 2016 Integrated Report for their chief operating officers’ viewpoints and company finances. Interestingly, both NG's Board Chair Morgan and CEO Zelenski referred in addresses to shareholders to NG’s prioritizing cash generation during these times of gold price volatility. In fact, Zelenski stated that “We have continued to prioritize profitability over production growth…over the last few years. A series of decisive actions to date has provided us with much-needed balance sheet flexibility, an area in which we will seek to make further improvements in 2017…” Further, NG according to Zelenski has major debt payments coming due in 2018 with net debt load at US$505 mill as of Dec 2016. Admittedly, NG has taken on loan facilities recently (e.g. ING Bank Dec 2016; Sberbank, March 2017) but clearly the balance sheet is extremely important to them.
 
The question NG maybe facing is what will it take to get their hands on CBGDFs 45% of the FG project? How many ozs would CBGDF actually be able to negotiate for with an infill drill program being quickly initiated (re., 1 mill ozs pit inferred) along with an already ongoing exploration drilling program? NG (as we do) also knows that CBGDF is already talking with other interested entities who wish to participate in funding the 45% of the mine. Such funding would complicate (e.g. royalty streamers) any buyout offer that NG might be contemplating, as well as raising the cost per oz (especially as Moriarty points out if mid/major(s) get involved in a bidding war). With major debt payments due in 2018 and a potentially expensive FG buyout situation for NG then maybe Moriarty is onto something.
 
I wondered why NG would consider joining CBGDF in infill drilling the pit inferred ozs if such an increase in reserves (which I think most would agree is to some degree probable) would only raise the buyout price. Further,if profitability is prioritized over production growth for NG (a stated goal for 2017) why then would NG run the risk of blowing their balance sheet or ending up with an unwanted partner in the FG mine? NG has other mines and projects progressing so if both NG and CBGDF were to come forward with a e.g., a 3.5 (??) mill oz., pit reserve and potential ?? Inferred ozs and present this to Newmont, Barrick or Iamgold etc, then Moriarty talks about bidding wars in the $200- 400 oz range. These are numbers that would really immediately impact NG’s balance sheet re., cash and their CBGDF owned shares.  Also, these are the type of numbers that might also have a positive impact on NG's present Ba3 Stable Moodys rating, especially when they decide to come back public.
 
Again thanks for the alert to the article – obviously just my musing - all comments welcome.