You are indeed correct but profits look like they are going to continue to increase gradually as costs are being kept down after re-reading the interim figures. Still excellent news imo and with no debt things still look good here provided the price of platinum continues to hold around current levels.
Treadstone - Annual product was always around 55,000 - 60,000 ounces, I think the 35,000 ounces quoted is the interim total (ie over two quarters). An excellent achievement ofcourse. But there hasn't been a staggering increase to projected production. Remember we were always producing around 13-14koz each quarter but it has risen recently thanks to management initiatives.
looking to retrace a bit probably because there'll be little news until next quarters results ending 31st march to be released in april. It's as if few investors read the good news in the last quarters results fully. Project echo is already underway and production upped to 60,000 ounces pa promised from the current 3500 ounces. A staggering increase in production let alone revenue and profits is on the cards for this year. I've recently bought back in with a small investment having sold out earlier which was a mistake. I will add on any further weakness before the next results.
Wuffle - you were right, Stillwater are planning to expand the Blitz project and they anticipate "production of 270,000 to 330,000 PGM ounces/year when fully ramped up by 2021-2022". Now general production ramp up quite often comes in gradual increments so increases to free-cash flow won't be sudden and we this will require continued capital spend, the details of which I am still looking through.
If what the guest speaker said was true, that Stillwater cash-flow won't cover the servicing of the newly created debt pile Sibanye has taken on in order to merge then it adds a significant strain to the PGM sector. Dividend cuts, job cuts and lower forecast earnings short term followed by potential cash-flow issues, assuming low PGM prices come back to bite them. I doubt this will be the case however and expect we will see Sibanye complete further deals following Stillwater.
They were interested in Lonmin but I don't think they will go for an all out takeover now. I don't believe Lonmin will be looking to dispose of individual assets. Which brings a potential agreement concerning the 'mines-to-market' strategy Lonmin have and Sibanye want in South Africa. Lonmin could agree a shared partnership deal whereby it retains majority control of the operation but allows for Sibanye to treat it's product for a 'toll fee'.
That would be beneficial to Lonmin who have excess capacity but are reducing production.
That's an interesting point Wuffle, I have yet to check those details so I can't confirm. I would be keen to follow up and assess what Stillwater had been developing up to the point of Sibanye's offer. I would add that Stillwater have come a long way since 2012, their output has dramatically increased to the point where I now believe the company stands in the top 10 listed PGM producers in the world. I am currently compiling research for an article on this as previous date published was for 2014 and then beyond that investors have to research individual sources. So I am hoping to outline the rankings for all private investors to make it easier. My interest is in the general trend and how much of a market share the top 3-4 have of primary platinum production. If this project does not prove too great I hope the findings will help others to make longer term decisions about the future of the platinum industry. We know global production has fallen since 2012 but it would be easier to see if this data was compiled in chart-form.
Shareminator, I did some digging about when the deal was announced and have an image in my head from a corporate presentation of a huge mine expansion for Stillwater (which would alter their financials). Have I remembered this right? None of this changes your fundamental point that this is exceptionally 'brave' by Sibanye but it would bring some viability to the endeavor. -Though they did get the financing away so it won't have been an obvious 'dead duck' and plenty of people are PGM positive. Apologies if I have remembered this incorrectly but I made no notes as it was just for context.
Of interest to those following the pgm space, CNBC discussion concerning Sibanye and its recent acquisition of Stillwater (original post on LMI board)
They recently agreed to acquire US based precious metals producer Stillwater for a deal worth approximately "1.5x the size of Sibanye at the moment" according to the analyst on the show. Context behind the deal is to pay an all cash deal through a bridge loan at Stillwaters record highs and then raise about $1 billion from a dilutive rights issue to pay down that bridge facility. The current dividend yield is expected to be slashed and the deal will be a serious dilution to shareholders.
One of the presenters suggests if Platinum is ready to go higher then now is the time to be making deals like this, that is Froneman's (of Sibanye) vision apparently and we have seen Palladium rise strongly in recent weeks. The guest analyst proposes there is not another platinum miner that is banking it's credibility on higher platinum prices more than Sibanye following this deal. Meaning even marginal producers like Lonmin are not as exposed to PGM weakness as Sibanye will be once the deal is completed. Bankruptcy is a very real risk for Sibanye if PGM prices do not continue to strengthen and I will comment on this a little later. Remember Sibanye could have played it safe and bought Lonmin, we were the cheaper option in their backyard offering the mine-to-market strategy they are after. We have it from various sources the two companies were in discussion for a while before the Stillwater deal was announced.
Stillwater will apparently only increase their production by 20% and yet it will cost 1.5x their current market cap in order to acquire it! I think that excellent point puts into context just how valuable this asset space is right now and what is at stake going forward.
Bankruptcy mentioned above is also touched upon in the closing statement of the discussion. The female presenter mentions the likelihood of difficulties servicing their debt if PGM prices don't gain momentum. And just listen to what the guest analyst has to add! Incredible really. The free cash flow of Stillwater is not enough to service the debt at the moment at current PGM prices. Just how do Sibanye hope to service the enormous debt pile it will soon have created for itself is a question analysts will be asking themselves for a while yet.
ps Paul the male presenter seems a little blase and calls it 'hot' but I think the other two on the show were smirking behind his back.
The future value of extending the life of our SDO operations to 2027 and beyond will be substantial if the higher PGM price narrative Sibanye buy into plays out. The margins here look set to improve further. The cash pile could be deployed to better use however. A lithium licence or JV would transform the share price...
Trader...I am far from an expert but I have my money on 16p and that is without further news, sales or licences, as they remain unknown. I would love some progress to just be dropped in on a cheeky RNS. A sale out the blue would ' low the bloody doors off'. You know, the out the blue stuff. It happens and we have had a dearth of news here, hence my PR comments. Some have, historically, mentioned 20p ish. I am not that brave (but I can be stupid), hence I keep move my stop losses on this. Bonker has been bang on so far. Well done that man. This is AIM (snake pit) and it is nice to be in a steady riser. I have sold any yet, and I have an average of 7p. I prefer FTSE 250 but AIM is, sadly, like a candle to a moth.
Bonker99, thank you for the chart. You should get a nomination for a CBE for services to the community. Not a chartist at all but they do add another dimension especially when considering how the human brain works.
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