GGPChat

Why didn’t NCM take the 5%?

I’m baffled why they didn’t.
They must have gambled on them winning the independent value being in their favour and missed the chance to accept Shaun’s $85m.
Must be kicking themselves.

If you look at the Sprott note they quote a figure of $276/oz in the ground
On the reserves alone the value comes to around $42m.
This can be the only reason not to take the 5% for $60m.

Their hurdle of 15x the initial investment fell short.

If you look at it another way
$1800 gold price less $1000 AISC (for clarity)
160,000oz 5% ore reserves = $128m revenues

$60m x 15 =$900m
That seems a bit short sighted to me, if it had been a green field fresh start on new mine, I could have understood it.
What if the gold price does rise to $2,500 and what if Hav north comes good or the EB doubles in size they will have missed out big time.

But they have said they are comfortable with 70%, so fair play Sandeep thank you very much you’ve been a great partner keep it up

Why is Shaun and most long term holders delighted to have retained the 5%?

Ore reserves 3.2moz equivalent
25% = 800,000
30% = 960,000

NCM would have had 2.4mozeq 75% now they have 2.24m 70% that is a 5% reduction

Ggp would have had 800,000oz
Now they have 960,000oz

That is a 20% gain

Thank you so much Sandeep I think your brilliant

And @ $276/oz in the ground, 6.5MozAuEq and GGP owning 30%, that equates to 10.2p for the share price. What a coincidence.
Z

To put the NCM 5% decision into a little perspective.

Over the next 5-10 Years Havieron will contribute less than 10% of NCM's average annual gold production.

If they took up the 5% for $60M, it would have added less than 1% to their average annual gold production.

Although we saw them taking up this option as a no brainer (and it would have given them significant returns over the lifetime of the mine), NCM can easily justify not spending the $60M for such a small increase in their annual gold production.

Havieron is a god send to NCM, and the saviour of Telfer, but in the scheme of things the 5% is miniscule to them, but an additional 20% to us. Perhaps all in all the decision was best for both parties.