CGT - Frustration continuesBarebear stated – “This is one great way way to destroy share value. Must be planning to buy someone’s hand me down, or issue more stock.” Agreed, this is a frustrating and with hindsight disappointing situation. If only all long term holders had realized when the SP was around US$ 0.90; what we might have done. Still, that boat has long sailed.
So, who might be selling this stock down as we watch a steadily increasing gold price? Doubt it is long term holders or anyone day trading. At this price very few (if any) would be making any money. For me there is only one entity who might love to see this stock continue its plummet and they have a Russian flavor. Make what you want of that suggestion.
IMO, CGT have no reason to issue stock. CGT has several million AUAU shares to sell and this amount would cover their admin’ expenses for the next couple of years. Nor do they need to do much with their new ‘acquisitions. Nobody is going anywhere with FG gold exploration until this present mine permit is sorted. That is at least another 18 – 24 months with NG's reports still to be issued and, likewise, the French governments mining paper (without court challenges and allowing for one year for all the licences to be issued). For all the other miners they are fearing the possibility of future FG mining restrictions (as a sop to the environmental groups) should this permit be granted.
Taking the
worst case build out scenario and CGT opts to be carried to first pour by NG. Assuming that the build out costs to NG are $400 mill (they have suggested lower in the past but that was before considering the state of art mine demands that will be made on them – if we are lucky). That takes CGT down to a 15% share of their approx P&P 1,240,000 oz. Taking $800 AISC (NG has said around $750) and a gold price of $1,400 means we have a simplistic profit over 10 years of around $111 mill (about US 0.70 per share); that's as the present P&P stands. I think that NG has been sitting for over a year now on those infill drill results they have (I’d do the same in their shoes). They also control the information coming out as the controlling partner.
Obviously, there are two even worse case scenarios 1. We don’t get a mine permit (bye bye; including probably to gold mining in FG for years). 2. NG goes for a buyout. If that permit is granted and they can pick up CGT for premium to share price of let’s say a very rare 100% premium (and they hold around 10% of CGT shares already). Notice that if anyone else tried to buyout NG’s FG holding they would be demanding a price based on P&P in the ground (+ watch those probable infill results come flying out!).
As I have said in the past there is no need for CGT to think about a sale. True, NG might also try to offer some funding for CGT future exploration as apart of a buyout package but then Guistra whose spent 10 years or so in FG with this mine already, would be looking at another 3-5 years before his CGT shares show any significant appreciation. IMO once the permit is passed (hopefully) the SP will start to be influenced by both the gold price and P&P oz. held as well as a continual stream of mine news coming out.
Long term holders will take a bath on any premium sale. IMO if you’ve been in longer than a year the most profitable approach is to hold. Of course, if $0. 25+ is attractive then all must make their own decision (or sell if you think the permit will be denied).
GLTA
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