Author Topic: GCM.TO - Gran Colombia Gold Corp  (Read 19844 times)

SafetyinNumbers

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Re: GCM.TO - Gran Colombia Gold Corp
« Reply #20 on: March 06, 2017, 04:45:18 AM »
Interesting press release today.  http://www.marketwired.com/press-release/gran-colombia-gold-announces-2017-outlook-and-proposals-to-improve-capital-structure-tsx-gcm-2200586.htm

Guidance seems fine. The proposal to extend the 2020 debt is interesting. Those bonds are my primary holding and an increase in the interest rate and enhancement of option value seem like good things at first glance since I do think the equity is undervalued.
ELF IAM GCM.DB.U/DB.V/DB.X PIF C.N


SafetyinNumbers

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Re: GCM.TO - Gran Colombia Gold Corp
« Reply #21 on: March 16, 2017, 05:12:08 PM »
New agreement w/ IAMGOLD for a exploration property that is likely valued for zero by anyone analyzing GCM!

http://web.tmxmoney.com/article.php?newsid=5245081097633691&qm_symbol=GCM

Seems like a good idea as it allows for some exploration dollars in a property they probably would not have a chance to spend money on for many years.

This is a bit of a stretch but it also potentially lets IMG warm up to Colombia for an eventual takeover of GCM. IMG is already in some "high risk" countries and have a relatively low valuation so they could make a very accretive deal by paying say 15% of their market cap to increase their production/EBITDA by 20%.

15% of IMG's market cap works out to about 25 cents CAD/share (vs the 10 cent close today) on a fully diluted basis for GCM. Of course that could be a lot more if GCM can buy back a bunch of debentures in the mean time.
ELF IAM GCM.DB.U/DB.V/DB.X PIF C.N

SafetyinNumbers

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Re: GCM.TO - Gran Colombia Gold Corp
« Reply #22 on: March 27, 2017, 08:03:34 AM »
The company announced last week they will do a 15-1 consolidation instead of a 10-1 based on feedback from investors.

I ran through my estimates based on this higher gold price ($1255) and I get run-rate EBITDA on forward twelve months around US$67m.

Given they have guided to about US$15m in free cash flow to buy back debt this year with gold around $1225, I figure they can buy back around US$25m in debt by August 2018 when the GCM.DB.U convert to stock (they are 81% mandatory convertible).

At that point debt/ebitda will be around 1.25x TTM EBITDA and at the current share price EV/EBITDA would be around 1.9x TTM EBITDA. At that point, every multiple point increase would be worth about CAD 15 cents per share vs the CAD 9.5 cents share price.

Of course, once the stock trades above US$0.13, the debentures are all in the money so they will also convert to stock which will dilute shareholders but even fully diluted valuation is still extremely compelling especially for a company with no debt at that point!

The safer play is the GCM.DB.V, the senior secured convertible debt, which is likely going to be extended to 2024 and have an 8% coupon while being convertible at US$0.13. It is currently offered at 83.
ELF IAM GCM.DB.U/DB.V/DB.X PIF C.N

Cardboard

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Re: GCM.TO - Gran Colombia Gold Corp
« Reply #23 on: March 27, 2017, 09:23:50 AM »
I have not done any DD but, what is the reserve life at current run rate?

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SafetyinNumbers

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Re: GCM.TO - Gran Colombia Gold Corp
« Reply #24 on: March 27, 2017, 12:35:52 PM »
It's currently 2022 on the main money producer, Segovia, but they haven't spent any money for a long time on drilling until this past year as cash flow started to rebound. We should see reserves increase as they update estimates after incorporating the drilling. The smaller producing mine has 14m oz of reserves but they don't have the capital or political flexibility to develop that right now. They spent ~$500m for that asset back in 2011.
ELF IAM GCM.DB.U/DB.V/DB.X PIF C.N

SafetyinNumbers

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Re: GCM.TO - Gran Colombia Gold Corp
« Reply #25 on: April 07, 2017, 04:22:03 AM »
The company just did its annual issuance of options and it set the strike price at 17 cents or almost double the close last night at 9 cents.

17 cents is effectively US$0.13 which is the conversion price of the convertible debt so it makes sense that they don't want any dilutive instruments to have strikes below the bonds but management teams rarely do what's right when it comes to options.

The shareholder meeting to vote on consolidation and extension of the 2020 debentures is on April 24. I think it's possible the 15-1 consolidation could be a decent catalyst if only it makes the stock show up on some quant screens. Not many stocks trading at $1.35 with trailing TTM EBITDA of over US$3.25/share!
ELF IAM GCM.DB.U/DB.V/DB.X PIF C.N

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Re: GCM.TO - Gran Colombia Gold Corp
« Reply #26 on: April 11, 2017, 07:04:55 AM »
I was starting to warm-up to the idea of the GCM.DB.V with: near 10% interest yield post approval, conversion price 80% above current price or just under 50% if you take into account the discount to par to buy them, effectively the only debt of the company with the "U" forced to mostly convert into shares, a company that makes money and a gold price ready to move up.

Now this:

http://www.stockwatch.com/News/Item.aspx?bid=Z-C%3aGCM-2459925&symbol=GCM&region=C

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SafetyinNumbers

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Re: GCM.TO - Gran Colombia Gold Corp
« Reply #27 on: April 11, 2017, 07:14:54 AM »
Yeah that was out a few weeks ago. Marmato has a giant resource but they have only done small scale mining there because of the impediments. It's status quo in terms of current operations. Most of the cash flow and production comes from the Segovia mine while Marmato has been steady state and relatively higher cost.

There is a potentially giant opportunity if they can get a resolution on Marmato for a large scale mine and seemingly this lawsuit is part of moving that process along. They would likely need a partner for the capital to develop.

Current operations more than support the debenture value and a much higher stock price.
ELF IAM GCM.DB.U/DB.V/DB.X PIF C.N

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Re: GCM.TO - Gran Colombia Gold Corp
« Reply #28 on: April 13, 2017, 07:33:22 AM »
Was that disclosed in their last conference call? Unless I missed it, I did not see anything in their filings.

Pretty solid update relative to their yearly guidance. I am surprised that the stock did not react positively along with the gold price moving up:

http://www.stockwatch.com/News/Item.aspx?bid=Z-C%3aGCM-2460161&symbol=GCM&region=C

I definitely see potential here.

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SafetyinNumbers

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Re: GCM.TO - Gran Colombia Gold Corp
« Reply #29 on: April 13, 2017, 07:56:39 AM »
It was in the Colombian press but I guess didn't get a lot of play in the Canadian press until the FP article. They didn't talk about it on the call. I assume its because it doesn't impact the current operations but I guess they probably should have. Here is a link from end of February: http://www.americaeconomia.com/negocios-industrias/gran-colombia-gold-anuncia-demanda-contra-el-estado-colombiano-por-us700m

Someone on this site suggested that I post too much about the name and might be too close too it and they might be right. I saw the lawsuit as potentially long term positive as it potentially results in a long term plan to either develop Marmato or some financial compensation (they paid US$500m for it in 2011 so the US$700m seems reasonable in that context). It seems though that investors responded by selling the stock. I just don't see any value being ascribed to it in the stock right now as the cash flow from Segovia alone is enough to support the valuation.

Shareholder meeting is on April 24 in Toronto and I will likely attend.
ELF IAM GCM.DB.U/DB.V/DB.X PIF C.N