Really... buy a project without environmental permit when the issuing of that enviro permit is just around the corner......
Maybe that was the way it was done at one time, but boards have become more risk adverse I would imagine.. let's say you buy the project and two months later there is a problem with the environmental approval and it adds 300 mill to the capex and adds a year to construction start date... and then on top of that the price of gold goes down. It's like buying a car with a crack in the head gasket...
Conversely let's say that post enviro permit issue another company bids 250 mill above mkt price.. You offer 300 mill above the mkt price. As a board of directors have you overpaid by 300 mill??? Well maybe but you could reason that the mkt independantly valued the asset at around the same price...
It's all risk analysis and aversion. Being able to explain your actions etc... testicular fortitude shrank and died over 10 years ago at the height of the resources boom..
And Goldfields for one certainly think an enviro permit is important. They issued the following annoucement on Salares nortes at a time when the delay in Cardinal permit was known by the mkt... The message could be interpreted as 'we are annoyed and perhaps we are going to put our money elsewhere...
Anyway here is the annoucement
https://www.goldfields.com/news_article.php?articleID=8713
Also goldfields have said recently they are not looking to do M+A, but what they are instead suggesting is that they will pump a billion into Chile, which is not exactly stable right now.....
And the thing to also understand is that while Salares Norte has some real good cheddar, its 1000m deep and probably looking like a block cave and we all know the capex is high, over a billion in this case, and the payback is slow.... and what we have is the exact opposite and perfect for this uncertain early M+A/gold price environment..
So could we just do this J.V already. The price for the whole project is north of 750 mill. Unless the big guys are really ready to really step it up it's not going to happen soon although share price appreciation is set to continue I would imagine.
So to summarise G.Fields I am not convinced and Archie if you delayed the enviro permit nice try, but it's high time I recieved my sugar hit from the share price and can get on with job of becoming upwardly mobile/distribute my winnings into other m+a opportunities..
Thanks
P.B
