Panthera Resources (LON: PAT) shares are up 12% this morning. The jump in PAT shares seems to stem from another announcement about the arbitration case in India. As far as it’s possible to tell they do have something of a case here. But it’s going to be some to many years before there’s even the hope of a payout. We’d therefore suggest that price movements based upon entirely procedural reports about the case are not likely to be maintained. Sure, any final payout could be substantial. Not as substantial as some seem to think (even a total win would be profits after due taxes, not the value of production) but we also need to add both probability of success and also time to the net present value.
The announcement: “Following the delivery of the notice of dispute and in the absence of any meaningful correspondence in relation to this matter from the Government of India or if no amicable settlement is reached, IGPL will subsequently deliver a notice of arbitration to the Government of India. Any such notice of arbitration is anticipated to be delivered to the Government of India in the first quarter of 2024. Under the Treaty, an arbitral tribunal is to be constituted within two months of delivery of the notice of arbitration. The Company is aware that on 30 September 2023 the Times of India reported that, based on information from the Geological Survey of India and the Additional Chief Secretary of Mines, the gold deposit at the site could be worth over US$1 billion.”
The way we read that is that the gold at the site might have that value - before extraction costs. Any award will be about profits lost, not total production value. We’ve also done the calculation another way (114 million tonnes of ore at 2 g Au) and get the same answer - $1 billion sort of range.
Panthera Resources share price from Google Finance
We’ve talked of Panthera Resources before: “Panthera Resources (LON: PAT) shares are down another 12% today. PAT shares are down because the company has lost yet another court ruling in its fight over that Indian gold mine prospect. The domestic courts have now pretty much been exhausted to it’s off to the international arbitrators to try and get this sorted. That takes years - years and years.” And more hopefully about PAT shares: “Panthera Resources (LON: PAT) shares are up 20%. PAT shares are up as the company announces that it has gained litigation finance. This is important because there was some worry that they would not. Without finance they’d not be able to pursue the claim - and if they couldn’t get finance then perhaps the claim wasn’t very good.”
They did gain litigation finance, they are good to go on that arbitration proceeding. But the claim isn’t going to be for $1 billion and the award most certainly isn’t. It’s also going to be years before we know. There may well be interesting blips in the share price as things proceed but don;t get excited by any of them.
