Market Like! Caution: Not a producer yet. They are building their gold processing plant now, while still obviously finding more gold.
08-Apr-2020: Quarterly Activities and Cashflow Report
Capricorn (CMM) are making good progress with the Karlawinda Gold Project (KGP) in WA and say that COVID-19 has so far not significantly impacted construction and development activities at Karlawinda. They're fully funded through to gold production there. Still speculative at this stage however.
01-Jun-2020: Capricorn released this Corporate/Investor Presentation back on May 12, but I missed it. It presents a good overview of the company. I don't hold shares in them currently, but they're on my Strawman.com scorecard. They are a gold project developer, so no income yet, and still very speculative.
CCZ’s call on CMM is “Hold” (upgraded from “Sell”), with a 95 cps PT (up from 90 cps).
CMM have to be regarded as speculative because they’re building a gold processing plant and won’t have any regular income until that plant has been completed and commissioned. It won’t be substantially de-risked (in my view) until it’s running at or above nameplate capacity, particularly because the CMM board and management have all changed, and so has the EPC contractor (who is building the plant) and so has the plant design (from the original design by GR Engineering – GNG). GNG don’t have any involvement in Karlawinda now – since the Capricorn (CMM) board got rolled and the previous management all quit, and the new team decided to go in a different direction, so while I do hope that Karlawinda will be successful, there are also a few seeds of doubt there (or reasons to be cautious).
Recent reports and presentations from Capricorn Metals (CMM):
18-Dec-2019: Debt Financing Completed & Project Update
20-Nov-2019: Share Consolidation Update
20-Nov-2019: AGM Presentation
Disclosure: As discussed in my valuation update, I don't hold CMM shares, and I had previously considered my exposure to CMM's Karlawinda gold project would come via my holdings in GR Engineering Services (GRES, ASX:GNG), but it seems that CMM's new board and management are happy to build Karlawinda without GNG now. Karlawinda looks to have favourable economics and they're in the right place (Australia) at the right time (record A$ gold prices), but much can go wrong during this development/construction phase, and can also go wrong during the commissioning and ramp-up phases next year. We don't need to look far to see where things have gone badly wrong - Gascoyne Resources' (GCY's) Dalgaranga gold project, Heron's (HRR's) Woodlawn zinc project, there are plenty more examples of where there are either serious cost blowouts and/or construction delays and/or actual production doesn't achieve anything near what had been projected (in terms of grades and recoveries) due to a variety of factors. Dacian Gold (DCN) also recently had what many would have considered a near-death experience (again caused by lower grades and recoveries than they had expected resulting in much higher costs than they had anticipated), but DCN look to be pulling through that phase on the back of further high-to-reasonable-grade gold discoveries within a reasonable distance of their existing plant. It can be a roller-coaster ride, and should be considered very high risk until these developers actually do become producers with track records of consistently profitable production, which obviously takes years. There's money to be made if you jump on the good ones early, but there's also plenty of money to be lost if you don't pick the eventual winners. Much like horse racing.
My plan now is to stick with the proven producers (like NST, EVN, SAR, SBM) for the most part, and to only gamble on junior developers with money I can afford to lose. Consequently, I'm not currently "invested" in any junior precious metals or base metals explorers or developers, preferring to stick with the proven producers.
16-Nov-2018: CMM held their 2018 AGM yesterday and made the following company presentation available via the ASX company announcements platform - see here - which was shown at their AGM. It is presented by Peter Thompson, their COO, and gives a good overview of the company and of the Karlawinda Gold Project, their flagship project. Karlawinda will be designed and built by GR Engineering Services (GNG) under a lump sum fixed turnkey price ($93.1m) contract, and will include the processing plant, communications, and power supply. The final contract will be inked once all remaining permitting and financing is in place. Construction was expected to commence in the first quarter of 2019.
Disclosure: I hold GNG shares, but no CMM shares directly. I have put CMM on my Strawman scorecard however. There has already been a takeover attempt made by Regis Resources (RRL) but they quickly withdrew their offer after Capricorn's largest shareholder refused to support it. Karlawinda is a good project, and it will get built. I just don't know how long it will take, or who the eventual owners will be.
On Monday 1st July 2019, Capricorn Metals (CMM) released this: Karlawinda Gold Project Update and then immediately (within 1 minute) called a trading halt, pending a capital raising announcement (and changes to their board and management). That announcement was released today (Wednesday 3rd July) - Equity Raising and Key Board Appointments and they resumed trading, and the market reaction has certainly been overwhelmingly positive. Despite the cap raising being at a huge discount (they're raising up to $18.26m at 6.5 cents, being a 27% discount to their last traded price), they've so far risen +36.4% to 12c/share (just since they released that announcement this morning).
Apart from the very high calibre of the two new board appointments, one of whom will become their new Executive Chairman, the key sentence for me from the announcement was the first one in the following paragraph, which I've highlighted in bold:
“The board recognises the very strong feedback from shareholders in recent times that in the current gold price environment the best prospect for Capricorn to deliver maximum shareholder value is for the Company to develop the Karlawinda Gold Project itself. To this end we are very pleased to have attracted two highly credentialed mining executives in Messrs Clark and Okeby to join the board and drive the development of the project. The funding secured through the placement also further bolsters Capricorn’s cash position and will allow the company to expedite the work required to progress towards development.”
Disclosure: I don't hold CMM shares currently, but I do hold GNG shares, and GNG are the contractors who CMM have engaged to build the Karlawinda Gold Processing Plant for them. It all got off track for a while there, but this announcement suggests that it's all getting back on track now.