I would like to ask the question of people's expectations of share price and company valuations if mining approval with U as a by-product is given.
Personally, I believe that with this project getting approval for mining from Greenland govt. is the easy step.
The next bit, after that in order to generate cash is the hard bit, and that is only when and if GGG has a management team capable of taking it to a production stage. Personally, I believe current management is ball-parks away from having that level of skill.
IF, approval for mining is awarded, the current line of thought from believers on HC threads is that the sp will be $3+ etc. One has to question whether that is a reasonable assumption in comparison to other 'peer' companies.
GGG has about 200 million shares, and who knows how many more options etc. are hidden in other deals etc, or will be issued willy nilly to 'partners' etc. Anyway let's say 200m at the moment. Even a $2 sp, gives $400m mc, which in comparison with 'peers' ARU, LYC, Avalon etc. is not in line with other valuations for much more advanced projects with long-life resources (i.e. 20+ years). For example ARU most likely have a lot more resource present, but what is the point of deliniating it when it is already big. What is the point of being bloody big?
One has to ask, what is a cash flow stream in more than 20 years worth, when discounted even with a very conservative DCF?
IGV may be veru big, but who cares when that value will be unearthed in the next generation?
The ore body may be big, but it is also lower grade in respect to other REE and U bodies. Lower grade, hard rock mining in remote environment isn't cheap, which will give a higher capex and opex. Especially, if as GGG have said they are aiming for 50kt of REEs. That is a huge amount of hard rock that will need processing, and it isn't cheap to do or bulid something that is capable of doing it.
If approval is given today in Greenland, they won't be mining for at least 5 years.
So my question is will investors value GGG at $4-500m, for some cash flows in 5+ years on what could be slimmer margins than peers?
Does reward outweigh the current risks?
PLease retaliate now.
choice
GGG Price at posting:
40.5¢ Sentiment: None Disclosure: Not Held
