Anonymous Analytics out with a strong buy on GTT – see the full thing below.
The last three weeks have been an interesting ride for GTT shares. On 25 June 2020, we released our initial ‘Strong Buy’ report, and in the following days the stock climbed over 20%. Then the Company’s mineral resource estimate (“MRE”) came out and the stock tanked, before recovering some ground.
GTT summary
So, what happened? In short, the numbers were exceptional and exceeded our expectations, but were confusingly presented and largely misinterpreted by the broader market.
First, the MRE showed a giant headline resource of 800 million tonnes. Big is usually good, but in this case, the surrounding lower-grade rock averaged out the high-grade core. GTT’s deposit is unique because of its concentrated, high-grade core, not because of all the other rock surrounding it. Moreover, the Company initially failed to provide a detailed break-down of the different grades, which left investors
concerned this was a high CapEx project.
However, these issues were addressed on a conference call Thursday evening (9 July 2020), and they line up closely with estimates we had in our initial ‘Strong Buy’ report. We’ll take a look at those figures, next.
Second, the MRE wasn’t presented in a way the market is used to. CEO Paul Harbidge is a geologist. The guy spent over 30 years in the bushes making discoveries, that propelled multi-billion-dollar valuations.
As chief geologist at Randgold Resources, his gold discoveries helped take that company from a hundred- million-dollar valuation to a multi-billion-dollar valuation during his time there.1 Mr. Harbidge didn’t spend his time in the investment banking world, trying to pitch promotional slide decks to investors.
Accordingly, we think he’s new to speaking the language investors need to hear.
“Former colleagues rate him as the best geologist in the industry. His exploration team at
Rangold found 16m ounces in Mali and Senegal, and at Goldcorp he flew in a loop around
its operations, focusing on near-mine discoveries instead of stacking-up ounces on
paper.”
2
– Global Mining Observer on Paul Harbidge
GTT stock pitch continues here
