Author Topic: GCM.TO - Gran Colombia Gold Corp  (Read 19843 times)

doc75

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Re: GCM.TO - Gran Colombia Gold Corp
« Reply #90 on: October 02, 2017, 07:02:46 AM »
Safety - thanks for the response. 

I've been reading more about the PRE story and it certainly leaves a nasty impression.  From abuse of workers and all the stuff you sadly "expect", to inflated reserve estimates and a sketchy restructuring of their options program that perversely benefited management.  Far less innocent than getting caught like so many others with too much leverage to the price of crude.   There seems to be plenty of evidence that you can't really trust promotional guys like Iacono and Guistra with capital. 

Objectively speaking, past performance of management and the BOD here is weak at best, and the major players seem to be of questionable integrity.   I see the value.  I see the insider ownership and purchase.  But if they're not honest brokers, then who knows what's really going on with local mining relations, reserve estimates etc.

So I was wondering how you address that type of risk in your price model, since it seems like you have a substantial position in this name.  Do you discount your numbers in any way?  Or do you just handle the "black box" risk through position sizing?

FWIW, there's some interesting/colourful and potentially quite biased reading about Iacono and friends available at http://incakolanews.blogspot.ca .  Just search the blog for Iacono or GCM.

Again, not trying to troll or bash.   Just trying to negotiate my fears.  I have a position in the X debs based purely on the numbers, but have kept it small because of the question marks.


SafetyinNumbers

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Re: GCM.TO - Gran Colombia Gold Corp
« Reply #91 on: October 02, 2017, 07:29:06 AM »
I donít think my risk approach is always very scientific. Of all of the allegations I have read on the BOD, none have suggested they misstated financial statements. I suppose with any resource company, I have to trust the reserve engineers as well.  At least there is production here.

I feel more comfort in owning the debt than the common which allows me to have a bigger position than I normally would if only the common were available. For example, I think JAG.TO is a very cheap gold stock (albeit with a checkered past) and I like the new(ish) CEO. I own less JAG than GCM because there is only common available.

I have read IKNís comments on GCM and he seems hung up on the contract model as not being real production for some reason but the cash flow does appear real.

The risk mitigation will be to begin selling the position as it approaches fair value long before it gets there if that makes sense.
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 #92 on: October 04, 2017, 05:18:17 AM »
Marmato resource estimate is finally out. It seems enticing to grow production here to 125koz/yr for at least 12 years but with no cost estimates yet, I canít get too excited. The stockís value is entirely supported by Segovia so if Marmato is proved to be economic with a further PEA expected then that would be a nice bonus.

http://www.grancolombiagold.com/news-and-investors/press-releases/press-release-details/2017/Gran-Colombia-Gold-Announces-Underground-Mineral-Resource-Estimate-for-Its-Marmato-Project-Commencing-Scoping-Studies-for-Underground-Mine-Expansion/default.aspx
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 #93 on: October 11, 2017, 05:05:31 PM »
Q3 production numbers are out and while I was expecting a decline from last year, the September numbers were incredible and the grades for the quarter as a whole were also incredible. 

http://www.grancolombiagold.com/news-and-investors/press-releases/press-release-details/2017/Gran-Colombia-Sets-New-Monthly-Gold-Production-Record-in-September-2017-and-Remains-on-Track-With-2017-Annual-Production-Guidance/default.aspx

The highlight to me was production of 16,664 oz in September which was a record and if they can keep that pace means 50k oz in Q4. I'm not expecting that but it sure would be impressive if they get there.

I have been using 170k oz for next year but it seems light given their performance but that at $1295 gold (current price) produces EBITDA around US$75-80m and every 10k oz in additional production adds another US$5m in EBITDA.

Recall fully diluted share count is ~95m and peers trade at 7x so even trading at half of the peers means a ~C$3.60 share price or about double the current price.

Also, if that happens, there will be no interest costs and tax rates are on there way down over the next two years so FCF generation should be very good.
ELF IAM GCM.DB.U/DB.V/DB.X PIF C.N

doc75

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Re: GCM.TO - Gran Colombia Gold Corp
« Reply #94 on: October 11, 2017, 05:20:49 PM »
Interesting that insiders were back in the market today.  Another 18200 shares flagged today as an insider buy.  I would have thought these pending production numbers would be viewed as material insider knowledge.

SafetyinNumbers

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Re: GCM.TO - Gran Colombia Gold Corp
« Reply #95 on: October 11, 2017, 05:43:16 PM »
Interesting that insiders were back in the market today.  Another 18200 shares flagged today as an insider buy.  I would have thought these pending production numbers would be viewed as material insider knowledge.

Yeah, I was looking at that too. I guess we'll see who it was but not sure if the whole BOD would be privy to the monthly production numbers before they are published. They do put out production numbers around the same time every quarter. It's not even clear its "material" by definition but the appearance should be enough for insiders to be careful.

ELF IAM GCM.DB.U/DB.V/DB.X PIF C.N

doc75

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Re: GCM.TO - Gran Colombia Gold Corp
« Reply #96 on: October 12, 2017, 07:57:40 AM »
I'm quite surprised to see no market reaction to yesterday's production numbers.   Surely they were higher than anyone expected, given the strike.


SafetyinNumbers

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Re: GCM.TO - Gran Colombia Gold Corp
« Reply #97 on: October 12, 2017, 08:12:24 AM »
I'm quite surprised to see no market reaction to yesterday's production numbers.   Surely they were higher than anyone expected, given the strike.

With no analyst coverage, there arenít any expectations!

I guess they donít have to worry about trading ahead of ďmaterialĒ non-public information.

Next potential catalyst is results on Nov 15. I expect weíll see another tender announcement on the GCM.DB.V as they should have decent excess cash flow this quarter.

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 #98 on: November 03, 2017, 05:30:44 AM »
The GCM.DB.X has traded up to 97 so I have taken the opportunity to sell some bonds and buy the common at C$1.85 as the risk reward has become pretty compelling into Q3 results in a few weeks.

The earnings on Nov 15 will coincide with the Colombian Gold Symposium in Medellin where GCM will present on their Marmato project.

Personally, I find it a bit odd when companies advertise but in GCMís case, I share their frustration about getting their story out there. I donít think they hit on the salient points of valuation which I think are interesting but most gold investors just want a good story!

This is a feature on the BTV TV show running on BNN this weekend.

 http://www.b-tv.com/gran-colombia-gold-btv-321-feature/
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 #99 on: November 13, 2017, 04:26:11 PM »
GCM reported Q3. The details are in the press release below. The EBITDA number was a few million below my own estimate but it appears it's because the sold 3k oz less than they produced during the quarter (my estimate was based on them being equal). The excess cash flow was also below my estimate for the same reason. The important thing is that they kept full year free cash flow guidance at US$16m (implies US$8m in Q4).

Also, super important is that they produced 17k oz in October and raised overall guidance for 2017 to 165-170k oz. With 139k oz produced in the first 10 months of the year, if they maintain the October production rate, they will beat the high end of guidance.

They also signed up 7 mining collectives up as contract producers since the agreement signed in September. It's not clear what impact that will have on total production going forward.

http://www.grancolombiagold.com/news-and-investors/press-releases/press-release-details/2017/Gran-Colombia-Gold-Reports-Third-Quarter-2017-Results-Raises-2017-Production-Guidance/default.aspx
ELF IAM GCM.DB.U/DB.V/DB.X PIF C.N