17-Feb-2026 (1:05am): I hold CMM in my SMSF and I've been reading through their Dec Quarterly report looking for clues as to how they're likely to report on H1 of FY2026 this month, or next month (last year they released their H1 report on March 6th).

The quarterly was excellent, and they look on track to come in at the top end of guidance or exceed their production guidance in August for FY26 (full year) if their second half is anything like their first half. Their costs for H1 were at the upper end of their FY25 full year guidance range but their costs are some of the lowest across all of the mid-to-large Aussie gold producers, so they can afford to have some increased costs and still be among the most profitable gold miners we have on the ASX.

Some highlights from their Dec Quarterly Report:

• Year to date gold production of 62,794 ounces at AISC of $1,626 per ounce puts KGP on track to achieve the upper end of FY26 guidance of 115,000 – 125,000 ounces at an AISC of $1,530 - $1,630 per ounce.
• Karlawinda Gold Project (KGP) delivered December 2025 quarter (Q2) gold production of 30,476 ounces (Q1: 32,318oz) at an all-in-sustaining cost (AISC) of $1,627 per ounce (Q1: $1,625 per ounce). 
• Record quarterly cash flow from operations of $122.4 million generated in Q2 (Q1: $106.9m).
• Total material movement continues to meet the production and construction requirements for the Karlawinda Expansion Project (KEP) with 4.4 million BCM mined in the quarter.
• Consistent mill performance continued with throughput of 1.16mt (Q1: 1.23mt).
• The acquisition of Warriedar Resources Limited (ASX: WA8) by way of a Court-approved share scheme of arrangement and option scheme of arrangement was successfully implemented on 25 November 2025, following approval by Warriedar shareholders on 6 November 2025.
• Cash and gold on hand at the end of Q2, inclusive of the integration of Warriedar balances, was $457.4 million (Q1: $394.4m). The cash build for the quarter was $88.8 million (Q1: $71.8m) before total capital expenditure of $39.0 million at the KEP ($36.1m) and MGGP ($2.9m), and the closing Warriedar cash balance of $13.2m following integration during the period.
• Gold sales of 31,652 ounces at an average price of $6,333 per ounce generated $200.5 million in revenue with a further 2,542 ounces of gold on hand at the end of Q2 valued at $16.6 million (Q1: $23.5m).
• Department of Energy, Mines, Industry Regulation and Safety (DEMIRS) approved Capricorn’s Mining Proposal and Mine Closure Plan (MPMCP) in July 2025, allowing full development of the KEP and subsequent to those approvals the project has been advanced substantially. 

Now so far there's no bad news that I can detect - the KEP has now been fully approved and is progressing at pace and they're still producing gold at Karlawinda while they expand (upgrade) the plant to enable it to produce more gold p.a.

It should be noted that CMM can appear a little more expensive than other gold miners but they do have a management premium and/or quality premium in their share price because of their management's proven track record of getting very profitable gold mines built and operating on time and on or under budget, from Equigold to early Regis (RRL) to CMM. That Equigold/early-RRL team are mostly all now at either CMM or EMR, and both companies have done very well and don't seem to make mistakes or ever overpromise & underdeliver - it's more about conservative guidance which they then try to beat and often do.

I don't have any concerns over Karlawinda (their KGP), but their other big development project, Mt Gibson (their MGGP), has taken longer than expected to achieve final approvals (2.5 years so far), and it's still not there yet, so I had a read of what they've had to say about MGGP:

MGGP DEVELOPMENT

• Following MACA being awarded the preferred contractor status for the mining services agreement, early works mine design and planning activities have commenced.
• The process plant design scope was advanced to 98% complete, with the focus shifting to tendering of key construction scopes. Power supply contract evaluation continued.
• Capricorn submitted the final Public Environmental Report (PER) to the Department of Climate Change, Energy, the Environment and Water (DCCEEW) in late Q1 FY26. The document was advertised for public review during the quarter with final updates and assessment now to follow. 1
• Capricorn is also advancing the Environmental Review Document (ERD) for the Part 4, Western Australian Government assessment process with EPA Services, ahead of the upcoming public review phase. This process includes incorporating outcomes from the Federal DCCEEW assessment. 

So they are going ahead with as much as they can prior to final approvals being granted in a way that suggests to me that they expect the project to receive final approvals this calendar year, probably within months, however down on page 8 of their December quarterly report they said this:

Mt Gibson Gold Project

Progress continues to be made on development and permitting for MGGP in parallel with continued exploration and resource extension drilling.

In December 2023 Capricorn referred the development of the MGGP to the Commonwealth Department of Climate Change, Energy, the Environment and Water (DCCEEW) under the Environmental Protection and Biodiversity Conservation Act 1999 (EPBC Act), based on comprehensive environmental assessment work over the last two and a half years. In June 2024, Capricorn received advice from DCCEEW relating to the assessment of the MGGP referral. The project referral is being assessed as a Controlled Action via a Public Environmental Report (PER). In Q4, Capricorn submitted the final MGGP PER to the DCCEEW. This follows previous receipt of guidelines for the PER and ongoing feedback on the document from DCCEEW. Capricorn submitted the final Public Environmental Report (PER) to the Department of Climate Change, Energy, the Environment and Water (DCCEEW) in late Q1 FY26. The document was advertised for public review during the quarter with final updates and assessment now to follow.

In May 2024 Capricorn lodged the referral of the MGGP to the Environmental Protection Authority (EPA) under Part IV of the Western Australian EP Act to commence the WA assessment process, which will run in parallel with the Commonwealth assessment. In July 2024, the referral was validated by the EPA and released for 7 days public comment. Capricorn is now advancing the required Environmental Review Document (ERD) for the Part 4, Western Australian Government assessment process with EPA Services, ahead of the upcoming final public review phase. This process includes incorporating outcomes from the Federal DCCEEW assessment.

--- end of excerpt ---

My concern was/is: "The project referral is being assessed as a Controlled Action via a Public Environmental Report (PER)."

So I had a chat tonight with ChatGPT:

Question: How much of a problem is it that CMM's MGGP has now been referred to a Controlled Action via a Public Environmental Report (PER) in terms of holding up final approvals or the likelihood of approval being ultimately denied?

The fact that CMM's MGGP (presumably a mining or industrial project) has been referred to a Controlled Action via a Public Environmental Report (PER) indicates that the project is undergoing a more detailed environmental review. This generally happens when a project is considered to potentially have significant environmental impacts that need to be carefully assessed.

To break it down:

1. Controlled Action: This is a legal classification under Australia's Environmental Protection and Biodiversity Conservation Act 1999 (EPBC Act). It means the project might affect matters of national environmental significance (e.g., biodiversity, heritage sites, water quality). A controlled action requires further scrutiny and approval from the federal government before proceeding.
2. Public Environmental Report (PER): This is a form of environmental impact assessment, where the developer submits a report outlining how they intend to manage and mitigate potential environmental risks. The PER is open to public comment, allowing stakeholders and the community to review and express concerns.

Implications for Project Approval:

• Delays: The referral to a Controlled Action and the subsequent need for a PER typically causes delays. This is because the assessment process is more comprehensive and involves consultation, public feedback, and possibly additional information requests from government bodies. These delays could range from a few months to a year, depending on the complexity of the environmental impacts and the responsiveness of the proponent.
• Likelihood of Denial: While being referred to a Controlled Action does not mean the project will be denied, it does suggest that there are concerns over potential environmental impacts that need to be carefully evaluated. Denial is not common, but it is a possibility if the project is found to cause unacceptable environmental harm that cannot be mitigated.
• Final Approvals: The project will not be granted final approvals until the environmental assessment process is complete. The PER itself will be a key part of determining whether the project's environmental management plans are adequate and whether it can proceed. If the PER leads to a finding that significant environmental risks remain unaddressed, the project could face further scrutiny or conditions that delay its approval.

In summary, while being referred to a Controlled Action via a PER doesn’t automatically mean the project will be denied, it does add a layer of scrutiny that can cause significant delays. The likelihood of approval ultimately depends on the results of the environmental assessments, the mitigation measures proposed, and how well the concerns raised during the consultation process are addressed.

Question: What are the main environmental concerns over Capricorn Metals' Mount Gibson Gold Project?

The Mount Gibson Gold Project (MGGP) by Capricorn Metals is located in Western Australia, and like many large-scale mining operations, it has raised several environmental concerns. While specific issues can evolve over time with new reports and assessments, some of the main environmental concerns associated with the project typically include:

1. Biodiversity and Habitat Impact

• Flora and Fauna: The project area may contain significant native plant and animal species, including some that are considered endangered or vulnerable. Mining activities, such as clearing land for infrastructure, can destroy or fragment habitats, threatening local wildlife.
• Vegetation Clearing: Clearing large areas of native vegetation for the development of the mine site, tailings storage facilities, and infrastructure can reduce biodiversity and disrupt ecosystems, particularly in ecologically sensitive areas.

2. Water Management and Quality

• Groundwater Use and Impact: Mining operations, especially those involving open-pit mining and dewatering, can impact local groundwater systems. The extraction of water for processing operations can reduce available groundwater for nearby agricultural or community uses.
• Surface Water: Mining activities can lead to contamination of local rivers and streams from runoff containing chemicals or heavy metals, or from sedimentation caused by soil disturbance. The management of waste water, stormwater, and the potential risk of chemical spills are critical concerns for the surrounding environment.
• Tailings Storage: Proper containment and management of tailings (waste left after gold extraction) is crucial to avoid potential leaks of toxic chemicals such as cyanide, which is commonly used in gold mining.

3. Air Quality

• Dust Emissions: Open-pit mining, blasting, and transportation of materials can generate significant dust, which can affect air quality both on-site and in nearby areas. Dust can be harmful to human health, local vegetation, and livestock.
• Emissions from Equipment: The use of diesel-powered machinery, trucks, and processing equipment contributes to greenhouse gas emissions and air pollutants, which may impact local air quality and contribute to broader climate change concerns.

4. Chemical Use and Contamination

• Cyanide Use: Cyanide is commonly used in gold extraction processes, and its potential for leakage or mishandling poses significant risks to local ecosystems and wildlife if not managed properly. The potential for spills or contamination, especially in proximity to water sources, is a key environmental issue.
• Chemical Waste: The handling, storage, and disposal of chemicals used in processing (e.g., cyanide, sulfuric acid) need to be carefully regulated to prevent contamination of surrounding land and water.

5. Waste Management

• Tailings Storage Facility (TSF): One of the biggest environmental risks for any mining operation is the management of tailings. The Mount Gibson Gold Project will need to manage large quantities of tailings, and the risk of failure of the tailings dam or seepage into surrounding environments (soil, groundwater, surface water) is a significant concern.
• Waste Rock Piles: Mining operations produce waste rock, which, if not properly stored or treated, can leach contaminants into the environment, including heavy metals or acid mine drainage that could harm nearby ecosystems.

6. Impact on Cultural Heritage Sites

• Indigenous Land and Heritage: Mining operations on or near Indigenous lands raise concerns about the destruction of cultural heritage sites, including sacred sites, archaeological artifacts, or other places of cultural significance. There may also be social and cultural impacts on local Indigenous communities, including displacement or disruption to traditional practices.
• Community Consultation: Ensuring proper consultation with affected Indigenous communities is critical for the project’s social license to operate and for addressing concerns about environmental and cultural impacts.

7. Climate Change and Carbon Emissions

• Greenhouse Gas Emissions: Like all large-scale mining projects, the Mount Gibson Gold Project contributes to greenhouse gas emissions through its operations, particularly from the use of heavy machinery, transportation, and energy consumption. These emissions contribute to broader climate change concerns.
• Energy Use: The energy requirements for processing ore and other operations may rely on fossil fuels, which can increase the carbon footprint of the project. If the operation transitions to renewable energy sources, this could mitigate some of the concerns related to climate change.

8. Landscape and Visual Impact

• Landform Alteration: The open-pit mining method used at Mount Gibson would alter the landscape significantly. There are concerns about the aesthetic impact on the surrounding environment, especially if the site is near sensitive or pristine areas that are valued for their natural beauty.
• Dust and Noise: Along with visual impacts, the noise and dust generated by the mine could affect both human populations and wildlife in the area, potentially leading to public opposition and regulatory scrutiny.

9. Social Impacts

• Local Communities: There are concerns about the social and economic impacts on local communities, especially with regard to noise, dust, and the potential for reduced quality of life for nearby residents. Additionally, there may be concerns about the distribution of economic benefits from the mine, with some arguing that local communities should receive a larger share of the economic returns or better infrastructure support.

Environmental Approval Process:

Given these concerns, the Mount Gibson Gold Project has been referred to a Controlled Action under the EPBC Act. This means that the project is being assessed for its potential impact on matters of national environmental significance, and the project will need to go through an Environmental Impact Assessment (EIA) process. The Public Environmental Report (PER) that is part of this process will be a key document in evaluating whether the environmental impacts can be adequately mitigated, or if the project poses unacceptable risks.

If concerns raised in the PER are not addressed adequately, it could result in significant delays or even rejection of the project.

Question: Please name any specific concerns over this particular project that have been raised by either local groups or environmental groups

For Capricorn Metals' Mount Gibson Gold Project (MGGP), several specific concerns have been raised by local and environmental groups, especially in the context of the environmental and social impact assessments that are part of the regulatory process. While specific groups or individuals might raise different issues, common themes from environmental and community stakeholders typically focus on:

1. Threat to Local Biodiversity and Ecosystems

• Endangered Species: Environmental groups have raised concerns that the project area is located near habitat for endangered or vulnerable species. There are concerns about the impact of mining on flora and fauna, including any endangered plant species or threatened animals that inhabit the area, such as certain fauna species native to the region. Mining operations may disrupt these species' habitats, leading to fragmentation or loss of habitat, particularly in sensitive ecosystems.
• Clearing of Vegetation: The project involves clearing large areas of native vegetation, which poses a threat to local biodiversity. Groups like the Wildlife Conservation Society and other local environmental organizations have often voiced concerns about how clearing might impact the region’s native plant communities and disrupt local wildlife corridors.

2. Water Usage and Pollution

• Groundwater Depletion: The project is located in an area where water resources are already scarce. The dewatering required for open-pit mining operations could lead to local groundwater depletion, impacting both nearby ecosystems and communities. There is concern that excessive groundwater extraction could affect agricultural activities or local freshwater supplies, a key issue in many rural areas.
• Surface Water Contamination: Environmental groups have expressed concerns about potential pollution of nearby rivers, streams, and wetlands. Runoff from the mine site could contain heavy metals, cyanide, and other contaminants from the mining process, which could end up in local water systems, damaging ecosystems and potentially harming local agricultural land or drinking water supplies.

3. Tailings Management and Risk of Contamination

• Tailings Storage Facility (TSF): There is concern over the design and safety of the proposed tailings storage facilities (TSF), particularly the risk of seepage or dam failure. In the past, tailings dam failures at other mining sites have led to severe environmental damage, and local environmental groups have pushed for stringent oversight and transparency regarding the construction and maintenance of these facilities. Leaks of toxic substances such as cyanide or heavy metals into the environment could result in long-term ecological damage.
• Acid Mine Drainage: Another concern is the potential for acid mine drainage from the mine's waste rock or tailings. If sulfur-containing minerals in the waste rock are exposed to air and water, they could create sulfuric acid that leaches into surrounding soils and waterways, further impacting ecosystems.

4. Cyanide Use in Gold Extraction

• Risk of Spills or Leaks: The use of cyanide in gold extraction is a well-known environmental concern. Local environmental groups have questioned the project’s plans for cyanide management and the containment of the toxic substance, particularly its potential for accidental spillage or leakage into nearby water sources. If not managed properly, cyanide contamination can have catastrophic effects on aquatic life and the broader environment.

5. Cultural Heritage and Indigenous Land

• Impact on Indigenous Lands: The project area is located on traditional Indigenous land, and concerns have been raised about the impact on local Aboriginal heritage and sacred sites. Environmental and cultural groups, such as the Western Australian Aboriginal Heritage Council, have pushed for proper consultation with Indigenous communities to ensure that culturally significant sites are preserved.
• Consultation with Traditional Owners: Local Indigenous groups, including the Wajarri Yamaji people, who are the traditional owners of the land, have been involved in the approval process. There have been calls for more meaningful and transparent consultation to ensure that their concerns regarding land use, cultural heritage, and environmental protection are adequately addressed.

6. Air Quality and Dust Pollution

• Health and Livelihood Concerns: Dust emissions from mining operations, particularly from blasting, hauling, and the processing of ore, have been a concern raised by local communities and environmental groups. Dust can degrade air quality, leading to potential health issues for nearby residents, livestock, and wildlife. There are also concerns about the visual impact of the mine site, particularly for those living nearby.

7. Climate Change and Greenhouse Gas Emissions

• Carbon Footprint: Environmental groups, including those focused on climate change like The Wilderness Society, have raised concerns about the carbon footprint of the Mount Gibson Gold Project. The emissions from diesel-powered mining equipment, transportation, and processing contribute to the broader issue of climate change. While the project’s carbon emissions may not be as high as some other industries, environmental groups are advocating for a reduction in emissions and a shift toward more sustainable energy practices in the mining sector.

8. Impact on Local Communities

• Disruption to Local Way of Life: Local residents, particularly those who live in rural areas near the project, have voiced concerns about the social and economic impacts of the mine. There is a perceived risk of disruption to local agricultural practices, community activities, and the overall quality of life due to noise, dust, and traffic from mining operations. Concerns have also been raised about the potential increase in cost of living, particularly for essential services like housing and infrastructure.
• Employment and Economic Benefits: While the project will likely create local jobs, some groups have expressed concerns about the distribution of these benefits. Local organizations, as well as some Indigenous groups, are advocating for a greater share of employment and economic benefits for local and Indigenous communities.

Groups and Organizations Involved:

• Australian Conservation Foundation (ACF)
• The Wilderness Society
• Western Australian Environmental Protection Authority (EPA)
• Wildlife Conservation Society
• WWF Australia
• Environmental Defenders Office (EDO)
• Indigenous Groups: Wajarri Yamaji people, Yamatji Marlpa Aboriginal Corporation

These groups are typically engaged in the formal assessment processes, making submissions, and sometimes organizing public campaigns to highlight their concerns about the potential environmental and social impacts of the Mount Gibson Gold Project.

Conclusion:

In summary, the main environmental and social concerns raised by local groups and environmental organizations regarding the Mount Gibson Gold Project center around the potential loss of biodiversity, water pollution, tailings management, use of cyanide, cultural heritage, and climate change. These concerns reflect the complex balance that mining operations must strike between economic development and environmental protection, and they highlight the challenges the project faces in obtaining environmental and social approvals.

Question: Please be more specific - what flora and/or fauna for this particular project are considered to be at threat or compromised

The Mount Gibson Gold Project (MGGP) by Capricorn Metals is located in a region of Western Australia with significant biodiversity, and as with any mining operation, there are concerns about the potential impact on flora (plants) and fauna (animals). Specific concerns over the threat to vulnerable or endangered species in the project area have been raised by environmental groups and during the environmental impact assessment (EIA) process.

Here are some of the flora and fauna species in the area that have been identified as potentially at risk due to the project's activities:

1. Flora (Plant Species)

• **Acacia Species: The project area includes important habitat for various species of Acacia, a genus of plants that are common in the region. Some Acacia species are considered vulnerable or endangered, such as Acacia gilesiana and Acacia pineana, both of which can be found in the area around the project. Mining activities such as vegetation clearing and soil disturbance can threaten these species.
• Eucalyptus Species: Several species of Eucalyptus trees, such as the Eucalyptus gamophylla and Eucalyptus woodwardii, are also present in the area. Eucalyptus species play a crucial role in the local ecosystem and are important for both habitat and food sources for local wildlife, particularly koalas and birds. Clearing land for the mine could directly impact these species.
• Spinifex Grasses: Spinifex grasses are a significant component of the landscape, providing habitat and food for a range of fauna, particularly ground-dwelling species. Clearing or disturbance of spinifex habitat could lead to the loss of these important ecosystems.

2. Fauna (Animal Species)

The Mount Gibson Gold Project is located in a region where various threatened or vulnerable species reside, and the following are of particular concern:

Mammals

• Bilby (Macrotis lagotis): The Greater Bilby is a vulnerable species that inhabits the region. Bilbies rely on burrows and dense vegetation for shelter and food, and habitat disturbance, such as land clearing and changes to soil structure from mining activities, could have a negative impact on their populations.
• Western Ringtail Possum (Pseudocheirus occidentalis): This species is also classified as vulnerable and may be found in the region, particularly in areas where eucalyptus forests exist. Loss of habitat due to land clearing or changes in vegetation could negatively affect the population.
• Mallee Fowl (Leipoa ocellata): This ground-dwelling bird, listed as vulnerable under Australian environmental law, builds large nests in sand mounds. Its population could be impacted by habitat disturbance caused by the mining operation.

Reptiles

• Western Carpet Python (Morelia spilota imbricata): This snake species, which is found in the region, can be threatened by habitat destruction, including deforestation and disruption of native ecosystems.
• Great Desert Skink (Liopholis kintorei): Listed as vulnerable, this species is found in spinifex-dominated habitats in desert and semi-arid areas. The mining project could disrupt its habitat, leading to a potential decline in numbers.

Birds

• Grey Falcon (Falco hypoleucos): This species of falcon, listed as vulnerable, relies on open areas and forested landscapes for hunting and nesting. The disturbance of such habitats by mining could affect its breeding and hunting capabilities.
• Australian Bustard (Ardeotis australis): While not classified as critically endangered, the Australian Bustard is listed as near threatened. It inhabits open grasslands and semi-arid regions, and the disturbance caused by mining activities (such as clearing, dust, and habitat fragmentation) could negatively affect this species.

Invertebrates

• Red-Tailed Phascogale (Phascogale calura): While primarily a mammal, it relies heavily on invertebrate prey. Its habitat could be compromised by mining, affecting its food sources and shelter.
• Threatened Insects: Certain species of native insects, such as pollinators and other vital members of the ecosystem, could also be impacted by habitat loss, dust, and chemical use on the mine site.

3. Key Ecological Features at Risk

• Wetlands and Waterways: The local wetlands and riparian zones (areas near rivers and streams) are crucial ecosystems that support a variety of species, including aquatic invertebrates, amphibians, birds, and mammals. These areas are often sensitive to pollution from mining, especially runoff from the site containing chemicals, dust, and sediments.
• Threatened Vegetation Communities: The montane vegetation in the region, characterized by Eucalyptus woodlands and other specialized vegetation communities, could be disrupted by the expansion of the mine. This habitat supports a range of species and is important for local biodiversity.

Specific Concerns Raised by Environmental Groups

• Disturbance of Ecologically Sensitive Areas: Environmental groups have pointed out that clearing land for the Mount Gibson Gold Project could affect key ecological corridors. Fragmentation of habitat could isolate wildlife populations, reducing their ability to breed and forage effectively.
• Impact on Endemic Species: The region is home to some species that are endemic to Western Australia or specific regions, meaning they are found nowhere else in the world. Disturbing their habitat could contribute to a decline in already fragile populations.
• Fragmentation of Habitat: Many of the species at risk rely on large, contiguous tracts of habitat. Mining could disrupt these areas, making it difficult for species to find food, mates, and shelter.

Regulatory and Mitigation Measures

In response to these concerns, the company will likely need to address them in its Public Environmental Report (PER) and Environmental Impact Statement (EIS). The potential for habitat destruction, particularly for vulnerable or endangered species, will be a major focus during the approval process. Some possible mitigation measures might include:

• Offset Programs: Proposals to offset habitat destruction by protecting or rehabilitating other areas of land with similar ecosystems.
• Wildlife Relocation: Plans to relocate species from affected areas to new habitats.
• Monitoring: Ongoing monitoring programs for species at risk, including surveys of populations, nesting sites, and habitat quality.

Conclusion:

The Mount Gibson Gold Project threatens several flora and fauna species, particularly those classified as vulnerable or endangered, such as the Bilby, Western Ringtail Possum, and various plant species like Acacia and Eucalyptus. The key concerns revolve around habitat destruction, fragmentation, pollution risks (particularly to water), and the overall impact of mining on local biodiversity. Environmental groups have raised these issues, and they will likely play a central role in shaping the project's approval conditions and any required mitigation measures.

--- end of chat ---

OK, so we have discussed here on SM recently the limitations of AI when it comes to doing research and even solving simple problems like how best to get to a car wash 200 metres up the road (with or without your car), so I accept that much of that above will be worthless and may not even be applicable to this particular case (CMM's MGGP), however there are still likely a few environmental concerns there that I was previously unaware of, or hadn't considered to be an issue here.

So while CMM are confident that Mt Gibson is going ahead at some point, so were the current management at RRL about McPhillamys in central NSW a few years back until Tanya Plibersek (then Australian Federal Minister for the Environment and Water) torpedoed the project in July 2022 by denying them their TSF location (TSF = tailings storage facility, basically where all the waste slurry is pumped to after the gold has been extracted from the ore). McPhillamys might still get built, but if nothing else that decision in mid-2022 has delayed that project by at least 4 years. At worst it may never get built.

However McPhillamys is apparently prime farmland in rural NSW whereas Mt Gibson is an old minesite, so a brownfields site rather than a greenfields site, as this arial view shows:

Yes, CMM want to expand the project area and clear further land around it where they have already found more gold such as their Highway Deposit plus those red dots on the above map outside of the existing pits - Sundance, Gunslinger, Ace High, Crazy Horse and Mexicola; however the majority of the gold is below existing open pits and there is already an old heap leach plant there.

This is gold mining in and around an old gold mine, with dozens of historical pits already there, so this one is NOT going to get torpedoed like Regis' McPhillamys GP (gold project) was. At worst CapMetals may not be able to clear some of the land around some of those few deposits outside of the existing pits, or they may have limitations put on them over how much additional land they can clear, but this has to be viewed in the context of what it is, which an old minesite.

So my take on this is that the governments (state and federal) are not rushing this through, but are actually doing the opposite, maklng sure everybody with an opinion gets heard and that as far as possible all legitimate concerns are adequately addressed in the final approval conditions. So while it's already taken longer than expected, and it might take longer yet, at some stage this one gets approved IMO, and I'm thinking that will be some time this calendar year (most likely).

And Mt Gibson will be CMM's second mining centre:

Interestingly, despite CMM generally regarded as being one of the more expensive Australian gold producers, 4 out of 5 of the brokers that FNArena covers are bullish today and have even higher price targets:

Only Jarden is neutral with a TP of $11, being $2.44 lower than the $13.44 that CMM closed at today - here's FNArena's summaries of the most recent broker notes/updates from Canaccord Genuity and Jarden:

And Below are FNArena summaries of the latest updates from Macquarie and Ord Minnett:

So you can see there that OM had a TP of $19.50 for CMM on December 12th, then raised that to $24 on Jan 29th, while Macquarie had a TP for CMM of $15.20 on Jan 30th and then on Feb 9th they raised that by $1 to $16.20.

Bell Potter's last update was back at the end of October when they had a $14.30 target price for CMM. I have only included the most recent updates here in this straw, but FNArena has a much longer history.

Source (Broker data above and charts/tables below): https://fnarena.com/index.php/analysis-data/consensus-forecasts/stock-analysis/?code=CMM

Charts source: https://fnarena.com/index.php/analysis-data/consensus-forecasts/stock-analysis/?code=CMM

When looking at those Capex and G&A numbers above, remember that they are in the middle of expanding Karlawinda (their operating mine) as well as doing some early work at Mt Gibson, so they are spending to increase future production at Karlawinda and bring a second mining centre into production.

So, yeah, possible further permitting delays for Mt Gibson (MGGP) are a risk, however on the whole I reckon CMM is more likely to have more upside (positive) share price catalysts than downside (negative) catalysts.

And then there's the gold price:

We're holding above A$7,000/ounce for now, and the US$ gold price just dropped below US$5,000/ounce in the past couple of hours while I've been doing this straw, but I have no doubt it'll be back over US$5K/oz within a day or two. Soon enough anyway. The uptrend remains intact. But my point here is that no matter how good a gold mining company is, the gold price is going to have a major impact on their share price. At the moment the gold price is still a tailwind, but it could become a headwind if it dropped below CMM's cost of production, but with an AISC of less than A$1,700/ounce, the gold price would have to go down a very long way before we need to worry about CMM's profitability.

So, yeah, happy with CMM being a decent position in my SMSF - and I may add to that position today, or soonish. Before they report for H1. They sort of already have though because it's all in their December Quarterly Report, but I still reckon they could rally on their official H1 report.

I was very happy with the market's reaction to NST on the day they reported (+4%), GMD yesterday (+7.42%), and EVN last week (+8.68%) - I can't see why CMM would be the black sheep.

Much better reactions than I've seen with some SaaS and a handful of consumer discretionary companies on the day of their reports during the past week. In terms of sentiment, there's still plenty of positive sentiment around the better Aussie gold producers, with good reason.

P.S. Here's Commsec's current view of broker sentiment regarding CMM:

Source: https://www2.commsec.com.au/quotes/recommendations?stockCode=CMM&exchangeCode=ASX#/recommendations/consensus

And here's a chart showing CMM, NST, GMD and EVN vs the All Ords (XAO):

I'm thinking there's room for CMM to head further north from here. They haven't recovered from the recent small gold price decline at the end of January like the others have. GMD is another one that had a management premium in the share price prior to that gold price decline and rebound and they (GMD) also haven't fully recovered to their former highs, so both GMD and CMM look good here to me here.

Disclosure: Held.

14/7/2025: I've been looking to add further diversified gold exposure to my SMSF and I did that today by buying back into Cap Metals (CMM) at $9.33 after selling out of MAQ (Macquarie Technologies, a data centre builder/owner/operator that operate mostly in Canberra and Sydney) @ $66.77 average (sell prices ranging from $66.70 to $66.88) after they popped almost +8% this morning on an announcement of a Sydney land purchase option agreement and a positive update on their IC3 SuperWest data centre development progress (Proposed-Land-Acquisition.PDF). I had built a position in MAQ during recent months at prices from $58 to $62/share after their SP had fallen from $90/share at the beginning of this year. I still like the company, but I think CMM has more near term upside, so I took the profit on MAQ and switched that capital into CMM.

I note MAQ got up to $67.80 earlier this morning, but was falling when I sold out late morning at $66.77 (average) and they're now trading at around $65 as I type this, so the spike in their SP might be short-lived.

It wasn't much of a profit, but it was the company in my Super that I had the least conviction in over the short to mid-term, despite remaining bullish on their longer term prospects, and I want to have most of my investable capital invested in my very best ideas most of the time, so I had to cut them loose to make way for Cap Metals again.

The main things to know about Capricorn Metals (CMM) is that they have great management, led by their Executive Chairman Mark Clark, who have great form for getting gold projects built and producing on time and on budget, not just with Karlawinda, Cap Metals' flagship gold mine, but also back in the early Regis Resources (RRL) days at Duketon and before that at Equigold, which was bought out by Lihir, which was bought out by Newcrest, which was bought out by Newmont (the world's largest gold company), AND CMM have great projects as well.

Karlawinda is their producing gold mine, and Mt Gibson is their big development project. The main things to know about Mt Gibson are that they have a lot of gold there, and;

• The Mt Gibson site was a previously producing gold mine under earlier operators:
• Gold production commenced in 1986, exploiting laterite and oxide ores through shallow open-cut pits (up to ~100 m deep), including some limited underground operations, and between 1986 and 1999, the mine processed approximately 12.5 Mt of ore at ~1.99 g/t, yielding about 799,600 oz of gold via CIL, with an additional ~68,900 oz recovered from heap leach – totalling around 868,500 oz. Operations were placed on care and maintenance in 1999 and the site remained inactive until Capricorn Metals acquired it in 2021. They have found a heap more gold there since then of course.
• Capricorn Metals’ Mt Gibson Gold Project (MGGP) is currently undergoing its final environmental permitting phase. Capricorn lodged the Public Environmental Report (PER) for Mt Gibson with the Australian Commonwealth Department of Climate Change, Energy, the Environment and Water (DCCEEW) in December 2024. Permitting time was expected to be within 6 months. It's now been 7 months. It's important to remember that this was a previously active gold mine so there should be no objections to getting it back into production.
• Argonaut’s latest research indicates that their opinion is that: “Securing the final environmental approvals for Mt Gibson is expected to occur in the next few months” (as of May 2025). Source: https://www.argonaut.com/capricorn-metals-cmm-on-track-for-fy25-guidance/
• That aligns with an approval timeline sometime in mid-2025, preceding the onset of full-scale project construction in early FY26 (which has just begun).
• Main point being, their final permit is imminent now. Could happen any day, but regardless, it should not be far away.

Another positive is that the company is now debt free and fully unhedged:

Here's a brief overview of what I'm getting with exposure to CMM:

They're an ASX200 company with a current m/cap of just over $4 billion, so they are one of the majors now. And they have very competent management who have a history of making sensible capital allocation decisions.

In my opinion they do have a quality / management premium in their share price, so they are not cheap, however the recent pullback in the gold price has presented an opportunity for me to get back into CMM at around $1.50 less than their recent high point of $10.80 (reached only 4 weeks ago on the 16th June).

In summary, they're not cheap, but I'm willing to pay up for quality management in this space, because management matters a LOT, particularly in mining, and the imminent final approval for Mt Gibson (when it happens) should provide a decent positive catalyst for a further leg up on their chart from here, IMO.

Disclosure: Holding (again).

01-July-2021:  First Gold Poured at Karlawinda

• Gold bars weighing 12.0 kg (386 ounces) were poured in the first smelt on site on 30 June 2021.
• Optimisation of the three-stage crushing circuit to deliver the most suitable product size for ball mill feed in laterite ore is continuing. The crushing circuit has run at in excess of 1,000 tonnes per hour (tph) (6.1 million tpa at 70% availability) at times during the 6 days of start-up operations to date.
• The 7.5MW ball mill has operated at an average of 91% availability during start-up as final testing, inspections and alignments are completed.
• The ball mill has achieved a throughput of up to 480 tph (4.25Mtpa) on an ad-hoc basis during the 6 day start-up period. This is encouraging as 4.25Mtpa is the budget throughput for laterite feed used in generating expected long-term throughputs of:
  • 4.5 – 5.0 Mtpa in oxide/fresh blend; and
  • 4.0 – 4.5 Mtpa in fresh rock.
• Run of mine (ROM) ore stocks continue to build with in excess of 450,000 tonnes of ore now on the ROM pad.
• Ramp up and optimisation activities continue across crushing, processing and plant services areas.

[Disclosure: CMM are in my Strawman.com virtual portfolio, but I do not currently hold any CMM shares IRL.  Also, in August last year, Capricorn (CMM) awarded MACA (MLD) a five-year contract for open pit mining services at Karlawinda.  I do hold MLD shares.]

24-June-2021:  Ore Processing Commenced at Karlawinda

The board of Capricorn Metals Ltd (CMM) is pleased to advise that it has completed construction of its wholly owned Karlawinda Gold Project and has started continuous ore processing.

Commissioning activities were completed to plan over the last three weeks and culminated in the ball mill and crushing circuit being ready for full operations in the last week.

Processing has commenced with low grade ore and will transition to run of mine grade ore over the next week as the operation moves to steady state. The project is now building gold in circuit and is expected to pour first gold in around one week.

Capricorn Executive Chairman Mark Clark commented:

“The commencement of continuous ore processing at the Karlawinda Gold Project is a significant milestone for Capricorn. It is the culmination of a huge effort from our construction team and key contractors. We now look forward to transitioning to full steady state operations and turning the project in to a profitable, long life business.”

--- for the full announcement, click on the link above ---

[I do not currently hold CMM shares, however they are in my Strawman.com portfolio and I do follow them closely because of the pedigree of their board members and senior management - most of them being ex-Regis Resources (RRL) and Equigold (which merged with Lihir Gold in 2008 in a transaction worth $1.2 billion, and Lihir was subsequently taken over by Newcrest Mining, Australia's largest gold miner (NCM).]

The following is an OLD (2018) straw, however I've just added a heap of new stuff to the end of it.

24-Sep-2018:  Capricorn Metals (CMM) is now in play.  Regis Resources (RRL) has made a takeover offer priced at 11.4c/share.  CMM closed on Friday at 5.9c, so the offer is 93% higher than Friday's close.  Understandably CMM is rocketing up today.

Please note that while the offer is currently unanimously supported by the CMM board, it is still subject to shareholder approval, including CMM's substantial shareholders.  Therefore, this deal may or may not proceed, and if it doesn't - there could well be downside from here.  

See CMM's announcement here.

And RRL's announcement here.

Regis reserve the right to terminate discussions (and withdraw their offer) if they can not secure the support of Hawke's Point, who own 18.9% of CMM.  Hawke's Point are not currently supporting Regis' proposal.

For CMM's latest corporate presentation (at the Precious Metals Summit in Beaver Creek, Colorado, last week), see here.

Disclosure:  I do not currently hold any CMM shares, and after looking at these announcements, I decided to stay on the sidelines with this one.  By the time I read them, CMM had already risen 50% today, and there is downside from here if RRL can not get Hawke's Point onside.  Read the RRL announcement for further details.  I do hold RRL shares.

16-Oct-2018:  Update:  On October 1st, CMM announced that Regis had not been able to secure the support of CMM's largest shareholder, Hawke's Point Holdings (who own 18.93% of Capricorn Metals) and had decided to withdraw their takeover proposal and cease discussions with CMM.  That announcement can be viewed here.

The accompanying announcement by RRL (Regis Resources) can be viewed here.

On October 3rd, CMM announced that Heath Hellewell had stepped down as their board Chairman but would continue as Managing Director of CMM.  Ms Debra Bakker who was an independent Non-Executive Director of Capricorn has assumed the role of Non-Executive Chairperson.  That sounds like a better arrangement.  It is usually better to have an independent Chair rather than have the MD also chairing the board.

22-Mar-19:  Update:  The CMM board has now been rolled and the MD has quit.  So has the CFO (Chief Financial Officer) - see here for that 6-Mar-19 announcement.  One week later (on March 13th - 9 days ago) their new management released a "Company Update" which suggests to me they would like to sell Karlawinda, or the whole company, rather than proceed with the development themselves.  (I still don't hold CMM).

05-Apr-2021:  Update:  I just came across this "stale" straw from September 2018 originally.  Hawke's Point (CMM's largest shareholder at that time) blocked the Regis (RRL) takeover of Capricorn (CMM) by refusing to sell their CMM shares to Regis, so Regis withdrew and have never made a subsequent offer for CMM, despite the fact that Karlawinda would have been a nice bolt-on asset for Regis.  My own thoughts were that it was a value play for Regis back in 2018 and they saw upside in developing the project themselves, and now that the KGP processing plant has been modified (greater ore throughput capacity but at a much higher construction cost) and the share price has appreciated so much, it's not attractive to them any more, or not attractive enough.

Hawke's Point later mounted their own takeover campaign for Capricorn Metals (CMM) at LOWER price than what Regis (RLL) had offered.  Understandably, that lower offer was rejected by the CMM board, especially after Hawke's Point had been the one and only reason why the earlier offer (from RRL - at a higher price - which at the time had been unanimously supported by the CMM Board) had fallen over.

My last update above (on 22-Mar-2019) mentioned that the new CMM Board in March 2019 was keen to sell the project, or the whole company.  They wasted about 4 months going down that road, paying Macquarie (MQG) millions in fees to try to find a suitable buyer, but none emerged during that time.  Meanwhile, CMM had to renegotiate a new $100m debt and bank guarantee package with MQG after the previous agreement was allowed to lapse during the period in which the old board and management either walked out or were replaced when the remaining board members were rolled (and the lack of progress achieved on the KGP during that period).  It was not a happy time to be a CMM shareholder - and I was not one.  So much promise, and so little progress!

And then, on July 3rd 2019 the CMM Board released an announcement to the ASX saying that they had listened to shareholder feedback and now agreed that the best course of action was for CMM to go ahead and develop the KGP (Karlawinda Gold Project) themselves.  This happened to coincide with a number of ex-Regis Resources (RRL) people joining the board and management at CMM (further details of that below).

During this time, GR Engineering Services (GNG) were quietly dropped as the designated EPC (engineer, procure, construct) contractors for Karlawinda, and the new CMM Board expanded the capacity of the plant, at a significantly higher construction cost, and they raised fresh capital, a number of times. 

The MQG $100m facility was dependent on CMM raising the rest of the KGP construction costs themselves, so they did, over a number of raisings with mixed success, and existing shareholders (again, I was not one of them) were dilluted, as usually happens, as well as being asked to tip in more money themselves via a 1:5 (one share for every 5 shares held) retail entitlement offer in April/May 2019 which was 33% undersubscribed (they raised A$4.6m of the A$6.9m total they were aiming for).  The outcome for CMM of the institutional component of that entitlement offer was even worse - they only raised A$3.18m, a rather pitiful response really, considering the shares were offered at only 6.5 cents ($0.065) each and the share price had been over 8c and up to 9c during and just prior to the offer period.

Capricorn (CMM) did a 1 for 5 (1:5) share consolidation in late 2019, so their share price chart will show that their share price was up to 46 cents during that entitlement offer period in late April and early May 2019, but it was actually one fifth of that at the time because the chart has been adjusted for that 1:5 consolidation.

After that very poor result from the entitlement offer, they went on to raise $18.26m in July 2019 from two placements, and one of those was to Hawke's Point again, and at 6.5cps again, being a 27% discount to the last traded price of Capricorn shares at the time of that announcement (and a 24.5% discount to the 5-day volume weighted average market price of CMM shares at the time).  That's what I mean about ordinary retail shareholders getting severely dilluted.

They also added two ex-RRL Marks to their Board in July 2019.  The first was Mark Clark, with 28 years’ experience in corporate advisory and public company management. He was a director of successful Australian gold miner Equigold from April 2003 and was their Managing Director from December 2005 until Equigold’s $1.2 billion merger with Lihir Gold in June 2008. Lihir was subsequently acquired by Newcrest (NCM). He was closely involved in the development and operation of Equigold’s gold mines in both Australia and Ivory Coast. Mark was appointed Managing Director of Regis Resources in May 2009 and became RRL's Executive Chairman in November 2016. He retired as an executive of Regis in October 2018. Mark oversaw the development of Regis’ three operating gold mines at the Duketon Gold Project, which culminated in the project producing well over 300,000 ounces of gold per annum. In Mark’s time at Regis, the company grew from a small explorer with a market capitalisation of around $40 million to the significant gold producer it is today with a market capitalisation in the order of $2.5 billion (that was in July 2019, RRL's m/cap today is closer to $1.5 billion). Mark is well known in the industry for his strong financial stewardship and focus on delivering shareholder returns.  Mark Clark is now CMM's Executive Chairman and an executive director of the company.

The second addition to the CMM Board in July 2019 was Mark Okeby, who began his career in the resources industry in the 1980s as a corporate lawyer advising companies on resource project acquisitions, financing and development. He has a Masters of Law (LLM) and over 30 years’ experience as a director of ASX listed mining and exploration companies.  At the time of his appointment to the CMM Board in July 2019 Mark was also a director of Red Hill Iron Ltd (appointed in 2016) and previously has been a director of Hill 50 Ltd, Abelle Ltd, Metals X Limited, Westgold Resources Ltd, Lynas Corporation Ltd and Regis Resources Ltd. Mark joined the board of Regis Resources in July 2009 as a non-executive director and was a major contributor on the board that transformed Regis from a small gold explorer to one of Australia’s largest gold producers. Mark has a deep knowledge of the Australian resources landscape and the regulatory regimes around mine development and operation. He also has significant experience in the commercial and legal aspects of project development, financing and corporate transactions.

Capricorn’s Non-Executive Chairman, Mr Doug Jendry, said: “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.”

They went on to raise another $65 million in August 2019 via a share placement at 16 cents per share (also pre-1:5-share-consolidation, so equivalent to 80 cps now).  The issue price of 16.0 cps represented a discount of 15.8% to the last closing price of 19.0 cps on 9 August 2019 and an 11.9% discount to the 5-day VWAP of 18.2 cps. The placement was cornerstoned by two of Capricorn’s substantial shareholders at that time (Paradice Investment Management Pty Ltd and Hawke’s Point once again) and several Australian institutional investors who had been long term supporters of the (new) management team. Also, several of the founders of Equigold, three of whom have also previously been directors and shareholders of Regis Resources Ltd, subscribed for a total of $10 million.

That August 2019 equity raising enabled Capricorn to satisfy a key condition to enable finalisation of the previous (lapsed) offer of $107 million debt and gold hedging facility from Macquarie Bank Limited (MQG) for the development of Karlawinda.  

The following day (14-August-2019), CMM announced that they had secured 200,000 ounces of gold hedging with a 31 December 2019 maturity and a price of A$2,249 per ounce.  My understanding is that this hedging has been subsequently rolled into further hedging with a later maturity date.

On 16-Sep-2019, CMM announced another 4 Management and Board appointments that were all ex-Regis Resources people:

• Mr Kim Massey as the new Chief Executive Officer (CEO) of CMM
• Mr Paul Thomas to the Chief Operating Officer (COO) role
• Mr Stephen Evans as the General Manager of Operations; and
• Mr Myles Ertzen as a Non-Executive Director of the CMM Board.

At this point (September 2019), while Regis Resources had failed in their 2018 attempt to takeover Capricorn Metals (CMM), CMM was now completely loaded with Executives and Board Members who were all ex-Regis Resources (RRL).

In mid-October 2019 CMM announced that they were consolidating their shares on a 1:5 (one for five) basis, which became effective in November, effectively driving their share price up by a factor of 5 (from around 20c to 24cps to $1 to $1.20/share).  Obviously all shareholders at the time also had their holdings reduced by 80%, for example: If you held 100,000 CMM shares worth 20c each (worth $20,000) pre-consolidation, that became 20,000 shares worth $1 each (still $20,000) post-consolidation.

On 15-Nov-2019 they announced that Ms Tammie Dixon was their new Chief Financial Officer CFO) and Joint Company Secretary. She had held senior management roles with several ASX listed companies, including Regis Resources, Equigold and Hardman Resources.  They were REALLY getting the old team back together, eh!?!  The other company secretary later left the company (in late Feb 2020) leaving Ms Dixon as the sole Company Secretary and the CFO.  Tammie Dixon herself gave notice as CFO and Company Secretary of CMM in early March 2021, but she agreed to continue to assist the Company as required on a contract basis for 12 months. CMM's CEO Kim Massey will oversee the Company’s financial functions and perform the role of Company Secretary on an interim basis until a permanent replacement for Tammie is appointed.  Tammie is still listed on the CMM website as being their CFO and Company Secretary, but on the ASX and CommSec sites, Kim Massey is listed as being both the CMM CEO and their Company Secretary.  I assume Tammie is continuing to perform the role on a contract basis (from her home or other place of business) until at least March 2022 however Kim has assumed the official "Company Secretary" title and the responsibility that goes with it with regard to the ASX and ASIC.

On 17-Apr-2020 CMM announced:

• Karlawinda Gold Project (KGP) Ore Reserves had increased by 35% to 1,201,000 ounces (from 892,000 ounces); and
• KGP Mineral Resources had increased by 41% to 2,145,000 ounces (from 1,525,000 ounces).

With their vast experience in new gold mine and gold processing plant construction and optimisation, it appears that Capricorn's Board and Management are pretty much building Karlawinda themselves, hence why GR Engineering (GNG, who did the original PFS and DFS for the KGP for the previous management at CMM) were dropped when all of the ex-RRL guys took over at CMM.  They don't believe they need to pay another company to manage the process when they can do it themselves.

Further Reading:

27-July-2020: Project Update and Upscale of Process Plant Throughput

29-July-2020: $32.3m Capital Raising

27-Aug-2020: MACA Ltd Selected as Preferred Mining Contractor   [MACA (ASX:MLD) do all of the open pit (OP) gold mining for Regis Resources]

13-Oct-2020: Diggers and Dealers Presentation

20-Oct-2020: Karlawinda development progressing on time & budget

18-Nov-2020: Further significant milestones on Karlawinda development

[On 18-Nov-2020 Mark Clark (CMM's Executive Chairman) bought another $73K worth of CMM shares on-market at between $1.66 and $1.67/share.]

20-Nov-2020: 2020 AGM Presentation

20-Jan-2021: Strategic Investment in DiscovEx Resources Ltd

01-Apr-2021: Quarterly Activities Report

Home | Capricorn Metals (capmetals.com.au)

Analyst Coverage | Capricorn Metals (capmetals.com.au)

KGP (Karlawinda Gold Project) Overview Video

Karlawinda remains on track for first gold pour in the current (June 2021) quarter.

I am not currently holding CMM shares, but I'm thinking about it.  I consider this a risky point in their history, with possible cost blowouts and possible commissioning issues, however if the ex-Regis guys now running Capricorn are as good as their reputations and track records suggest they are, then they might sail through this quarter smoothly and get a positive rerating by the market when they announce they are now producing gold at Karlawinda at the plant's nameplate capacity.  They are not there yet however, and a lot can go wrong, so for now I'm just on the sidelines watching closely.

They certainly have the potential to become a strong up-and-coming gold producer, with excellent near-mine exploration potential.  And they will be first cab off the rank in terms of first gold pour - before Calidus Resources (CAI) with Warrawoona - their first gold pour is expected during H1 of CY 2022, and Bellevue Gold (BGL) who are targeting first gold production towards the end of 2022.  Capricorn (CMM) is therefore the potential big 2021 gold story, if everything goes to plan.

Disclosure: Of the companies I have mentioned in this straw, I currently (as at 05-Apr-2021) hold shares in RRL, GNG and BGL.  CAI and CMM are both on my watchlist.

20-Nov-2020:  2020 AGM Presentation   or using the secure ASX website:  2020 AGM Presentation with the ASX's "ERSONAL USE ONLY" watermark up the left hand edge of every page

Recently:  18-Nov-2020:  Further significant milestones on Karlawinda development   or   ASX Version

I do NOT hold CMM although I have traded them previously.  They are developing the Karlawinda Gold Project located in the Pilbara region of Western Australia, 70km by road south-east of the town of Newman.

They originally came onto my radar due to (1) Capricorn buying the Karlawinda GP (gold project) off IGO (Independence Group, ASX:IGO, whose shares I hold and have followed for many years); and (2) their (CMM's) previous management's intention to get GR Engineering Services (ASX:GNG, a company I also hold shares in) to engineer, procure and construct the Karlawinda processing plant (the EPC contract).  However, much has occurred since then.  New management.  New plans.  Different plant design.  Different EPC contractors.  If the gold price was still making all time highs, I think Capricorn (CMM) would be also, as they're in one of the sweet spots at the moment of powering ahead with the build, and not having anything go wrong - yet.  The risks associated with financing and approvals are all behind them, and the risks associated with final cost blowouts and commissioning issues are all in front of them.  Once the commissioning begins, that's when I often sell out of such stocks, if I'm holding them, then wait for the plant to hit its nameplate capacity in terms of production with no significant issues, and then look to possibly re-enter, as they would be substantially derisked at that point. 

Lately however, I have been avoiding the entire construction phase, including the commissioning that comes at the end.

Even after all of that is done and dusted, stuff can still come out of left field, like tailings dam wall leaks/collapses (RED 5's Siana mine in the Philippines), severe weather destroying part of your plant (MML's Co-O mine in the Philippines), sovereign risk (KCN's Chatree mine in Thailand being shut down, OGC's Didipio mine in the Philippines being shut down) or hitting difficult ore to process or having lower gold grades than expected (DCN's Mount Morgans, GCY's Dalgaranga, Wiluna Mining's Matilda project when they were still called Blackham Resources, it's a long list...)...  However MOST of the obvious and likely risks are probably behind the company at that point.  That said, if they are operating in the Philippines, Thailand or Indonesia, I'm just not interested.

I keep having the odd look at CMM mostly because (a) they are now stacked with ex-Regis (RRL) people - on the board - including Mark Clark who used to be the MD of RRL (up until Feb, 2014) and Mark Okeby - and their entire senior management team are all ex-RRL, and (b) because Regis (RRL) tried to takeover CMM a few years back, and would have succeeded (the then board of CMM unanimously supported the takeover) except for CMM's largest shareholder at that time - Hawke's Point Holdings - blocking the move.  Hawke's Point later launched a takeover offer of their own, at an even lower price, and that also failed.  Hawke's Point have subsequently sold down their position after the CMM share price increased a LOT, however they (Hawke's Point) are STILL RRL's largest shareholder, with a current position of 9.99%, which is a bee's whisker off being a blocking stake (i.e. 10%).  They could simply buy a few more shares on-market at any time to get back to 10% or above and block any other future takeover attempt, if they wanted to.  If CMM was to be taken over now however, it would be at a much higher price, comensurate with their current trading range plus a suitable takeover/control premium.  

CMM's Karlawinda GP is around 550km away (NNW) from Regis' Duketon operations, so if Regis was to have another crack at CMM, they would be looking at Karlawinda as a prospective additional and separate standalone gold project, which is how it is being built of course.  They were never planning to truck the ore to Duketon.  I still think Regis MIGHT be interested, but probably less so now than they were then.  Karlawinda would have looked to them as being a good project to develop back then, and now that it is over half built, and has become a lot more expensive, the opportunity is not the same any more I guess.

Here are CMM's current largest shareholders:

1. Eley Griffiths Group Pty Ltd, As of 01-May-2020 held 5.23% of CMM, as of 05-Aug-2020 held 6.45%;
2. Paradice Investment Management Pty Ltd, went from 8.93% to 9.94% on 04-Aug-2020, then sold down to 8.92% on 13-Nov-2020; and
3. Hawke's Point Holdings I Limited, sold down on 04-Aug-20 from 16.80% to 9.99% (34,340,852 CMM shares).

I consider Paradice and Eley Griffiths to be "smart money".  Hawke's Point have also proved to be fairly astute to date I have to say.

After peaking at $2.26/share mid-September (and hitting an intra-day all-time high of $2.37), they have fallen back to close at $1.665 yesterday.  This is in line with all of Australia's major gold producers and project developers - they've all come off over the past little while.  To give just one example, RRL's SP has reduced from $5.55/share to $3.85/share over the same period (-30%).  CMM are off about -26% from their mid-September high.  So they look cheaper now.  However, that's all relative.  CMM looked expensive to me before.  They now look like they're a bit closer to fair value for a gold project developer at the stage they are at.  Proven producers like Regis (RRL) who have multiple mines, are profitable, and pay dividends, are a much safer option.  I own RRL shares and I was buying more of them during the past week.  I have NOT been buying CMM shares yet however.  They remain on my watchlist.  If you flick through their AGM Presso (the first link at the top of this straw) you may understand why I keep them on my watchlist.  They could get exciting.  

Pay particular attention to their chart on page 19 which shows where Karlawinda sits relative to other current producers in terms of AISC Margin (Profit Margin) vs Indicative Reserves Life (Mine Life).  Karlawinda has a 12 year mine life, with a AISC (All-In Sustaining Cost) of ~A$1,200/oz, and should produce 105-120koz p.a. of gold.  That means they compare very favorably with most other Australian listed gold producers.  However, remember, they are NOT gold producers - yet.  They will be soon, but there is some water to flow under that bridge yet - before the plant is finished, commissioned, and running at nameplate capacity within its projected cost range.  Things can go wrong, and they often do.  Capricorn have some very experienced and well-credentialled board members and senior executives (with the majority of them being ex-Regis Resources), so it would be entirely reasonable to have more confidence in them to get this thing built and running smoothly as a result of that, however I would personally still prefer to wait.  I may dip my toe in (they are on my Strawman.com scorecard after all), however it will likely only be a small position until they become proven producers.

Further Reading:  https://thewest.com.au/business/public-companies/former-regis-md-mark-clark-to-head-up-capricorn-c-197003 (from July 2019)

and: http://capmetals.com.au/   and   http://capmetals.com.au/projects/karlawinda-gold/

27-Oct-2020:  Quarterly Activities and Cashflow Report

20-Oct-2020:  Karlawinda development progressing on time & budget

The first link (the Quarterly Report) contains some good pictures of Karlawinda and the progress they are making there.  Check out the size of the Ball Mill head and pinion (bottom of p.3).  That's a decent piece of kit!

20-Oct-2020:  Karlawinda development progressing on time & budget

DEVELOPMENT PROGRESSING ON TIME & BUDGET

PROJECT LOAN CONDITIONS PRECEDENT SATISFIED

HIGHLIGHTS

• All conditions precedent now satisfied to commence draw down on $80 million debt facility.
• Development of the Karlawinda Project progressing in line with schedule for first gold production in June 2021 quarter.
• Forecast development cost continues to be in line with guidance of $165 – 170 million.
• Development cost of $62.4 million spent to 30 September 2020, leaving a balance of forecast spend to complete of $102.6 - $107.6.
• Cash position on 30 September 2020 was $49.3 million, which combined with the $80 million debt facility gives a total available funding of $129.3 million. This represents a 23% contingency allowance on the midpoint of forecast cost to complete.

--- click on link above for the full announcement ---

[I do not hold CMM, but they're on my Strawman.com scorecard.]

27-7-2020:  Three announcements from CMM - concerning Karlawinda - this morning:

1. Project Update and Upscale of Process Plant Throughput
2. Quarterly Activities and Cashflow Report
3. Trading Halt (Capital Raising announcement pending)

I'm not a CMM shareholder, although I have been in the past.  I lost a fair bit of interest in the project after the board and management were all replaced and they dumped GR Engineering (GNG) as the EPC contractor to build Karlawinda, then changed the plant design.  They're now changing it again.  This is a risky time to be a shareholder of a gold project developer - during the build phase.  Common occurences can include unexpected capital raisings, construction delays and cost blowouts, then commissioning issues and plant modifications required.  Then underperformance if the plant doesn't perform as expected.  We saw all of that with Heron (HRR), a zinc producer, who went with Sedgman (part of CIMIC Group - ASX:CIM) to build their Woodlawn plant for them, and that did not work out well at all.  While HRR is a fairly extreme example of where things can go wrong, and how it can negatively affect shareholders, there are dozens of others; sometimes the issues don't emerge until after the plant has been fully commissioned and handed over and then the ore type changes or the grades don't live up to expectations resulting in big cost increases.  GCY (Gascoyne Resources) and Dacian Gold (DCN) are two examples of that in the gold space.  Wiluna Mining (WMX, formerly Blackham Resources) is another.

I have found that, generally speaking, the best times to hold explorers and developers is when they are still exploring and hitting those high grades of gold, then to take profits (sell out) during the build phase, stay out during the commissioning phase, and have a look at getting back in once they've been in production for a couple of years and all of the bugs have been sorted out, and they've fine-tuned their grade control and ore processing / gold recoveries.  And that means that CMM are an "avoid" for me at this point.

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.

17-Apr-2020:  Karlawinda Gold Reserves Increase 35% to 1.2 Million Ounces

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.

31-March-2020:  CCZ Equities Research:  Capricorn Metals Ltd (CMM):  Funded, first gold from Karlawinda due in 1Q 2021 

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):

31-Jan-2020:  Quarterly Activities and Cashflow Report for the December 2019 Qtr

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.

September 2018:  CMM (Capricorn Metals) have released a presentation that they have prepared on their Karlawinda Gold Project for the 2018 Precious Metals Summit, held this month in Beaver Creek, Colorado, USA.   It is titled, "A compelling opportunity in the Australian gold sector", see here.