Santana Minerals Limited

[Buzz]

Interesting discussion on the other channel initiated from a newbie 'Tinman' (it starts here) who seems to have detailed knowledge of this venture, and the vagaries of getting it to production, of course much to the disdain of those who reckon (hope?) it's all plain sailing to untold riches.

[Basil]

Interesting and robust discussion that's for sure.  I won't opine on whether I think anything that's been said is actionable other than to say one poster in the other place has certainly gone out on a limb to discredit the executives of Santana in a pretty serious way.

I think the Australian Gold mining analysts are FAR more experienced and far better placed to put a value on this company than myself or anyone else on here and of course they're valuing it with the caveat and assumption that consent is granted and mining takes place so you need to discount their average valuation by whatever amount you think is appropriate to take into account the consenting risk.
I note the average valuation of 4 Australian analysts covering Santana is A$1.235 https://www.marketscreener.com/quote/stock/SANTANA-MINERALS-LIMITED-13314774/consensus/

In terms of consenting risk and whether this gets going after possible appeals, I note this is a binary outcome situation and on a straight 50/50 assessment of the chances of successfully undertaking mining, if you discount the above valuation average by 50%, it becomes A61.75 cents = approx 67 cents Kiwi.
Maybe the shares are about fairly priced at this level ?

[Left Field]

Interesting discussion on the other channel initiated from a newbie 'Tinman' (it starts here) who seems to have detailed knowledge of this venture, and the vagaries of getting it to production, of course much to the disdain of those who reckon (hope?) it's all plain sailing to untold riches.

Very astute postings by Tinman. Investors beware IMO. Very high risk.

[Basil]

~$50m in cash on hand at the end of June and that's after investing ~ $5m in the previous quarter which was a very active period with multiple consultants paid for work done to advance the FTA and drilling to firm up the inferred resource.

They have enough cash for at least 12 further quarters, probably 4 years if they get bogged down in appeals and temporarily stop exploration work), in my opinion so its not the end of the world, (although one on the other channel seems to think it is) if they do not meet the timeline's already indicated, (first gold first quarter 2027).

Investment in Santana is clearly a bet on whether they get consent, taking a position on whether they can mine effectively at around the cost prices indicated in the updated PFS, how much they can expand the current estimated reserves through further exploration and the future gold price, among other things.

One new poster on the other channel seems to think he has a lot of answers.  I'm not an experienced gold mining investor by any stretch of the imagination so prefer in this instance to rely on the professional analysts in Australia who value gold mining operations on a very regular basis and as noted above, discounting the average of 4 valuations by about 50% for consent risk seems about right to me and the market in my opinion is pricing Santana efficiently for all the known and perceived risks at this point. 

I acknowledge the high risk and this is not for everyone but almost all portfolio theory I have ever read suggests investing 5-10% of your net worth into alternative asset classes.  Whether that's precious metal's, miners, collectables, art, classic cars, crypto or whatever other asset class you can think of that will give you a return of one form or another.   (Might not necessarily be a return in monetary terms either, for example some people get a heck of a lot of pleasure from investing in a race horse or a boat)  Choose whatever alternative assets float your boat.
https://www.fool.com/research/high-net-worth-alternative-investments/?msockid=35c2492e62e8616707d15a0f637860ec

[Left Field]

When I started investing, I made the principled decision not to invest in tobacco, gambling or mining companies. Makes me sleep easy at night. No regrets.

GLH's.

[Sideshow Bob]

~$50m in cash on hand at the end of June and that's after investing ~ $5m in the previous quarter which was a very active period with multiple consultants paid for work done to advance the FTA and drilling to firm up the inferred resource.

They announced recently they are buying Ardgour Station, which I think was $18m of cash (??) - so that will go through in the next months. Will make a dent in their coffers.

[Basil]

When I started investing, I made the principled decision not to invest in tobacco, gambling or mining companies. Makes me sleep easy at night. No regrets.

Its cool that you didn't exclude weapons manufacturers.  We need mining companies, how for example would you be driving your car without them ?  I like my Gold watch, I couldn't have one without gold mining companies.

They announced recently they are buying Ardgour Station, which I think was $18m of cash (??) - so that will go through in the next months. Will make a dent in their coffers.

Fair point, although possibly worth noting its a conditional offer until December 2025 with a $2m non-refundable deposit.

[Left Field]

Ha Ha....Cheap shot Basil......FYI I don't invest in weapons companies .....for the same reasons as above.

[Basil]

I think the chance is better than 50/50, given the pro mining stance of the current govt, and I think the delay means they're making sure they have all their ducks in a row before submission, which is healthy.
A friend who doesn't post shared this thought with me.

[Otago K]

Interesting and robust discussion that's for sure.  I won't opine on whether I think anything that's been said is actionable other than to say one poster in the other place has certainly gone out on a limb to discredit the executives of Santana in a pretty serious way.

I think the Australian Gold mining analysts are FAR more experienced and far better placed to put a value on this company than myself or anyone else on here and of course they're valuing it with the caveat and assumption that consent is granted and mining takes place so you need to discount their average valuation by whatever amount you think is appropriate to take into account the consenting risk.
I note the average valuation of 4 Australian analysts covering Santana is A$1.235 https://www.marketscreener.com/quote/stock/SANTANA-MINERALS-LIMITED-13314774/consensus/

In terms of consenting risk and whether this gets going after possible appeals, I note this is a binary outcome situation and on a straight 50/50 assessment of the chances of successfully undertaking mining, if you discount the above valuation average by 50%, it becomes A61.75 cents = approx 67 cents Kiwi.
Maybe the shares are about fairly priced at this level ?

bit random, too some extent about my money psychology, and consequently some investment strategy contemplation, but 12 months on from investment holding at a paper gain of 40% on my holdings.

Digression to the other site poster, for myself I have a clear knowledge of from my personal situation how people may choose to distort and miss portray elements of validity, can say there is some clear statements he makes that are bullshit, don't personally need to consider anything I see as valid in his statements to reconcile with where I am with investing in  Santana.

From here if it all goes rosy towards a gold pouring early calendar year 2027 it will be sub optimal for me to be placing some sell orders on SMI, but as we must appreciate there isn't anything certain in where the future Mr Market will see the valuations of traded shares. At a 40% plus 12 month uplift from week one of NZX trades when I bought in to what I always felt was an overweight SMI position I am more than happy to de-risk my holdings and particularly for what is in effect trust entity holders reduce the cash funds invested as a portfolio percentage, and consequently a lowering of the per share average, the extent of which may be somewhat determined by where the SP of SMI goes over the next month.

Digressing some what, in effect at least for one Trust Entity holder, arising from a late April 2025 KPG overweight level of buy activity, the current paper profit will warrant in the context of some beneficiary grumbles, a similar lowering of the weighted cash funds invested on a per share basis by moving to a more normalised portfolio percentage being held going forward.

[Basil]

I do have a few concerns which is why I have reduced my holding.

1.The facts are that they have repeatedly delayed making their FTA, since April, to end of June and in their latest PFS they said it was due mid July.  Why the repeated delay's ?
They have said its because they were waiting for one last report but now we're at the end of the month that excuse doesn't really seem to hold water anymore.  As a friend opined to me last week, (who is a consultant on the Waihi mine), maybe its not that the environmental report is late that's holding up the application, perhaps there's some things in there the company doesn't like ?

2. The use of a 6.5% discount rate in their latest PFS, down from 8% because the mine has been "de risked" lacks credibility. Even the original 8% discount rate to value future cash flows is quite low.  Most analysts use a companies WACC and is usually 11% or thereabouts.  The difference between valuing a stream of cash flows over 13 years at 6.5% or 11%, the latter gives a NPV approx 20% lower.  I think they are overstating the NPV of their estimated resource by ~ 20% for this factor alone

3. In recent days, due to work pressure earlier this month I have finally had the time to invest in comparing their initial PFS with the latest one in some detail.  The NPV has gone up mostly because of the increase in the price of gold and the use of the very "creative" discount rate in (2) above.  Mine economics have actually deteriorated at a cost level with the all in cost jumping by ~ $430 an ounce.  The size of the estimated resource has only increased marginally.  I think they need to drill a lot more holes to increase the size of probable reserves.

4. Gold itself has had a huge run and is now breaking down through key technical supports.   For me this factor is HUGE as a bet on this company is a big bet on the future direction of the gold price.

Finally, mine approval is a binary outcome process and with that are serious risks.  Appeals including a possible judicial review could take this process out over the deadline of the election next year, Tinman has made that point and some others, quite well.

DYOR I am not, by any stretch of the imagination,  experienced at investing in gold mines.  In my book, any company needs to build a track record of credibility of doing what they say they will do.  FTA has been delayed several times and by many months...that's made me increasingly uncomfortable as the months have ticked by.

Disc: Still holding a very small stake.

[Left Field]

Thanks for sharing Beagle. Wise move IMO.

[seaweed]

Anyone remember Heritage Gold years ago, I lost money on that one too.

[Hectorplains]

Anyone remember Heritage Gold years ago, I lost money on that one too.

Heritage kind of lives on (in an undead / zombie kind of way) as New Talisman, and it still isn't mining any gold. 

[Dolcile]

For the record I've also sold out.  I hadn't noticed the change in discount rate Basil, but I had uneasiness even around the previous 8%.   

My change of sentiment was more to do with my own risk tolerance, together with the lack of transparency around the status of the fast track submission and my view that there is a very low margin of safety at the current valuation.