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Strong close on the cards
Stock getting tight
Some decent buys coming in now to take the volume over 1 million on what has been a quit day so far with most trades designated sells even though they are buys.
Au back through $2000 and doesn't look like it's going to drop below $1980. Some more of the same inflation, job reports and retail spending numbers and I can see us staying above $2k for all of 2024. The Fed will signal tapering from May in the Feb 01st announcement and then Au will be off to the races. Throw in all our news over this 6 month period and we're going to be 15-20p guaranteed. Any t/o offer sub 25p is going to need to land in the next few months for it to have a chance of being accepted. At the moment we're a straight up money printing machine. Current Q4 average Au price is going to be +$1950 providing we stay above this level for December. Extrapolate with some reasonable assumptions of $1100 group AISC and 28k oz production and you get $23.8m EBITDA.
In summary the Q4 update in the second half of January is going to look extremely good. We'll have exploration results back from all three tenements, net cash position, and possibly a new CEO announcement. Throw in significant reserves upgrade later in Q1 alongside a decision to expand Sing production and I cannot see the sp being below 15p providing Au is still above $1900. Solid +30% from now in 8 weeks. Sometimes it's very easy to make money. GLA
Ah that would be me!
Gla here, still an excellent opportunity, and hope to return soon(circumstances pending)…but a profit is a profit.
Yup, perfect maths
Whatever is achieved:
With 1B shares in issue, for every 10M added to cash reserves ( and completely excluding everything else ) should add 1p to the share price. Is my maths correct?
Someone just took some profit!
Odd. No trades yet. Waiting for somat?
Toptiger, sorry, I cannot share the names, as I am still accumulating. One problem is these stocks are quite illiquid now, most being under 200M market cap. It takes a lot of time to get a decent exposure if you don't want to cross insane spread. At this point, SHG is my largest position, and it will probably stay like that for some time.
I often am !
Except I was one of those who thought the new mine was going to be late , have teething problems. And I thought they were surfing close on liquidity.
Happy to admit I was wrong and staggered that it’s over performing targets and on budget and time. If you look at the video presentation someone posted from three years ago they have achieved everything they said they would and more. That is rare on AIM
Look at the car crash HZM on mine build , RMM , all the other over run projects , the market is littered with casualties. But Shanta seems to stand out.
Eric will want the headline of debt free on his likely final quarter as CEO
Mic drop and leaves a hero to some.
But I still think theirs a better man for the job although I think Eric is excellent at presentations and selling it.
He says he has a candidate who as a shareholder himself he would be more than happy with , have a feeling it’s a done deal with said person and he’s waiting for him.
I hope you’re right mate!
You need to realise not all quarters are the same , the capex at the new mine of 3 million is not applicable this quarter and their could of been catch up equipment last quarter on plant and machinery elsewhere.
If you assume it is 1 million for on your assumption and factoring the dividend payment then the debt is cleared just on that thinking.
I’d be staggered if they had any net debt on the next set of results
Gold only dipped briefly and is on for averaging the same as last quarter. I guess if gold stays this level or kicks on will enhance the numbers.
We also have to expect the normalisation of cash costs upwards at the new mine to more the plan
Eric has already warned us not to expect cash costs down at 800 dollars as there are oxides in the stockpiles that are pumping up the numbers.
I think this quarter Q4 we will see grades fall back to the plan.
I’m looking forward to drilling results on the Tanzanian assets and more reserve additions supporting the expansion.
Thanks GGG.
Don’t get me wrong I’m also super bullish i just think we need to be careful re the net cash position. Eg public am saying gold is now $2k is a bit rampy given it was in the $1800s for the first part of the quarter.
Debt will have reduce by about a $1m more this quarter than it did last - that’s my point.
Hi Adw, it's really broad brush strokes (yet conservative) based on the last 2 quarters. Given the last 2 quarters I've used:
- $1200 AISC (higher than last 2 quarters)
- $1900 Au price (lower for this quarter)
- Production of 27.5k oz (average last 2 quarters & 2024 guidance)
From this you get $19.25m EBITDA. Publican mentioned some additional costs from last quarter that no-one expected. But in Q2 you need to keep in mind they cleared over $10m in debt. If Au averages $1950 (current expectation), AISC are $1050 (current average), and we mine the higher end at 29k (Q2 production) then you get to $26m EBITDA. So with net debt at circa $5m I'm expecting us to land somewhere between $5-10m in net cash even with taxes, dividend payment etc.
After this with Au averaging +$1900 then I would expect $10m cash build to be relatively safe assumption even if they're throwing $25m ($6m per quarter) at further exploration. One needs to keep in mind this is a lot of drilling across the 3 tenements. Our EBITDA will range between $20-30m per quarter with Au ranging $1900-2000, AISC ranging $1000-1200, and production ranging 27-30k oz per quarter.
That's the thinking at least. Basically every quarter in 2024 we'll be adding a lot of ounces to reserves across 3 tenements, building to expand production by 30% in 2025, and still adding to our net cash position (lowering our EV). That's why I'm saying it's an easy double from here providing Au stays above $1900 and we have no mine breakdowns etc. An offer will definitely need to be +20p to have a chance of succeeding in the next 3 months. In 6-9 months I think at least 25p. And in 12 months at least 30p (providing 140koz is the 2025 production forecast). AIMHO GLA
With all respect it does not take a big calculator to work out we will be debt free on the Q4 report
Gold prices are 2000 area
They don’t have 3 million of capex to spend on the new mine
They fix the roof while the suns shining with spares
If you have Less debt then it’s less interest to pay this quarter also
So just with the 3 million extra and interest less you arrive at full debt payback
This is a 200 million dollar turnover business and you think debt won’t be paid this quarter ? Even with the dividend payment it will be
I concur, which is why I've bought GDXJ.
Very happy with exposure to HUM and SHG, but wanted some diversified exposure.
Sold all my QQQ positions! Eek
Equanimity,
totally agree with regard other gold miners, and for us just a matter of time......what gold miners over in TSX land are you looking at btw ?
“Balance sheet deleveraging with net debt of US$4.9 million ("m"), down 44% from US$8.7 m in Q2;”
So they paid off $3.8m last quarter leaving $4.9m net debt. What makes people so confident we’ll be debt free by year end ? Saying they paid off debt doesn’t really answer it!
For example, once the gold mining sector valuations normalise, every gold ounce in the ground would cost 100$ or higher. Only WK, with 3M Oz reserves, would cost +300M, i.e. double of current Shanta capitalization. +140k Oz production with Singida and NL reserves would come for free,
Current undervaluation is not only about Shanta. I am looking at many gold/silver producers in the US, Canada, Australia, and it is amazing how undervalued they are now. Gold mining sector has probably never been cheaper relative to the value. This is a typical vicious cycle:
Value Lower --> Portfolio Managers are fired and liquidated, retail investors run --> Prices lower.
The tide is turning now. Once gold starts testing the 2100 - 2500 range, I expect a lot of madness on the contrary. PMs will get hired back, new allocations will be given, the most undervalued stocks, like Shanta, will quickly re-rate. We don't even need any news stream from Shanta for re-rate. Anything on top, like drilling results, Singida expansion, WK progress, etc., coinciding with the upward gold move, will produce an overshoot in value.
For a start they had debt repayment and interest last quarter which will be gone Q4
So no more interest or debt
They had capex of 3 million on the new mine on a power upgrade so prob had bits there still to sort.
This quarter they will have the dividend payment of 2 million I guess
From Q1 they should be plus 10 million at this gold price cash surplus no debt at the worst case.
This would be a lot more but they are drilling on three fronts and doing a feasibility on Kenya and associated work streams.
I guess when that’s out the way they add far more in cash per quarter.
Other posters may have a better idea.
What will Shanta look like after 12 months with 40-50 million on the balance sheet ? That should go right onto the market cap and then some !
It’s ludicrously undervalued but the market likes to see hard figures and profit before it re-rates us
Great to think that one quarters profits pay for the expansion at the new mine taking us up to 140,000 oz producer !
Lots to come here and the growth opportunity is amazing all self sustaining.
Todays start looking good with a couple of decent buys 100000@11.644, 150000@ 11.70 and 150000@11.68. If this continues 12p must be on the cards today.
Hi GGG, really enjoy your post, tip analysis.
But can. I ask what makes you say we’ll be adding $10m per quarter? We were miles off that last quarter weren’t we.
About Singida superpit: take a look and pay atentiom starting at min 6:53
https://youtu.be/kzMpQlHB89w?si=Xn8SzneaGd_45iQO
I agree with pretty much everything Publican, except the Au price. Reckon we may need to wait until Q1 before we see new highs. I see Au range bound ($1970 - 2010) until the next set of inflation, retail sales and jobs reports come out. If heading in the same direction then Feb 01st Fed meeting should light the blue paper to push Au to all time highs. To be honest I think this will be perfect timing for the sp to start pushing toward all-time highs as well. We'll have received the Q4 results, which will be spectacular and show a net cash position of circa $10m. And we should have received all exploration results by this point, which will then feed into the Feb/Mar reserves report. From there they can sanction the second ball mill at Sing and we're off to the races. By end H1 I'd be surprised if we're not at 20p. A bid then will need to be closer to 30p.
As mentioned many times, the longer a would be predator waits to make a bid the more they will have to pay. This is especially the case if Au continues on its current trajectory, which imo is all but guaranteed. Remember every quarter we're adding +$10m cash to our accounts. By the end of next year we'll have $50m in cash sitting on top of +1moz of additional resources (min), ML for WK, and140k oz production profile for 2025. Then we have jokers in the pack like Sing super-pit, $30m VAT receivables, and another Tanz near mine license with +500k defined resources. All will add 5p in their own rights. Sing super-pit could make this go silly.
I just need my straggler to pick up in i3e and I'll add more to my pile here. Divis will obviously be reinvested. Something else for the sp next week. Reckon we will get an incremental +3m shares picked up by current investors with their divi payments. Put this buying on top of what we're currently seeing and you can add another half penny to our base. Soon to be knocking on 13.5p resistance imo (as in the next few weeks). GLA