Post by
123buyholdhope on Mar 31, 2017 7:33pm
A 4th Option
The Gold Report came out with a summary article on March 30th continuing the strengthening belief that the CBGDF portion of the FG project will be sold. The writer highlights Moriarty’s suggestion that there are three possible M&A options. The first is "Nordgold buys out Columbus Gold's 45% interest and puts the project into production." The second is "another major comes along and either buys out Columbus' interest in Paul Isnard or buys out both Nordgold and Columbus." And the third possibility is a "bidding war starts and either Nordgold or a major or two get into competition for the project." However, I believe based on recent events that there is now a 4th option; that is that two majors (not including NG) decide to share the risk/reward of this strong project.
Such a joint approach would allow both acquiring miners to gain share in a very solid project (which will get stronger with optimizing FS economics, infill drilling and extension exploration) and without involving themselves in the suicidal bidding wars that occurred several years ago. For example, Goldcorp has recently gone in with Barrick and Kinross on properties in Chile, while Goldcorp have already joint ventured with Teck Resources. It also looks like Newmont may sell a 25 % interest to the government of Suriname in their Meriam mine so partnerships do seem to becoming more in vogue.
As a recent article writer indicated it is also possible the NG is thinking of concentrating its resources closer to Russia where it has its main mines. EU troubles along with French and American attitudes towards Russia may make any Russian company less comfortable with assets a ways from its' home borders. NG may therefore want to sell out the FG project; however, they aren’t going to give the project away. It is now my belief that should NG actually want CBGDF 45% it can’t afford to offer a low bid. CBGDF may hold the cards - it could refuse to accept a NG offer and either a) go onto fund its own mine portion via third party funders (causing NG the 'pain' of a JV partner and the mess of another financiers' involvement). Or, CBGDF could force NG to dilute CBGDF re its mine % (unlikely but would cause NG more financial stress with its upcoming debt payments). Further, a major might step into bid just above above NG’s capability to claim the 45% prize (again another unwanted NG partner). Consequently, as none of these possibilities may be to NG's liking there may be a very strong movment by NG and CBGDF to sell this project for the highest price they can get.
To prevent a project buy rejection by NG the 4th option for purchase that should be considered is that two majors offer a price together that would not be turned down (thus forcing NG to face the other outlined options). Such an offer would still fit probably fit comfortably within these companies balance sheets instead of the past bidding wars blowing them up. Moriarty has talked about a sale at $100 per oz but this might be a price that NG would themselves offer (i.e., if looking to then build and sell the mine in 2-3 years). So joint offers may well be markedly above this and beyond NG’s less than pristine balance sheet limits (with their large 2018 debt payments looming).
The two amjors that immediately spring to mind as other contributors have also indicated are the dominant players in the area; Newmont and Iamgold. NM with $2.2 bill and IAG with $900 mill available both have large mines in Suriname. IAG I believe is the largest shareholder in CBGDF and has in the past held the Camp caiman property in FG which fell afoul of French conservation. in fact, few other companies seem to have yet established a major foothold in FG which is clearly underexplored and may represent a reason for both these companies to want to extend their footprint in the region (recognize this is also a contrarian argument for other majors to in fact come a calling in FG).
As an aside we might also have involvement in this whole process by the French government. Just as the Suriname government is looking into a 25% partnership with NM in their Meriam mine likewise, the CBGDF/NG project is very important to the FG economy, which is suffering some real economic turmoil. Interested readers should begin with a recent news article discussing the problems that FG (and therefore France) are facing. This deteriorating social/economic situation in FG may emphasize the even greater importance of CBGDFs project to a nation.
See https://www.connexionfrance.com/French-news/French-Guiana-crisis-what-you-need-to-know
Again, this is all just musing but it does seem that CBGDF is now gaining a very strong position in the expected sale of this important project (and not even a mention of Nevada). All arguments are welcome.
Comment by
goldhunter11 on Apr 03, 2017 12:38am
ukerM, High grade indeed. The NR says "A drill hole plan map is attached to this news release", but I did not see it anywhere (going blind?) Do you see it anywhere, or they forgot to attach. The same thing happens in their previous NR. GH
Comment by
ukermann on Apr 03, 2017 7:13am
Here you go... https://s1.q4cdn.com/766430901/files/doc_news/2017/03/NR-15-17-Saramacca-March-2017-drill-updates_FINAL.pdf
Comment by
goldhunter11 on Apr 03, 2017 11:06am
UkerM, Much appreciated. Very nice drill hole diagram at the end. A picture is worth a thousand words! Cheers, GH