Santana Minerals Limited

[Basil]

Updated Mine pre feasibility study released yesterday.  Looks very good.
https://api.nzx.com/public/announcement/454329/attachment/446695/454329-446695.pdf

Noting much lower pre-strip, now 6.5 units less than half the 15 in the original study, much lower capex.  Disc: I significantly increased my position in late June.

[Dolcile]

Hey Basil, where do you see the current value of SMI? So hard to know with these gold plays.  Obvious risk seems to be not actually getting the permit to dig the stuff up.

[Basil]

Bell Potter valued it at A$1.30 a while back and that's modelled off their old pre-feasibility study and takes a very conservative view of the future Gold price.  It will be interesting to see where they value it now given much lower upfront capex.  Looking forward to seeing their revised valuation in due course.

Clearly, consent is not a foregone conclusion and is the biggest risk, although under this far more progressive Govt agenda, I think its better, perhaps much better, than a 50/50 chance. First gold if consented is not until early 2027 so this isn't without risk that's for sure and people need to consider their risk tolerance, whether this fits with their ESG beliefs and whether a new unconsented start up mine is for them and if so, what's an appropriate portfolio allocation.   

On the other hand Bell Potter called them a speculative BUY and reckoned they are ripe for takeover once consented, or words to that effect and there are very few opportunities this compelling for the big Australian miners to add significantly to their reserves.   I reckon a takeover is a very real chance once the mine is up and running.  Hopefully that takeover is at least double the share price as it stands today, triple or quadruple your money 2-3 years from now would be much nicer.  I would probably best describe my investment here as a fairly large speculative punt that's not for the faint of heart.

[Dolcile]

Thanks Basil

[Dolcile]

I spent a bit of time looking at Santana today, and ended up making a small purchase.   Keen to see how this one plays out. 

[Buzz]

@Basil I like your summary of a "fairly large speculative punt". My concern with that is there will be an election before they are mining in any significant quantity and with the way the coalition is polling, it could be a disaster if Labour/Greens and heaven forbid the Maori party got in again. They'd kibosh the thing in a heartbeat and we'll all be forked. For mine, it's a 'smallish speculative punt', and a close eye on an exit if politics seems likely to get in the way. I think another eye on monitoring the gold price is warranted.

[Basil]

I spent a bit of time looking at Santana today, and ended up making a small purchase.   Keen to see how this one plays out. 

Welcome on board mate.

@Basil I like your summary of a "fairly large speculative punt". My concern with that is there will be an election before they are mining in any significant quantity and with the way the coalition is polling, it could be a disaster if Labour/Greens and heaven forbid the Maori party got in again. They'd kibosh the thing in a heartbeat and we'll all be forked. For mine, it's a 'smallish speculative punt', and a close eye on an exit if politics seems likely to get in the way. I think another eye on monitoring the gold price is warranted.

Its going to be a horrendous mess if those three get into power and there will be PLENTY to worry about if they do but passing legislation to retrospectively annul what will amount to a mining operation that's well underway, albeit still in the pre-strip and commissioning phase hopefully by late 2026, is the stuff of banana republic's and not something I think even they would stoop too.  They haven't tried to stop the operation of the Macres mine or the Waihi mine before so what you're suggesting as a realistic possibility is not something that concerns me as they would open themselves up to a massive compensation claim of the net present value of the mine based on the prevailing spot price of gold at the time...potentially an actionable claim for as much as $2 Billion.

[Basil]

https://www.thepost.co.nz/business/360742481/australian-miner-expects-38b-pre-tax-profits-nz-gold-mine-current-prices

Another article.
AROUND 20,000 (by my guess) NZ investors have bought shares in the Bendigo gold project being developed by Santana Minerals near Cromwell.
The gold discovery is of world-class dimensions, the grade unusually high, the ore easily able to be realised without the high-energy process of burning off carbon before the gold is heap-leached from the crushed rock.
The investors will be elated that the gold price has risen, converting the modelled production of gold into a giant dollar value, probably exceeding ten billion, over a decade or so.
All of this will be highly relevant to those investors.
Naturally there will be an anti-mining lobby. Quite correctly it will want assurances that the project does not create hazards (for example, water pollution), does not damage any unique flora or fauna, does not ruin the life quality of any neighbours, and does not destroy public playgrounds, like national parks.
The authorities that will assess the project are about to be called into action, the consent application to be filed soon (but no date specified).
Under the previous Act, the Environmental Protection Agency assessed the environmental issues and the economic benefits and released its judgment, approving (or not) the project. Only a court could reverse the EPA decision.
Today, the EPA simply assesses the "completeness" of the application, given 15 working days to announce that the consent is complete or not. A "complete" application respectfully acknowledges the issues, and details how these matters will be mitigated, relying on expert independent consultants.
Santana has spent $6 million, and change, on at least 12 consulting firms, one of which has yet to complete its work; hence the delay.
The EPA would not destroy its credibility by comparing mining disasters in unregulated parts of the world where engineering standards do not exist, and no heed is placed on safety or the environment. Such a scare strategy would be childish and would discredit the anti-mining lobby.
The EPA no longer has the role of assessing the economic benefits and thus is not the judge of the overall case. All it can do is refer the consent back to Santana, demanding it addresses whatever the EPA decides has not been addressed or conclude that the application should be passed on to the Fast Track panel, to approve the project, or not.
The EPA process no longer involves public submissions or public hearings. The Fast-track panel weighs the environmental cost with the economic benefit.
The modelled economic benefits at today's prices are undeniable.
Annual export of gold – $500m-800m per year
NZ Govt tax and profit share per year – $200m or thereabouts
Jobs – 300 (plus)
Minimum span of the mine – 13 years (probably 15+)
Modelled profitability – billions
NZ ownership – currently 40% plus
To date, 900 people from around Central Otago have contacted Santana applying for jobs.
The objectors have one immutable claim – that the distant valley, on private land, 3.4 kms from any house, and around 6kms from the highway, will end up with a giant hole in it, possibly 2kms long and 1km wide. No doubt soil and rotten rock will be stored and later used, and no doubt natives will be planted later, but a hole is still a hole.
Some of the objectors, holding meetings and attracting media coverage, have badly damaged their credibility with silly stuff, which has encouraged the general public to dismiss the agitators as Wallys.
One angry protest organiser has claimed she will have to look at the mine while she drives along the highway. Her driving licence should be withdrawn if she gazes into the hills looking for a distant valley six kilometres away.
Another, an unwise lawyer, wrote that all the financial benefits will go to the Australians (who own 60% of the project). The tax, amounting to billions, goes to the NZ Government, and 40% of the dividends go to the NZ shareholders. Facts are facts.
But a giant hole is a giant hole so the consenting process will be crucial in coming weeks.
That hurdle to overcome is reflected in the discounted share price, now less than one half of the value of a consented project, and less than a quarter of the value of a producer should the current gold price be stable.
All of this explains the high level of concern of current and potential shareholders. For example, the Australian institutions would rather buy later at double the price than take the risk of the consent process favouring objectors. Aussies have no respect for our anti-mining lobby.
Over the next month all Santana investors will be on high alert.
The NZ Government very firmly wants the jobs, the exports and the tax. The environmental objectors will be noisy and in some cases coherent about their reservations.
Hold on to your hats!
The next month may be a test of the Government's enthusiasm for mining.
Footnote: Santana has this week updated its feasibility study.  The study is worth reading.
Chris Lee yesterday

[Otago K]

Bell Potter valued it at A$1.30 a while back and that's modelled off their old pre-feasibility study ...........

I suspect that the next Bell Potter publicly announced valuation will be once there is an approval into the FTA process and I am picking might well start with a $4 level. Some of the base upgrades we have had announced to the ASX / NZX I am guessing would have had them valuing over $4 in their initial valuations if in the FTA process when you read through them, and taking into account regards the overhangs possible. Think the  A$1.30 was discounted from about A$2.60 as the FTA was uncertain so consequently more speculative.
The Bell Direct you tube report has it as their potentially best pick to give a ASX SP 12 month uplift from early 2025 to the end of calendar year 2025.
discl: at current SP I would be pushing my portfolio % weightings rules majorly to further invest any funds, and I am not yet happy the SP has the value that would justify any sell downs to the various entity holdings I am dealing with.

[Dolcile]

Hold up $4, that's a market cap in excess of $2.8 billion.  I think we need to pump the breaks a bit - unless I'm seriously misunderstanding?!

[Basil]

I've got a copy of Bell Potters $A1.30 valuation here.  At $A54.5 cps the market cap was $A394m which is basically where its at now.
Updated pre-feasibility study talked about a net present value of the mine of $A1.5 Billion, that's 3.81 times that share price = $A2.07 based on known reserves established to date.  https://api.nzx.com/public/announcement/454379/attachment/446791/454379-446791.pdf
I would think if we are fortunate enough to get mine approval, the share price would move materially north as a result of that. 
Keep in mind the Marth Hill mine at Waihi was originally supposed to have a 10 year mine life in 1987 based on probable reserves known at the point of its development and 38 years later its still has a 10 year mine life.  They just keep finding new veins of gold to mine.  Likewise I expect the ~ 13-14 year initial mine life of Santana will be considerably longer as they find new reserves, (assuming they get approval)..

[Dolcile]

I suspect that the next Bell Potter publicly announced valuation will be once there is an approval into the FTA process and I am picking might well start with a $4 level. Some of the base upgrades we have had announced to the ASX / NZX I am guessing would have had them valuing over $4 in their initial valuations if in the FTA process when you read through them, and taking into account regards the overhangs possible. Think the  A$1.30 was discounted from about A$2.60 as the FTA was uncertain so consequently more speculative.
The Bell Direct you tube report has it as their potentially best pick to give a ASX SP 12 month uplift from early 2025 to the end of calendar year 2025.
discl: at current SP I would be pushing my portfolio % weightings rules majorly to further invest any funds, and I am not yet happy the SP has the value that would justify any sell downs to the various entity holdings I am dealing with.

Hey O K

Can you provide the link to that YouTube video you referenced?
Thanks

[Otago K]

Hey O K

Can you provide the link to that YouTube video you referenced?
Thanks

Hi, I will try to get around to it, will be  a few days until I have the time.
Also to the detail of the overhang element into valuations, for that I think there is a paper record of it, that said I am wondering if the matter may have even been pre the 3 / 1 split. May have got a little ahead of myself, perhaps good to maintain a level of caution being warranted by others.

Hot off the press: Not that reliable but simply wall street has a downgrade to A$1.17 on basis of averaging 4 analyst reports, suspect someone has downgraded, nothing to identify an actual update as at today's date.

[Basil]

https://www.marketscreener.com/quote/stock/SANTANA-MINERALS-LIMITED-13314774/consensus/

Note these 12 month price targets are in $A.  High estimate is $A1.40, low is $A75 cents.  Average $A1.17

For what its worth, (he is not a resource management consultant), I had a good chat with my environmental engineer friend today who was extensively involved with the design of the water treatment plant at the Waihi Gold mine and has spent a lot of the last year working on the updated development plans there.   His thoughts are that if for some reason Santana's application under the fast track approval process is knocked back, they still retain the option to reapply with an amended application process under the standard resource management act application process.  He thought any environmental concerns could probably be addressed in an updated RMA process.  I think, don't follow politics to closely, that a revised streamlined RMA Act is in the works.

This is still speculative though and there are no guarantees consent will be granted under either application process so portfolio allocation needs to be carefully considered as does whether this fits with your ESG criteria.

[Otago K]

https://www.marketscreener.com/quote/stock/SANTANA-MINERALS-LIMITED-13314774/consensus/

Note these 12 month price targets are in $A.  High estimate is $A1.40, low is $A75 cents.  Average $A1.17

For what its worth, (he is not a resource management consultant), I had a good chat with my environmental engineer friend today who was extensively involved with the design of the water treatment plant at the Waihi Gold mine and has spent a lot of the last year working on the updated development plans there.  His thoughts are that if for some reason Santana's application under the fast track approval process is knocked back, they still retain the option to reapply with an amended application process under the standard resource management act application process.  He thought any environmental concerns could probably be addressed in an updated RMA process.  I think, don't follow politics to closely, that a revised streamlined RMA Act is in the works.

This is still speculative though and there are no guarantees consent will be granted under either application process so portfolio allocation needs to be carefully considered as does whether this fits with your ESG criteria.

There was a snippet on TVNZ 29/06/2025 6pm News that started with Shane Jones stating that the Otago Local Authorities were negative about his mining plans, rest of the talk was regards the removal of Regional  Councils. Might fit with the rejected FTA speculation you had heard.

https://www.marketscreener.com/quote/stock/SANTANA-MINERALS-LIMITED-13314774/consensus/

Note these 12 month price targets are in $A.  High estimate is $A1.40, low is $A75 cents.  Average $A1.17

For what its worth, (he is not a resource management consultant), I had a good chat with my environmental engineer friend today who was extensively involved with the design of the water treatment plant at the Waihi Gold mine and has spent a lot of the last year working on the updated development plans there.   His thoughts are that if for some reason Santana's application under the fast track approval process is knocked back, they still retain the option to reapply with an amended application process under the standard resource management act application process.  He thought any environmental concerns could probably be addressed in an updated RMA process.  I think, don't follow politics to closely, that a revised streamlined RMA Act is in the works.

This is still speculative though and there are no guarantees consent will be granted under either application process so portfolio allocation needs to be carefully considered as does whether this fits with your ESG criteria.

TVNZ 6pm news on the 29/06/2025 snippet on the question of the point of Regional Councils starts with Shane Jones making comments that the Otago (Council?) are very negative of his mining emphasis in essence. May sit with what you had heard of a FTA rejection possibility, still would have expected to have heard if it was submitted?? speculating