Sold here but didn't follow through in real life

Guidance lowered

Hindsight is a wonderful thing...

[held]

As mentioned in my quick post while at work, Mark Clark has sold 5m shares in Capricorn and now no longer substantial holder

He still holds 17m shares.

Capricorn Metals Ltd (Capricorn or the Company) advises that two directors Mr Mark Clark and Mr Mark Okeby have sold a portion of their respective shareholdings by way of a fully underwritten block trade. Both have been directors of Capricorn since July 2019 and have made significant personal investments in Capricorn shares. They have been part of a board and executive team that has overseen the growth of the company from a market capitalisation of approximately $80 million to around $1.8 billion today.

This is the first time either director has sold any shares in the company. Mr Clark sold 5 million shares and retains a shareholding of 17.2 million shares (4.5% of the shares on issue). Mr Okeby sold 2 million shares and retains a shareholding of 4.6 million shares. Mr Clark and Mr Okeby remain significant long-term shareholders of the Company and have no intention to sell any further shares in the medium term.

Executive Chairman Mr Clark remains committed to driving the growth of Capricorn with a view to creating a high quality, multi mine Australian gold mining company. The sale of shares was conducted in accordance with the Company’s Trading in Securities

Policy. Appendix 3Y disclosures are attached to this announcement

Don't have a problem with the selling as Mark Clark gave this everything to turn around a problem child into a stable profitable gold miner. But it is a big kick in the teeth for a holder and weakens the thesis although I've held ever since Clark took so up a couple of bags still

[held]

Have neglected posting updates here but I am still holding and letting this grow in a "quiet corner of the garden" so to speak.

Capmetals AGM 2023

Overall not much has really changed. Mark Clark and team quietly going about their job.

Probably the only concern is how Mt Gibson will pan out.

[held]

Despite the bad quarterly, Capricorn did something surprising which I didn't think was possible.

Capricorn bought put options to hedge their forward contracts used for development financing.

So if I'm not mistaken, instead of selling their gold at around $2247-2296 /oz on the forward, they sold instead at $2810 /oz via the put on the contract. Then used the funds to close the forward contract on delivery of the gold and pocketing the difference.

Derivatives 101? Quite interesting. Correct me if my explanation is incorrect but I'm going by my basic knowledge of derivatives and forward contracts.

Either way it seems like a well executed move by Capricorn. Again a great example of Mark Clark adding or preserving shareholder value for the firm.

Wonder if that's possible in hedging currency risk (ie: CSL)? Food for thought...

[held]

CMM taking a hit today after posting their quarterly.

Cost guidance higher than expected and providing some fuel to the shorters this morning before recovering

Although my holding was small,still a big hit for me.

But expecting big hit in Strawman as my holding was oversized deliberately to give the stock some coverage.

I guess the gold bears were correct. Hats off to the gold bears!

[held]

I know many won't be interested and I admit I spend way too much time here. But it will be good if someone can scroll to the bottom and check the formula that includes probability as Karlawinda and Mt Gibson numbers are "Probable reserves". Maybe you can use what I've done for your other firms as it doesn't just apply for Gold but say replace the price with the price of a product?

Anyway NPV/sh after tax valuation is $5.14 assuming Capricorn reaches 100% production target as shown below:

So for valuation, I will use the after tax NPV of $5.14

NPV before tax valuation is $7.34

Valuation sensitivity with the probability of Mt Gibson and Karlawinda production targets (before tax)

Valuation sensitivity after tax. Expect 95%+ prob for Karlawinda.

Formula for the rough scrap paper NPV with probability (I probably should remove the hardcoding).

[held]

Doing more work on my Capricorn model to incorporate Mt Gibson soon. Including depreciation and after tax values as well.

All very rough right now...

Finally it is out!

Need some time to go through the lengthy document though. Look like an 8-9 year mine life on 150KOz PA production on reserves alone.

Markets were indifferent on the announcement and price not going anywhere.

Mt Gibson Gold Project Prefeasibility Study Confirms Ore Reserve Of 1.45 Million Ounces 152,000 Ounces PA Production

Pre-feasibility study (PFS) delivers a compelling case for development of Capricorn’s second mining operation at the Mt Gibson Gold Project (MGGP) in Western Australia.

▪ Maiden Ore Reserve estimate of 48.7 million tonnes at 0.9g/t Au for 1.45 million ounces of gold.

▪ A gold price of A$1,900 per ounce was used in the estimation of the Ore Reserve.

▪ Reserve pits have a shallow average depth of 140 metres, a maximum depth of 245 metres and operating strip ratio (w:o) of 4.2.

▪ The maiden MGGP reserve increases Capricorn's group gold reserves to 2.8 million ounces.

▪ Ranks Capricorn as 7th largest “Australia only" reserve base amongst ASX listed gold companies.

▪ MGGP average annual gold production of 152,000 ounces pa for the first 7.5 years of mine life at an all in sustaining costs (AISC) of A$1,420 per ounce.

▪ With the established gold production at Karlawinda Gold Project (KGP), this has the potential to lift Capricorn to circa 270,000 ounces per annum production1, in the lowest quartile of Australian gold industry AISC.

▪ Production of 270,000 ounces would rank Capricorn in the 10 largest ASX listed gold producers.

▪ Rare growth opportunity amongst Australian mid-tier gold industry.

▪ Wholly owned project of scale and quality in tier one jurisdiction.

▪ Project located on a granted mining lease, less than 300 kilometres from Perth and has exceptional access to infrastructure and services.

▪ Underpins Capricorn’s growth to a small group of mid-tier gold companies with >250kozpa of gold production and >2.5Moz of reserves

[held]

Bullish video on Capricorn Metals and why it trades at such a high premium

Money and Mine - https://www.youtube.com/watch?v=ggZuOjW9iuY

Starts at 4:42

Thought the podcast was quite funny how they poke fun at Capricorn's nineties-styled website, presentations built with Office 95 and minimal investor relations.

But they do give some serious commentary on Capricorn Metals and the importance of management adding shareholder value which is something that is hard to find in other listed companies out there in general.

Worth a listen just to hear what they say about management.

[held]

March quarter has passed and looks like the homework for Mt Gibson is going to be submitted late.

Had a feeling this was going to happen going back to the past drill result announcements. Somehow they don't look as "consistent" as those from Karlawinda. But I'm not a geologist so don't take my word for it. Hoping someone can comment on the results.

Or maybe because it is easter holidays.

Either way, this late submission is a genuine "orange flag".

But surprisingly the price has held up well.

[held]

Despite rally in gold price, I'm maintaining my valuation as 6 months of production now has to be subtracted from model below

Also I'm guessing maybe some are nervously awaiting the Mt Gibson study.

Will they do a Chalice and delay the study and instead announcing drill results to be included as part of the modelling and push out the study to next quarter?

Or commit fully to announcing the numbers?

[held]

Short covering I presume.

[Held]

As expected.

However, we really need an updated reserve estimate soon on Karlawinda otherwise share price will stay around $4.

So only a hold for me until we wait on Mt Gibson or upgraded reserve estimate for Karlawinda.

[held]

Intrinsic Value of Capricorn versus Gold Price below:

I assigned a NPV of 30m for Mt Gibson which is around the acquisition price.

To get the value excluding Mt Gibson, take about 8c off the NPV per share in the table and you get the current price of Capricorn which is close to $4.31 at a gold price of 2700

Unlike NST, the intrinsic value has much less variability on changes in the gold price. More importantly, Capricorn is trading within intrinsic value while NST is still trading at a premium.

Don't mean to offend NST holders here but the numbers don't lie. Capricorn is still a much cheaper gold miner.

Perhaps NST trades at higher premium from several factors. Ability to convert resources to reserves better than CMM. Proven operator compared to CMM which is still a young company.

On the other hand CMM still has time on it side with Karlawinda in its first years of operation with many more to come. And also we await the Mt Gibson study which could provide a surprise upside risk.

CMM is currently my only exposure to gold. Although I could count S32 which has some small gold exposure via Sierra Gorda.

[held]

Finally got our quarterly. I guess it was late so they can squeeze in the drill results.

Numbers look good. Capricorn managed to reduce the strip ratio and waste mined. Apart from the unfortunate worker fatality which caused production to temporarily halt, the quarter performed as expected.

[held]

Drill results announced for Mt Gibson and areas outside the Karlawinda operations. Some of the drill results from Karlawinda seem average but I'm no expert and some results are still pending.

Mt Gibson reserve estimate due in March 2023 Quarter (it was due later this quarter so a bit of slippage)

Still no quarterly update yet while NST, S32 and FMG updates already published.

I'm hoping the quarterly from Capricorn will be a good one but the delay is a bit of a concern.

Not the strongest announcement from Capricorn - shares sliding today.

[held]

Ann below:

https://capmetals.com.au/wp-content/uploads/2023/01/2022.01.16-Jan-Exploration-Update.pdf

Highlights

Mt Gibson Gold Project (MGGP)

• A total of 115,139 metres (727 holes) of RC resource definition and extension drilling completed in the 12 months ending 31 December 2022.

• Assays received from 160 holes since the last update continue to return exceptional results within and extensional to the current Mineral Resource Estimate (MRE) including:

Outside current MRE

• 9 metres @ 4.69g/t from 279 to 288m • 10 metres @ 5.21g/t from 226 to 236m

• 8 metres @ 4.1g/t from 153 to 161m • 22 metres @ 2.69g/t from 187 to 209m

• 6 metres @ 12.77g/t from 187 to 240m • 13 metres @ 1.25g/t from 243 to 256m

Within current MRE

• 50 metres @ 2.01g/t from 136 to 186m • 11 metres @ 5.94g/t from 212 to 223m

• 8 metres @ 14.51g/t from 203 to 211m • 11 metres @ 6.07g/t from 150 to 161m

• 18 metres @ 4.16g/t from 198 to 116m • 19 metres @ 4.30g/t from 220 to 239m

• 17 metres @ 9.16g/t from 228 to 245m • 12 metres @ 5.30g/t from 111 to 123m

• Drilling on the unmined Saratoga, Lexington Waste Dump and Orion North trends (on the eastern margin of the main Gibson trend) continues to define zones of high-grade within and extensional to the current resource shell.

• Drilling programmes for water exploration and sterilisation for project infrastructure now completed.

• First pass regional exploration east of the Mt Gibson trend provides encouraging results including:

• 8 metres @ 4.70g/t from 84 to 92m • 4 metres @ 2.73g/t from 32 to 36m

• 4 metres @ 2.80g/t from 153 to 161m

• First pass regional AC and RC drilling programmes across a number of high priority target areas commenced in early January 2023.

• Results from 2022 drilling programme resulted in a 32% increase in the MRE in November 2022 from 2,083,000 ounces to 2,755,000 ounces with maiden Ore Reserve Estimate (ORE) expected in the March 2023 quarter.

Karlawinda Gold Project (KGP)

• Drilling continued on near mine prospect Carnoustie with 10 RC holes (2,148 metres) and 31 Aircore holes (2,072 metres) drilled in the December 2022 quarter, assay results expected in the March 2023 quarter.

• Encouraging 1m split gold results from previous near mine drilling at the Muirfield and newly identified Vedas prospect received since the last update including

Muirfield

• 2 metres @ 15.25g/t from 117 to 119m • 1 metre @ 17.96/t from 79 to 80m Vedas

• 13 metres @ 2.19g/t from 140 to 153m • 2 metres @ 13.37/t from 96 to 98m

• Multiple regional exploration projects advanced during the quarter. Project areas are situated proximal to either the Nanjilgardy Fault or the Sylvania Inlier and Pilbara Craton margin with 268 Aircore holes drilled (9,132m) within the Jamie Well and Forfar project areas.

To get a estimate of Mt Gibson, I thought I'd go back to 2019 during the years when Mark Clark took over and was scaling up Karlawinda.

Using my own very crude multiples estimate, if we take that 1.52M Oz resource estimate of Karlawinda highlighted above with resource of 0.89M Oz and Capricorn at 167.2M then maybe Mt Gibson would be 167.2 * (2.8/1.52) = 308M. That's assuming we get 50% reserve figure from the resource similar to Karlawinda in 2019.

If current base dcf valuation at 4.40 and current share price is 5.20, then we have Mt Gibson at 0.8*370= 296M. And that is without a defined reserve.

Have a feeling that now buyers are buying for the management. As a reminder, both the CEO and Chairman grew Regis and Equigold from less than 100m to billion dollar plus market caps before they joined Capricorn. Very hard to find anyone on the ASX who has this sort of track record of growing a company to a billion dollars.

Just an fyi, I have held Capricorn since 1.35 (when it was less than 300m market cap) as this still represents a small proportion of my real life portfolio.

But I sold a small portion today in Strawman as it indeed has got quite big and looking at other opps.

[held]

Sorry I have to say it.

But the most despised of all the goldies has reached a 52 week high! Think the other would be DeGrey Mining

I'll do a updated valuation soon including a bull case valuation.

[held]

Macquarie PT $4.20

Hmmm. Did Mac copy my valuation?

[held]

Copper/Zn Base Metal Potential at Mt Gibson??

Found an interesting snippet in the Mt Gibson ASX Acquisition Announcement 28 Jul 2021

If true, it will be very deep as seen in the Orion Pit diagram (+500m)

If base metals are found, it will probably be acquired by base metals miner. Don't think Capricorn will develop any discovery due to Capricorn being part of the VanEck Gold miners ETF.

[held]

Possible short covering might explain the rally. Still 5.2m shares short sold.

Not sure why anyone would sell short on a company with top performing management and creating price distortions.

[held]

Few price targets

$4.00 - Macquarie

$4.10 - Bell Potter

Karlawinda mine life extended from 10 to 12 years and reserves increased to 1.3m Oz (see 27-oct Ann) which may add a few cents on top of my current SM valuation. As reserve is over 2m Oz there is still room for further expansion.

[held]

Mt Gibson Mineral Resources Increase to 2.8 Million Ounces

Another MRE update in another few months.

Not sure if this updated warranted 9% increase. But good to see goldies NST and CMM giving my portfolio an unexpected lift for a change.

[held]

Double edged sword being in the top 200.

Intraday low of 2.50

Bargain territory considering directors bought higher

Diggers and Drillers Presentation 2022

https://www.youtube.com/watch?v=2mwMjD0LHCQ

Quite a good presentation. Mark Clark really is a good public speaker.

Most interesting part is the Mt Gibson project at 15-16 minute mark. And excited in investing in gold companies now!

Hopefully Capricorn stays in the top 200 now.

[H]

Not sure why it took this long but when Capricorn was at 3.80+ (nearly 2 billion market cap), it did not make it to the ASX200

Today it finally entered the ASX200

Held

While I'm not a big fan of Gold Miners, I still like Capricorn Metals and still hold in real life.

And although Gold is in a bear market and sentiment is poor, Capricorn probably hasn't been told about it!

Seems like an excellent quarter. Staff costs not risen much from previous period. Overall AISC did rise from 1086 to 1199 but within guidance.

Question is whether or not a maiden dividend will be declared this FY now that Capricorn is hugely cashflow positive. I'm hoping there will be but they are reinvesting cash heavily into other projects so not surprised if none is declared.

Summary of announcement below:

OPERATIONS

• Record quarterly gold production of 32,018 ounces (Q3: 31,769 ounces) for the June 2022 quarter completes an outstanding first full year of operations.
• Annual gold production of 118,432 ounces at the top end of FY22 guidance of 110,000 – 120,000 ounces and all in sustaining cost AISC of $1,112 per ounce for the nine months ended 30 June 2022 at the lower end of guidance range of $1,100 - $1,200/oz.
• AISC for the quarter of $1,199 per ounce was higher than Q3 ($1,086/oz) primarily due to higher stripping ratio of 6.1 (Q3: 3.3) as waste was preferentially mined to open stages 3 and 4 of the pit for higher ore supply (and normalisation of strip) in coming quarters.
• Strong cash flow generation from operations continues with $38.1 million (Q3: $35.1m) taking cashflow from operations for the full year to $141.0 million.
• FY23 guidance of 115,000 – 125,000 ounces at AISC of $1,160 - $1,260 per ounce and growth capital of $10 - 14 million.
• AISC at Karlawinda continue to be amongst the lowest in the Australian gold industry despite industry wide cost pressures and Capricorn expects to continue its industry leading cashflow generation per ounce of production in FY2023.

CORPORATE

• Cash and gold on hand at quarter end $65.9 million (Q3: $45.0m) reflecting cash build of $20.9 million (Q3: $25.0 million).
• Net cash of $0.9 million at end of June 2022 quarter, up from net debt of $20.0m at end of the previous quarter. Achieving a net cash position within first year of operations reflects the strong operating performance and cashflow generation of KGP.
• Gold sales of 33,818 ounces at average price of $2,611/oz generated $88.3 million in revenue with a further 1,664 ounces of gold on hand at the end of the quarter valued at $4.4 million (Q3: 2,567oz’s).
• Acquisition of the Mumbakine Well Project located 10 kilometres from the KGP processing plant provides outstanding opportunity to add satellite resources and mill feed to the KGP.
• Shortly after the end of the quarter, the Company converted its project loan facility with Macquarie bank into a general-purpose corporate loan facility and made an early repayment of $15 million reducing the outstanding principal to $50 million.

Held

Drilling results from Mt Gibson project

- 29,842 metres (188 holes) of a planned 81,000 metre resource definition RC drilling programme completed to date at Capricorn’s wholly owned Mt Gibson Gold Project (MGGP).

-Drill programme commenced in January 2022 and is designed to infill (including historic data validation) and extend (depth extensions and along strike data gaps) the current Mineral Resource Estimate of 2.08 million ounces of gold

- Assays have been returned from the first 55 holes with very encouraging gold results reported, including:

o   23m @ 5.04 g/t from 157m CMRC028

o   18m @ 3.65 g/t from 149m CMRC031

o   14m @ 6.40 g/t from 126m CMRC035

o   19m @ 3.18 g/t from 160m CMRC038

o   21m @ 2.22 g/t from 155m CMRC039

o   10m @ 3.68 g/t from 139m CMRC1011

o   6m @ 5.30 g/t from 230m* CMRC1007

o   15m @ 2.08 g/t from 184m CMRC017

o   13m @ 2.34 g/t from 109m CMRC001

o   8m @ 3.31 g/t from 204m* CMRC015

o   15m @ 1.73 g/t from 173m CMRC1007

o   2m @ 11.92 g/t from 138m CMRC006

o   10m @ 2.26 g/t from 75m* CMRC022

o   14m @ 1.59 g/t from 95m* CMRC1001

o   10m @ 2.18 g/t from 174m CMRC040

* intercept outside the current 2021 MRE

-   Importantly, significant gold mineralisation has been returned both within and below the resource pit optimisation shells with high-grade mineralisation intercepts aligning with historic data both spatially and for grade tenor.

-    Review of strong results returned to date near the base of and below current resource pit optimisations has led to the planning of additional extensional drilling which will be incorporated in the drill programme in the current quarter. -   The resource drill programme will underpin an updated Mineral Resource Estimate and maiden Ore Reserve estimate targeted for completion in the September 2022 quarter. 

-    Regional exploration targeting underway with planning for drilling programmes at the prospective Taurus Trend and Highway prospects.

-    Other technical studies to inform the maiden Ore Reserve estimate and feasibility studies are progressing

=====

Don't know enough about how these results fit with the rest of the 55 drill holes as I'm no expert on this, so I can't really make a comment - obvious CMM highlighted the best out of the set. However the market obviously seems to like it today and share price rose significantly.

(Looks like the copy paste not working too well with the PDF)

Held

Just noticed that RMS and CMM have nearly the same EBITDA for the half year. And yet RMS has less market cap than CMM.

Not sure why the disconnect but maybe market is valuing future cash flows in CMM much higher than RMS (which also suffered a downgrade in production guidance).

Van Eck has bought a holding of CMM for their ETFs. I also updated my valuation to $5.15 from a back of the envelope calculation I did based off the quarterly production AISC numbers.

Also know that despite the 1.4bn market cap, CMM did not make it to the All Ords. My guess is because it is too thinly traded.

Anyway, expect some volatility now that it is in the Van Eck Gold ETFs.

Capricorn Acquires Mt Gibson project

Capricorn metals acquires 2M Oz Mt Gibson project for $39m dollars.

Equates to $20/Oz for 2M Oz.

Seems cheap in comparison to transactions of other peers.

Still scratching my head as to why other gold miners didn't have this project on their radar given it is so cheap.

Anyway this will explain the jump in the share price

held

December Quarter Update

Solid update from Capricorn Metals. Price had held steady despite the backward movement in the Gold price. Haven't seen much anything under $1.60.

I've extracted the first page of the quarterly as the update is very big.