OTCQX:CGTFF - Post by User
Comment by
ukermannon Dec 10, 2017 5:19pm
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Post# 27127269
RE:FG Long Term - Nevada Short
RE:FG Long Term - Nevada ShortGreat to see you guys posting again as you bring valuable insight to what's going on. I thought maybe you cut and ran at some point this Summer/Fall season, glad to see you're still here.
My take on where we are runs a little different. I'm thinking NG is going to sell their stake in FG. Up to now, they've scored big here. A $35 million investment is now worth $200-225 mill on a walk away sale, their end. Maybe more. Why would they sell? Wrong time, wrong place. Newmont is already in the neighborhood. Barrick, is starting to nose around, witness the Reunion deal. Across the river, IAG is proving to be quite successful in finding more product that can truck up to their mill. So they, will be alone amongst the giants in an area that they have yet to exercise any influence. Yet, it looks like it might be a battle, something the big guys can withstand. 5-6 years is a long time when your used to pulling the trigger and getting things done in a 24-30 month timeline. Add to that, their debt situation. Currently, these guys are into the banks for over a billion. Production from some of their older mines is declining, as grade is dropping. See it here:
- Total debt of US$1,003.9 million (including a derivative instrument of US$4.8 million) and net debt4 of US$668.7 million at the end of Q3 2017.
- All-in sustaining costs (1) ("AISC") of US$998/oz in Q3 2017 up from US$889 in the previous quarter, primarily due to lower grades at Taparko, Buryatzoloto and Neryungri. 9m 2017 AISC was US$908/oz almost in line with 9m 2016
- So I'm thinking if I were them, as much as I would like to put a project like FG into production, can I afford to wait the time and expense, or is there a better use for that capital where I'm strong and can get things done, like Burkina Faso. Plenty of opportunities there, companies like Roxgold, already in production, will soon be at 150k+ ounces per annum. All high grade, low cost, with high exploration possibilities. Carries a market cap of $400 million, and buys time even if it's only a 10-12 year run. Other properties in the area that can be consolidated. Remember, their goal is to go public again, so they'll need to show value as well as growth. Not more debt and litigation. We'll soon see.....
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