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GXY- to buy or not to buy?, page-32

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Sukurio

314 Posts.

18

24/04/17

17:55

Post #: 24241695
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Originally posted by Sukurio ↑

Some comments on share trading in general:

In the case of a company which the instos thought was not going to make any money they wouldn't want any part of it which is what Wary 1 may have alluding to.
In the case of a company the instos think will make them a profit they will want as much of the company as possible while sharing as little of it to others as possible.
When the price is low enough that retail investors start buying in and staying in the instos start losing their share of the company. At that point they will saturate the buying to accumulate as much as they can and when full will let it go to do what it is supposed to.

If retail investors do not buy in and choose to wait and the instos think the company will make money two things will happen:
1) The SP will be lower.
2) The instos will own *all of it. Well, maybe not all but as much as they can.

Now comments on GXY:
I doubt it will be sharing any of its cashflow with shareholders for a fair while. So the opposing philosophies include do you wait until it is going to make any money for you and come back later or do you take a position now even though there [probably] won't be a divi for years?

I am sure that if the instos thought GXY were going to make money they would love for people to subscribe to the former philosophy. It makes the SP much cheaper and they can accumulate more. I am guessing they will keep selling until retail investors such as yourself buy in.

For my mind it really hinges on Sal De Vida funding and construction.

The revised Detailed Feasibility Study placed SDV capex at US$376 M. The Net Present Value they arrived at was US$1.39 B so the potential upside is ok I guess.

The latest funding proposal I have seen was:
* 50%-65% paid by debt facility
* some undisclosed amount by pre-payments
* potentially 20%-30% sell down
* the rest by Mt Cattlin cashflow.

The last cash position I have seen was about $40M positive.

A few scenarios to ponder:
1) If I make the assumptions of no sell down, 60% debt, Nil prepayments, $40M head start and Mt Cattlin makes a profit margin of $440/T ($830/T which is the lowest value contract price and $390 running costs which are from the latest quarterly report) and ships out 13kT per month ($5.72M/month)
It would take somewhere near 20 months to fully fund the project but would end up with 100% of the asset, avoid all capital raises and is technically 10% less debt than was thought this time last year.

2) If I make assumptions of 20% sell down, 60% debt, $20M prepayments, $40M head Start and the same production from Mt Cattlin it would take three (3) months to fully fund the project with an 80% stake in the project. NPV $1.52 Billion.

My unvarnished opinion on either of these scenarios is- Yikers!

Now assuming it is fully funded it could take 5 years of construction and commissioning to get the plant up and running *I would love for news that it would be sooner and James Bay may or may not be still getting funding from Mt Cattlin. Potentially still no divi or a small one.

So you're looking at potentially up to 5 years to 7 years with no divi but you would hold a stake in a company you can see can comfortably reach an NPV somewhere north of $2B.

The current market cap is about US$0.6B

I have tried to make this the unvarnished version. I have a varnished scenario but without laying it out I think you get the idea.

Expand

Just a quick amendment to the previous note.
An 80% stake in SDV would be $1.11B not $1.52B

...but I still stand by my other statements.

GXY Price at posting: 42.5¢ Sentiment: Buy Disclosure: Held
1 Upvote

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