Opty, you are clearly on to something there and it surprises me that some of the Inspector Clouseaus on the SBM/GPR forums aren't joining the dots
So, who wants to operate a gold mine in PNG? Practically no one, except a few notable Australians like SBM (Simberi) and the Chinese, who are fearless and ignore the obvious risks of operating in PNG. That said, the mines of the islands in the Solomon Sea are a little different and over more than a century of peaceful co-existence with the locals has clearly demonstrated that.
On Friday we see SBM going into a CR trading halt apparently to raise $100M. Hold on, hasn't SBM already got close to $200M in cash or near cash. What's the rush? They need $300M to extend their existing Simberi mine by 3-5 years? Yeh, right. This is an opportunity that the market values at $180M or less - the current EV. Surely, the SBM directors have bigger things in mind and are weary of the constant abuse?
A few months back two different investor groups from China turn up on the GPR register, the owner of the Woodlark deposit - just down the road. Even sleepy old SBM can work out that clearly something is afoot. The gold price has recently doubled, aren't we that guys who best understand gold mining in this part of the world (synergies? OMG!!!), isn't our share price that has languished because the market (correctly) sees us as uninspired, clueless etc. etc. Oh, we might have to do something about this, otherwise the Chinese just might steal it from under our nose. Who do they think they are!!!
Let's look at the prize. Woodlark is a 1.67M AuOz resource, say 1.2M AuOz recoverable over 10-12 years. The recent published study details it for all to see. The AISC is circa $A1,600 and spot is currently a record circa $4,200 i.e. a gross margin of $2,800 or gross receipts of circa A$3.4B. What is the market cap? A trifling A$40M. Discount the cash flows and you nett, say, A$1.2B. And what about the exploration upside? May be there's another few hundred million upside on that............you do the math.
One thing's for sure, the Chinese ain't stupid and they ain't lazy.
Let's not give it away.
GPR Price at posting:
3.4¢ Sentiment: Buy Disclosure: Held
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