I sold out after the news came out that the environmental approval was not received. This after all the comforting words we got before. Before this announcement I was already pissed off about all the broken promises, which made me distrustful of Geraint and I do not invest in companies which I do not trust. My reasoning on this is contained in two e-mails to Geraint, as below:
Dated 4 May:
Hello Geraint,
Today we had the surprising news of a takeover bid by the Victor Smorgon Group (“VSG”), by far the biggest shareholder of Altamin. I cannot think of a more blatant sign of a thumb down to the management of Altamin. Obviously your largest shareholder is thoroughly pissed off by developments, or lack thereof, and has decided they can do a better job. They believe in the project, not in its current management. At least that should give other shareholders some sort of comfort.
I must say, I have very much sympathy for VSG. I was attracted in 2019 to Altamin because of its incredibly low valuation given it had a project that should be able to be redeveloped in very quick time. There was substantial underground infrastructure, excellent chances for additional resources, substantial historical studies, including much metallurgical testwork and a deposit with a mineralogy that made for an extremely simple process. My valuation was also coloured by my experience as a Senior Geologist at a base metal mine that underground drilling was very fast in proving up the outline of the deposit. I therefore fully concurred with the project schedule put forward in the November 2019 Corporate Presentation that the Mining Licence would be secured by mid 2020 and the DFS and Construction phase would kick off mid 2021. This schedule was supported by a well defined drilling campaign planned for the Pian Bracca area. The company started to announce at regular intervals drill results for this area, albeit a bit slower than I had expected based on my experience.
However, here we are almost three years later and precious little has been achieved with the company continuously pushing out the time line. Whereas we were told ages ago that the mining licence approval was just subject to the company answering a few questions by the authorities that needed clarification, it has still not been granted. The latest promise was for this licence to be secured in “H1 2022”, the end of this period is already ominously close. The news flow has also ground to a virtual stand still. Since January this year we had only ONE announcement dealing with a technical update on Gorno and that was purely on assays from sampling the year before and on a bulk sample for ore sorting. Ore sorting that was supposedly tested ages ago. What the exact reason for the bulk sample was has nowhere been explained, but it could be to establish the amount of fines generated in practice, something which I had pointed out to you ages ago as something that needed establishing. Even with this uncertainty it is very questionable this needs resolving as one should built in much redundancy, similar to the crushing stages as XRT sorters are relatively cheap and the risk of being under capacity very costly, similar to having such a problem in your crusher circuit. In general, this project is not complex and why it takes ages and ages to complete the studies is a puzzle to me. In terms of mining projects this is a very, very simple one.
The lack of progress gives the impression that Altamin has evolved to a lifestyle company with a total lack of urgency on the part of management to progress Gorno to mining to benefit from the excellent prevailing base metal prices. It seems that VSG has come to the same conclusion. Geraint, unless you can give me comfort that the mining licence is forthcoming before the end of H1 2022, I will take the VSG offer under favourable consideration, even though it is very much lower than the intrinsic value I see in Gorno. This attitude is also because I believe that, irrespective how successful VSG is, Altamin’s current management now has a major problem with the loss of support of its largest shareholder and without having secured other institutional support.
Followed by this e-mail dated 8 June:
Hello Geraint,
The news release of today refers. After all the comforting words about how much support there was from the community and the good cooperation with authorities, now we learn of a negative decree "because of opinions raised by stakeholders in relation to the Project’s configuration and production rate”. Therefore, there was all along a section of the community that was not supportive. It seems that all along my Australian contact, who was very sceptical about Altamin getting a mining licence, was correct. If he knew, Altamin must have known as well, yet preferred to present a picture that was very different.Anyway, we can now expect another delay of between 6 and 18 months, if this project gets off the ground at all.
Final comment to the readers of this post: As I do not want to run the risk of the project being stillborn I sold out. If I am wrong, I will have missed out big time as Gorno is worth a lot more than the current market capitalisation reflects. Good luck to you all.
AZI Price at posting:
9.5¢ Sentiment: None Disclosure: Not Held
