Santana Minerals Limited

[Basil]

Recently listed.  Investor presentation.
http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/SMI/435027/423350.pdf

I confess I have a guilty pleasure in that I am slightly addicted to watching "Gold Rush" on the Discovery channel, but I know nothing of any real substance about gold mine economics, however, the numbers as presented look quite interesting.

Who's going to join with me on this speculative "Gold Rush" adventure?  What could possibly go wrong lol
Disc: I have bought a small stake.

[BlackPeter]

Recently listed.  Investor presentation.
http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/SMI/435027/423350.pdf

I confess I have a guilty pleasure in that I am slightly addicted to watching "Gold Rush" on the Discovery channel, but I know nothing of any real substance about gold mine economics, but the numbers as presented look quite interesting.

Who's going to join with me on this speculative "Gold Rush" adventure?  What could possibly go wrong lol
Disc: I have bought a small stake.

Admittedly - I don't know a lot about goldmining as well. Used to own some miners, though to add diversity in my portfolio (e.g. OGC), and some of them did overall ok in my portfolio (no x-baggers, but over the long term some acceptable return plus providing the hoped for decoupling from share indices, while others (in the exploratory phase) just kept draining shareholder funds. There are always excuses for another CR.

One thing I noticed is that at least the larger miners seem to consider NZ share-holders as an "after"-thought - even the ones active in NZ. Sold my OGC shares when I noticed that I have to provide a Canadian tax return (and this was before they pulled out of NZX and ASX) - or lose a big share of my dividends to the Canadian IRD.

But - this is probably not relevant for Santana (assuming they operate only in NZ, do they)? Current political constellation looks good for them - Shane Jones does not care about destroying the environment  ... only thing is - every time the political pendulum swings right, it turns back to left (and vice versa) - and lets face it, while goldminers try to pretend to be environmentally sensitive, it is much easier to find information about goldminers destroying the environment than information about them improving it.

I recon as long as one just uses the pocket money and does not need to live close to the mine, it is probably ok.

[Basil]

I recon as long as one just uses the pocket money and does not need to live close to the mine, it is probably ok.

Disc: Half of one percent portfolio allocation, so yes, just chump change for me.  You're absolutely right about the new Govt's attitude to mining.  If there's Gold in them there hills, let's dig it out !  250 jobs created.  I doubt anyone on an unemployment benefit and a Green party member will be applying for one of them lol.

[Clearasmud]

Left field started the conversation last week.

I went into this quite deep after selling down dividend payers that stopped or reduced dividends. Mhj,stu,hgh,fbu.
I'm looking at those potential Juicy dividends but of course they have to make their timelines.
Pfs this year,final investment decision mid'25,first production mid '26.

Good luck to that I suppose.

[Basil]

Left field started the conversation last week.

I went into this quite deep after selling down dividend payers that stopped or reduced dividends. Mhj,stu,hgh,fbu.
I'm looking at those potential Juicy dividends but of course they have to make their timelines.
Pfs this year,final investment decision mid'25,first production mid '26.

Good luck to that I suppose.

Thanks.  Do they anticipate a capital raise to fund this project and capex prior to production? 

[Clearasmud]

Thanks.  Do they anticipate a capital raise to fund this project and capex prior to production? 

They probably do.
They said payback is 1 year at current gold prices so that assumes a loan of $200m?
There are  35 to 40 million unlisted options mostly at $1.08

[Basil]

Pretty cool adventure.  Like being part of the Gold Rush series on Discovery channel but you don't have to get your hands dirty lol

[BlackPeter]

They probably do.
They said payback is 1 year at current gold prices so that assumes a loan of $200m?
There are  35 to 40 million unlisted options mostly at $1.08

I suppose that's assuming everything goes to plan?

Rule of thumb for any project you haven't done before is to multiply with two and take the next higher dimension - ok, maybe 20 years are too conservative if everything goes right, but I haven't yet seen a lot of mining companies which returned the capital in a year.

Say 2 to 3 years if everything goes well - so, they will need $500m.

Why do I need to think back at Pike River?  Sure, they searched for black gold, but they had as well a quite attractive business case, didn't they?

[Basil]

http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/SMI/435256/423621.pdf

Latest drill results marked as price sensitive...I confess I have no idea of the significance of them but they do say at the end a reserve upgrade is likely.

Yeah BP I hear you.  Watch the Gold Rush series on Discovery channel and learn what could possibly go wrong, usually does lol.  I think of this as "horse racing" punting, without the Govt and TAB skimming off ~ 30% of the prize pool. You might win big or lose most or all of your money.  "Bet" accordingly lol

[BlackPeter]

One thing I noticed is that at least the larger miners seem to consider NZ share-holders as an "after"-thought - even the ones active in NZ. Sold my OGC shares when I noticed that I have to provide a Canadian tax return (and this was before they pulled out of NZX and ASX) - or lose a big share of my dividends to the Canadian IRD.

But - this is probably not relevant for Santana (assuming they operate only in NZ, do they)? Current political constellation looks good for them - Shane Jones does not care about destroying the environment  ... only thing is - every time the political pendulum swings right, it turns back to left (and vice versa) - and lets face it, while goldminers try to pretend to be environmentally sensitive, it is much easier to find information about goldminers destroying the environment than information about them improving it.

... just had a look into their latest annual report (https://www.annualreports.com/Company/santana-minerals-limited) and noticed that I was wrong.

They do have operations running as well in Cambodia and Mexico (oh, dear ...).

Anybody interested in investing into them clearly needs to understand the whole company. What is their environmental record in these other countries? Any past liabilities which still might blow up? What are the political risks? What is the likelihood they manage to operate in these countries without the need of "off the ledger payments" (aka brown paper bags)? What is the risk that a regime change in any of these countries might bite them and how will this impact on their overall viability?

Might be interesting to read in this context e.g. about OGC's history over the decades ... can be fun if your capital is taken hostage by various political militia groups (like e.g. OGC in the Philipines).

Clearly - an investment in this company is not just about finding some nuggets in central Otago. This brings all the complexity and risks of a large international mining company (like e.g. Rio Tinto), but without the legal, political and financial backing.

Not my idea of having fun, but hey - each investor is different ...

[Basil]

Thanks for sharing your perspective and for the link.
Read through the annual report and agree this is very speculative.
It's rare for me to make a pure momentum play, (reasonable uptrend on the ASX listing) but it's just at a level that i would call a "punt"
Not sure if you are aware, (good friend has done extensive work on the water treatment systems at the Waihi Gold mine) that they can filter and treat the water used in mining to a good standard now.
Of course, I can't attest to how they will go about this in N.Z. or elsewhere but our environmental laws, (Shane Jones refreshing approach to new projects notwithstanding) are very, very strict.   250 new jobs is pretty good plus all the downstream benefits for regional suppliers and the overall economic multiplier effect.  I hope it works out well for everyone.

[Basil]

http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/SMI/436369/424986.pdf
More encouraging drill results at RAS, just east of Queenstown.
Looks like its going to be a LOT bigger than the Waihi mine which has been going since 1988 !
Market seems to like it and Gold hitting an all-time record of US$2,500 per ounce on Friday last week, up ~ 20% for the year.
I'm up nearly 20% on this little speculative play in just on 3 weeks.  Better stay tuned to Gold Rush on the Discovery channel to keep up with all the latest stuff with Gold mining.

[Clearasmud]

http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/SMI/436369/424986.pdf
More encouraging drill results at RAS, just east of Queenstown.
Looks like its going to be a LOT bigger than the Waihi mine which has been going since 1988 !
Market seems to like it and Gold hitting an all-time record of US$2,500 per ounce on Friday last week, up ~ 20% for the year.
I'm up nearly 20% on this little speculative play in just on 3 weeks.  Better stay tuned to Gold Rush on the Discovery channel to keep up with all the latest stuff with Gold mining.

Chris Lee  with 1.2% must be pleased.
Stock up aud29c today = close to a million $ to his account.

[Basil]

https://api.nzx.com/public/announcement/437772/attachment/426839/437772-426839.pdf

Very exciting project.  2.5 million ounces is HUGE !

[BlackPeter]

https://api.nzx.com/public/announcement/437772/attachment/426839/437772-426839.pdf

Very exciting project.  2.5 million ounces is HUGE !

It is. Not sure, though about the percentage of mining companies which actually delivered to the big promises they made. Let me tell you from experience - it is less than 100%, and actually I'd say its significantly less than that. Lets put it differently - I could not name any mining company which regularly or even frequently delivered on their promises.

During the times I was as well with a small toe in mining (a decade or more ago), I only seemed to have the bad luck that my miners always promised big, but delivered small (if at all).

But yes, the business cases always looked amazing and the reserves huge.

Typical issues I remember:

Bad weather (Ok - I note Otago is semi arid, but hey - who knows what climate change will bring);

Politics and strikes (OK - worse in the Philippines, but not sure what will happen here if after the current stunt of the cigarette and gun lobby some other party takes over the reigns)

Equipment breaking unexpectedly. That's something which seemed to happen frequently - and most of the mining equipment is really expensive and hard to source.

Environmentalists stopping the operation or just making it uneconomical. Sort of coupled with Politics, but always a risk in a country with a still somewhat operational justice system.

Problems (as above) in some other parts of the world sucking company resources. I hear Santana has as well interests in other parts of the world - did I hear Cambodia and Mexico?

Ah yes, and obviously - reserves are just an estimate. Sometimes they increase, but sometimes they decrease as well.

And hey - we don't even know whether the gold price is a one way street to riches. Actually - it does go up and down, and given that we reached peak human - who knows whether the demand for new gold will really sustain the current (rather high) gold price? Plenty of old gold around when the old people die and less and less young people inherit whatever they had.

Anyway - the plans always look great.

Good luck to holders (and I mean that). I do hope they have previous mining experience so that they know what they need to look for. It's a dangerous world out there.

I will be watching with interest.

Discl: Some previous mining experience ... OGC, TAP, Pike River, Chatham rise, ATC (yes, they owned a mine as well ...) to name only some of them. I have seen all of above (including gold price dropping). Most of these companies helped to reduce my principal No - not really funny, but maybe its an experience people have to go through?