ORR - OreCorp Limited

[mullokintyre]

ORR down 10% today when all my other goldies running in the other direction.
Must be a cap raising coming up.
Mick

 

[Sean K]

ORR down 10% today when all my other goldies running in the other direction.
Must be a cap raising coming up.
Mick

Bit odd. Very low volume. $12k traded. Looks like it was just one punter who wanted to get out without looking at the depth which pushed it down on nothing. Next buyer will push it back up a few %.

 

[Sean K]

I think management will put a For Sale sign on ORR this year and it will be taken out by an experienced African gold producer who needs to add 200k ounces pa over 10+ years and has the cash flow to fit the capex. Mandatory ramp done.

 

[mullokintyre]

ORR crunched 10% again today. Not a huge volume, but a bit bigger than recent days.
Somebody wants that price down.
Mick

 

[Sean K]

ORR crunched 10% again today. Not a huge volume, but a bit bigger than recent days.
Somebody wants that price down.
Mick

I think once project financing gets a tick the MC will start heading up the second wave of the Lassonde Curve. Seems like they've got some interest and various methods to get it done. I'm still expecting a TO, especially at this level and with gold running. Could happen very soon. I just can't see how this much defined gold can stay in the ground. The only thing holding it back at the moment may be perceived country risk.

 

[The Triangle]

I think once project financing gets a tick the MC will start heading up the second wave of the Lassonde Curve. Seems like they've got some interest and various methods to get it done. I'm still expecting a TO, especially at this level and with gold running. Could happen very soon. I just can't see how this much defined gold can stay in the ground. The only thing holding it back at the moment may be perceived country risk.

View attachment 151693

Auramet have done a few $100m+ deals in the junior mining space in the past. I wanted to see if I could quickly evaluate how they've gone by simply plotting up share price since around 2020 for their last few deals. I'm not sure I came up with anything useful, 1/2 the companies they have arranged financing for are privately held (is that good or bad or neutral?) The others have not really done anything yet, at least seemed to go generally up once a deal was announced, but then come back down (but so has everything in the past year)

There is a pretty large gap where it looks like Auramet had minimal activity and only arranged 3 deals from 2011 to 2019. Again, not sure I've actually done anything here of value, may have talked myself into shortening my holding period, but probably just wasted 20 minutes of my life.

 

[Sean K]

This is disappointing. Financing was supposed to be this quarter, announced only a few weeks ago, and now it's H2 2023, with hardly any explanation for the delay. And that's a huge delay. Could be 9 month delay... Something fishie going on.

The thing it might be is getting initial agreements from Tanzania banks which is required before they can get approval from the mining commission to get the international banking syndicate on board. But, they don't explain why that's taking to long. Maybe it's just Tanzania...

 

[mullokintyre]

This is disappointing. Financing was supposed to be this quarter, announced only a few weeks ago, and now it's H2 2023, with hardly any explanation for the delay. And that's a huge delay. Could be 9 month delay... Something fishie going on.

The thing it might be is getting initial agreements from Tanzania banks which is required before they can get approval from the mining commission to get the international banking syndicate on board. But, they don't explain why that's taking to long. Maybe it's just Tanzania...


View attachment 154012

Having lived and worked in Tanzania for 2 years, I would suggest that there will be an issue with the Tanzanian government requirements.
I still have involvement with a school I worked at there, and my recent contacts sau not a lot has improved.
I had already been caught up in the Saga of another Tanzannian goldie, Rift Valley resources(was RFV), and so am not surprised.
I have a small holding left that has an average buy in of 35.5, having sold most at 47.
Toying with exiting, but will probably wait in the hope that its just a delay rather than the closure that i am fearing.
Mick

 

[Sean K]

Having lived and worked in Tanzania for 2 years, I would suggest that there will be an issue with the Tanzanian government requirements.
I still have involvement with a school I worked at there, and my recent contacts sau not a lot has improved.
I had already been caught up in the Saga of another Tanzannian goldie, Rift Valley resources(was RFV), and so am not surprised.
I have a small holding left that has an average buy in of 35.5, having sold most at 47.
Toying with exiting, but will probably wait in the hope that its just a delay rather than the closure that i am fearing.
Mick

EV down at about $120m now with NPV over US$600m, so there's room to move to the upside from down here. I think we're in the orphan stage of the Lassonde Curve and not much is going to shift it until they've got the finance sorted and start building the mine. So, it's going to be a bit of a wait to see value unless something else comes along as a catalyst like POG breakout or TO talk, or close by discovery, but I don't think there's much exploration going on.

 

[The Triangle]

Not more to say is there... Blacklist investing in any company with this board of directors in the future is about all you can do.

Unfortunately, unless you have inside information you have to trust the board to be truthful, honest, and ethical. This board have not been very flash. For your financing to blow out another 6+ months with minimal reason given there must be some serious cockroaches hanging about and I doubt they just figured this out today that financing was 'delayed' again.

Conspiracy theory (probably fact) here: If nordgold end up with this project then we know the Russians paid off the Africans. It's starting to hurt the western nations that the BRIC countries can perfectly legally bribe Africans, but we cannot. If I'm a Russian businessman I'm dropping off a few BMW M5s to the bankers homes and telling them not to give ORR any money.

The other conspiracy of course is the standard model on the ASX which is for juniors to sell out. There are plenty of Chairmen and MDs with zero intention of developing their asset and are only interested in selling out. I think in the past couple of years the market has learned to sniff these ? stains out and punish the share price. I'm struggling to recall the last takeover in the junior space which appeared to be at any decent premium.

 

[mullokintyre]

Having lived and worked in Tanzania for 2 years, I would suggest that there will be an issue with the Tanzanian government requirements.
I still have involvement with a school I worked at there, and my recent contacts sau not a lot has improved.
I had already been caught up in the Saga of another Tanzannian goldie, Rift Valley resources(was RFV), and so am not surprised.
I have a small holding left that has an average buy in of 35.5, having sold most at 47.
Toying with exiting, but will probably wait in the hope that its just a delay rather than the closure that i am fearing.
Mick

Chickened out.
Sold the remainder at 35.
Mick

 

[Sean K]

Chickened out.
Sold the remainder at 35.
Mick

Probably good to conserve capital on this one with the delays and price action making it look like they're in trouble of some type. It's about 1% of my holdings at the moment so I can't see the point in selling yet until end of June for a tax offset and just in case Mary Magdalene appears with a TO offer. ?

 

[The Triangle]

Chickened out.
Sold the remainder at 35.
Mick

I prefer the sport of knife catching. Been adding a bit over the past week. Low 30s just too tempting. I've stopped now so the price can go down again.

I know conventional wisdom is to invest in good companies and good people (and I'm not convinced ORR is in either category) - but ORR still have 84% of a 2.5 moz recovered ready to go drilled out mining project - for me $52EV/recovered ounce (AUD), not reserve ounce, not resource ounce, but recovered ounce has to be too cheap for the market to ignore. For a 50 cent offer right now (which I would begrudgingly take) you would get the entire company + $20 million cash = $180 million net cost for ~ $70/resource ounce (AUD) which would probably be at the very low end of takeover prices in the past few years.

I'm sure a buyer could tinker with the numbers and go smaller and start the underground after the pit to reduce capital and spread out mine life, or maybe do a super mega sized pit and forget about the underground to reduce capex. As I said before I think the only realistic theory behind taking so long for funding approval is that the board does not want funding because they want to sell out and overplayed their hand and everyone knows it.

 

[Sean K]

I prefer the sport of knife catching. Been adding a bit over the past week. Low 30s just too tempting. I've stopped now so the price can go down again.

I know conventional wisdom is to invest in good companies and good people (and I'm not convinced ORR is in either category) - but ORR still have 84% of a 2.5 moz recovered ready to go drilled out mining project - for me $52EV/recovered ounce (AUD), not reserve ounce, not resource ounce, but recovered ounce has to be too cheap for the market to ignore. For a 50 cent offer right now (which I would begrudgingly take) you would get the entire company + $20 million cash = $180 million net cost for ~ $70/resource ounce (AUD) which would probably be at the very low end of takeover prices in the past few years.

I'm sure a buyer could tinker with the numbers and go smaller and start the underground after the pit to reduce capital and spread out mine life, or maybe do a super mega sized pit and forget about the underground to reduce capex. As I said before I think the only realistic theory behind taking so long for funding approval is that the board does not want funding because they want to sell out and overplayed their hand and everyone knows it.

100%

But, I'm not adding.

I suspect there's not enough confidence in the mine development plan and thus the reason to add to the resources.

They need to send some 1930s Australian miners down the decline to make it happen.

 

[The Triangle]

100%

But, I'm not adding.

I suspect there's not enough confidence in the mine development plan and thus the reason to add to the resources.

They need to send some 1930s Australian miners down the decline to make it happen.

Interestingly I noticed Tim Goyder picked up 5% of the company over the past two months.

Tim is on the board of liontown. Which also has Craig Williams (Orr chairman who retired a few month ago). Suppose that's as close as insider buying as you can get without technically being an insider.

Board & Management - Liontown Resources Ltd

At Liontown, we believe that a strong and effective leadership team is essential for achieving our goals and fulfilling our mission. Our board of directors and management team are made up of experienced professionals with diverse backgrounds and expertise, who bring unique perspectives and ideas...

www.ltresources.com.au

 

[Sean K]

Interestingly I noticed Tim Goyder picked up 5% of the company over the past two months.

Tim is on the board of liontown. Which also has Craig Williams (Orr chairman who retired a few month ago). Suppose that's as close as insider buying as you can get without technically being an insider.

Board & Management - Liontown Resources Ltd

At Liontown, we believe that a strong and effective leadership team is essential for achieving our goals and fulfilling our mission. Our board of directors and management team are made up of experienced professionals with diverse backgrounds and expertise, who bring unique perspectives and ideas...

www.ltresources.com.au

Yeah, I noticed that. You wouldn't think he'd buy such a chunk without doing some due diligence, or being convinced it has some potential. Or, maybe he's just go some much cash laying about he has to stick it somewhere...

 

[Sean K]

Inching towards financing that might be a catalyst for a rerating, pending the terms of the finance. Could be a catalyst for a sell-off too.

Hopefully a breakout in POG above $2070 some time this year will change the finance metrics of this to around the $1b NPV. Current MC just $170m. Depending on finance solution, might be undervalued.

Hopefully a positive year of work towards development... ?

 

[The Triangle]

Inching towards financing that might be a catalyst for a rerating, pending the terms of the finance. Could be a catalyst for a sell-off too.

Hopefully a breakout in POG above $2070 some time this year will change the finance metrics of this to around the $1b NPV. Current MC just $170m. Depending on finance solution, might be undervalued.

Hopefully a positive year of work towards development... ?

View attachment 156140

There are so few development ready gold projects of this size that I don't think they can get a bad result in a year from now.

But maybe they just won't get a great result. I don't think any of these gold juniors will make it to production and will get taken out by bigger fish. But I've been saying that for a while now. 2 years is usually my time that I'll give these kinds of investments with expectation of a better than average return. Think I can give it 6 more months.

 

[Sean K]

There are so few development ready gold projects of this size that I don't think they can get a bad result in a year from now.

But maybe they just won't get a great result. I don't think any of these gold juniors will make it to production and will get taken out by bigger fish. But I've been saying that for a while now. 2 years is usually my time that I'll give these kinds of investments with expectation of a better than average return. Think I can give it 6 more months.

Zzzzzzzzz Only 4 more months for you Mr Triangle. I think my nieces and nephew will be getting my shares when I croak in 30 years or so and this is still waiting for finance.

NPV of this might actually get to the $1b mark if POG goes to $2100. MC $167 so something has got to give at some point. I'll settle for 40% of the NPV. Not a multibagger by any means but maybe a double bagger.

I've been very interested in their comments regarding 'resettlement' and the RAP. I can't see any villages sitting on top of the project site. Maybe some stray Massai living in a dung hut close by.

They sound confident the finance is going to be done somehow. But, I've been living the IBG dream as well.

Why would Tim Goyder lift his holdings though? Maybe he's just got too much money and doesn't know what to do with it. Not sure if he throws darts...

 

[Sean K]

Glad I was buying this in the 40s....

Well done to anyone as dumb as me buying an explorer/developer in Tanzania. Cheers to you Mr Triangle.