Other than an 85% intra-day spike (from 2.8-5.2c) & ultimate 50% closing gain in its share price when announcing the acquisition of the Dante Ni-Cu-PGE Project, GCX has been pretty quiet. However, just like the little duck swimming placidly on the lake, there may be more going on beneath the “water” than meets the eye.
The week that saw the report of this deal saw the largest weekly volume in the stock EVER, at just under 11m which is only about $500k worth of stock – very little in the scheme of things.
What was very refreshing about the deal was that it wasn’t accompanied by an el cheapo cap raise to get the insiders set so they could empty on the unsuspecting public. This is a “pay if you want to play” deal that has been vended into a very tight shell (more about that later).
Similarly, the vend, assuming the issue of 50m shares & not including performance shares, equates to about $1.4m at the pre-vend price; a very reasonable price to the best of my limited understanding. Just the database inherited with the project would be worth many multiples of the initial vend.
My experience has taught me that when perf shares are issued during a vend, the hurdles are usually set at milestones that are relatively easily achievable in the eyes of the project vendors. Consequently, should the performance share hurdles be met, I doubt that anyone will be complaining about issuing the additional stock given the share price targets.
I was pleased to see that Thomas Line (formerly TAR) has learned his lesson from his time at TAR, with GCX already having completed initial heritage surveys and signed a Native Title Agreement. In a nutshell, this means there will be no impediments to drilling.
The project itself is just up the road from BHP’s $1.7Bn Nebo-Babel Ni-Cu-PGE mine development & seems to have many of the hallmarks of that project.
The recent release of CHN’s Gonneville scoping study has many pundits believing that this project will never be developed. Notwithstanding the haircut that CHN received on the back of that report, there are numerous punters who had a very nice pay day on CHN’s run from circa 15c to $10 who should be willing to take a punt on an early stage PGE story which ticks many of the right boxes.
GCX is the consolidated former Paringa Resources (PNL). If my analysis is correct, Tribeca Investment Partners basically did its balls on PNL & as a consequence of the restructure is GCX’s largest shareholder, with about 18% of the register. It also has 20m options exercisable at 7 & 9c.
Tribeca has 2 Board appointees at GCX & needs GCX to do basically “do a CHN” in order to see its money back. Tribeca would’ve had to approve the Dante acquisition for it to go ahead & must see the merit in the project. Obviously they don’t get it right all the time – none of us do; but I dare say they have a greater ability to assess a deal like Dante than what I do. And should Dante come up trumps, they have the financial ability to turn it into a mine.
Following a 2.5 year absence from the ASX while all the PNL clusterf was being sorted, GCX raised about $5.5m at 5c post a 20:1 consolidation; relisting in June ’22. GCX currently has about $3m in the tin. Since relisting the stock has pretty much been dormant, drifting on almost non-existent volume after hitting a high shortly after relisting of 6.5 and a low of 2.3c in May of this year.
Upon reporting the Dante deal, GCX spiked to 5.2c on its highest ever daily volume. It then retraced to 4c and was seemingly accumulated in the low-mid 4s until it traded at 5c on Friday. I was one of the parties accumulating.
Logically, there should be some paper coming out at the 5c level as that’s where long-term holders from the placement are finally seeing their money back. The weekly close of last week is the highest since July ’22. A break of the 5-5.2c level should see a move to retest the post-consolidation ATH at 6.5c. Following that, the chart has some absolutely stupid targets that I won’t even mention.
The question is though, what is going to be the catalyst for this potential move?
Although GCX has permission to drill, there is no mention of when they will drill. I don’t know what they’re waiting for. CHN put on $50m of MC on the back of their first drill hit & continued on its vertical trajectory from there. $50m is multiples of GCX’s MC but it seems as though GCX is a bit away from that.
Anyhow, that’s my Sunday rant for you. I’d be interested to hear if anyone out there has anything to add. In the meantime, I’m a happy holder & potentially an ongoing buyer.
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