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Thanks for your input StoneFold. Personally, I'm not very concerned, marginally more so than I was before, considering the corp gov risks at any such small mining op in Kaz. Progress has been slow at Altyn but the numbers are improving and I don't see a strong argument for the Assubayevs to screw minority shareholders at this juncture.
I would not expect much to be said about Teren-Sai, until after the Kazak mining authorities have finished reviewing the documents which have been submitted as part of the application for further exploration works and proposals for production at Area No.2 .
From memory the bondholders do not have security on the mine, and are due to be repaid in December 2022. However the bank loan ( due to be repaid in September 2026) from Bank Center Credit is secured on the assets of the Group (cautious creatures those bankers).
Of the total prepayment of US$14.5m live as at 31-12-2021, at least US$8.4m has now been utilised against mining services provided to May 2022. At that rate the remaining $6.1m could be converted into better mine infrastructure by the end of September. Whether each dollar spent on expanding the mine feeds back into worthwhile increases in production is part of the investment/gamble.
Item 6 to be voted on at the AGM which starts at 11:00 tomorrow is:
" To reappoint BDO LLP as the Company’s auditors to hold office until the conclusion of the next general meeting at which the annual accounts are to be laid before the Company. "
Which either means both BDO and Altyn are happy to continue working together or that a few days later a GM will be held , the AR for year ending 31-12-2021 will be presented and a different auditor could be proposed.
With regard to the subcontractor that received the prepayments, the statement by auditors BDO that
".. two current principals of the sole subcontractor, its owner and director, have been business associates of the Group’s major shareholder ..."
Is being interpreted by some negatively, but for balance it can also be seen as a positive.
Some people who now work for company "A" previously worked with, got to know, trusted and respected, some people who now work for company "S". They trust and expect that the goods or work required will be delivered as per the verbal agreement, as maybe it has indeed been.
Of course BDO are quite correct in saying that deals should be promptly documented to eliminate later confusions, and that strict controls on what staff in subsidiaries are authorised to spend is necessary, what is sufficient for a lemonade stand may not be quite enough for a gold mine.
BDO have not resigned over it, their to big to want any issues...... no issue......
"Spike, keep it civil. You seem to be upset about the share price and are throwing big suggestions around about fraud and theft that you can't really back up."
Fair enough, I was responding forcefully to your "negativity parade" which is completely unjustified in the light of the seriousness of the situation.
In terms of my suggestions about fraud, let me be clear that in my view IF the company has not disclosed a related party relationship in its financial statements, especially one of this size, then that non-disclosure would be misleading and could be considered a fraudulent level of misleading - related party relations are required to be disclosed, regardless of the proper (or not) use of those funds in the background. The fact that this information was then omitted from the annual results released to the market is in my view appalling.
Looks like the contractor is keeping their costs down to me. If they are related, all the better!!
Spike, keep it civil. You seem to be upset about the share price and are throwing big suggestions around about fraud and theft that you can't really back up. As I said before, it doesn't make a lot of sense that the Assaubayev family would blow up this LSE listing and reputation over such small fry, especially after so many years of not doing so. The financial situation of the family is unknown but they were in the past worth hunreds of millions if not billions of dollars and as far as I know still have interests in the mining sector outside of AltynGold. It's absolutely likely that these prepayments involve a related party, I agree on that point, but at this stage it can't be assumed that the money is stolen - more likely, in my view, that the contracts will be fulfilled for mining services or whatever was intended. I'm just looking at all this and saying it doesn't make much sense to jump to the worst conclusion.
I came across this interview: https://bne.eu/interview-kazakh-gold-miner-altyngold-on-a-roll-228415/?source=russia
Why woud he bother if about to defraud the company?
If you don't like the smell of all this, by all means sell your stock. But making big unsubstatiated claims in a public forum isn't kosher.
The prepayments were disclosed in the original RNS and in pre ious years. "In relation to cash at the year end this was US$3.6m (2020: US$7.2m). Cash generation as indicated by EBITDA was much higher in the current year. The utilisation of funds by the Company was a result of a net repayment of loans and capital expenditure in the year and a substantial prepayment in relation to production facilitation for the forthcoming period. These have resulted in a drop in the cash balance at the year end, the balance is expected to increase as the prepayment is unwound and as a result of higher revenues from the increase in gold prices.
Negativity parade - have a day off. This has dropped over 20% today and trades at a PE of well less than 2 - why do you think that is Einstein?
If you can't see the issue with driving a coach and horses through any basic level of corporate governance by providing massive prepayments to associates, then I can't really help you. To then hide that from investors in the release of the annual report is just a massive redflag on top.
Sure it could be that they are utterly brainless in absolutely smashing any hope of getting market credibility and then were just a bit embarrassed about it - even that best case does not exactly provide a glowing business case.
Alternatively they could not give two hoots about external shareholders and instead it is just a vehicle for moving family wealth around, in which case at some point the listing is just an inconvenience that can be jettisoned when it becomes expedient to do so. Its not like there haven't been other frauds of london listed kazakh mining companies.
Regardless of what is happening, I'm here to make money and if the company does things that means no one will touch the shares with a bargepole, how am I meant to do that?
Look at the facts, defrauding the company to gain a few percent they dont already own just doesn't seem a likely outcome at this stage. You've offered no strong story for it either. Sorry to rain on your negativity parade.
Actually if anything the big fraud was several years ago when a huge payment and dilution happened acquiring Teren Sai. But today? Not likely at all.
"If the intention is to steal the very small part of the asset they dont already own from shareholders, they've had years and years to do this already and haven't. Why now? "
We can speculate on all sorts of things - the fact is they have gone so far beyond what is acceptable from a corporate governance perspective that who knows what comes next. Who owns the bonds that has security on the mine?
If the intention is to steal the very small part of the asset they dont already own from shareholders, they've had years and years to do this already and haven't. Why now? And why waste money on such a tidy annual report? And why waste money on Renaissance Capital research coverage if that was the intention? Indeed why waste money on a decent audit firm in London and listing on the main market? And why would people with such quantum of wealth bother with such a half baked and limited value fraud? Wouldn't they first accelerate the company, funded with plenty of foreign credit/equity, then steal it when there's something valuable they dont own to steal? They already own almost the entire company - they're stealing from themselves. Nah, I don't agree this is fraud at all and your assertion is far fetched - it is not obvious at all that theft is what this is.
But I do appreciate your reading of the annual report and highlighting what you found - and I do agree it does smack of **** governance and controls. But it's Kazakhstan.
"Fairly minimal in my view. More likely to be related party transactions lacking paperwork but not actually fraudulent."
I'd argue related party transactions that are not disclosed are fraudulent. Issues like this already scupper any chances of getting institutional capital - no one is going to stick funds into to develop, when there is no sufficient control that 6 months worth on running costs can go out to a related party with no paperwork and the board don't know about it. It might all be intended relatively innocently, but its not a good look.
What is even worse is that when they have published the annual results to the stock market on Monday, they haven't published any of the auditors comments or disclosed that the auditor has given a qualified opinion - that is terrible, its only because I bothered to see if the annual report was there I found it. I also understand now why they didn't actively notify the market of the AGM with this coming.
This will smash market confidence - I'll probably sit with what I've got as it ultimately trades at a PE of not much more than 1 - even if the market still thinks its a POS it could get up to a PE of 3, in which case I get a nice return, but equally it could languish here for ever more and not improbably I could wake up with an RNS one day and fine the share is worth nothing as they have done something else and shareholders no longer control the mine.
Share price tanking as usual be worth F . All at this rate ? Another B.O.D. twist robbing the investors of their capital for themselves .?
Suspicious yes. But these guys are so filthy rich, how likely is it that they're plundering their LSE listing for a handful of millions of dollars and ruining their credibility and future access to capital from any western credit organisation? Fairly minimal in my view. More likely to be related party transactions lacking paperwork but not actually fraudulent.
Worth reading the full annual report - I think its clear now why the report was delayed, the prepayments are murky to say the best. Read the qualified audit opinion
https://145908.selcdn.ru/files.altyn.uk/reports/2021/Project_Altyn_Annual_Report_2021.pdf
No mention anywhere of a resource update for Teren Sai? Wonder why...
Probably Putin Joined the Board !
Something to ask at the AGM perhaps?....what caused the delay
One interesting point of note - the commentary with the results highlighted a prevailing gold price of $1950 at the time of writing - the last time gold was at that level was mid-April. So it seems the results were finalized at that time but then the release for some reason delayed.
Well the results largely confirm what those of us who are overweight this stock already know.
This is a gold producer (not just a speculative hole in the ground explorer) which is now capable of generating consistent profits and yet trading on a p/e below 2 ! IMHO A doubling of the sp could easily happen with no further news !
The new information seems to be that Assaubayev's would rather slow the rate of increase in future production than dilute their shareholding or take on overbearing debt burden. That almost sounds prudent and fiscally responsible, terms you rarely hear these days from anybody let alone BoD of mining companies. I'll be happy with 15% increase in production and flatlining profit (if gold reverts to $1700 as they are using for budget calculations) ... or 25% increase in profits if gold goes back towards $2000. I've top-sliced this a few times and then bought back at lower prices. Best price I ever achieved was £2.50, think I'll be getting that again before too long !
$480,000 to a broker for 'sponsored research' and to help attract new investors....money well spent!!!!!
$540,000 travel costs.....first class flights and stays at the Ritz.....sign me up!!
If they could reduce some of those unnecessary costs then they would have more money to invest in the business....but I suppose they were hoping for the external funding. So 'hopefully' from now on they will cut their coat according to the cloth (easier said than done).
HappySurfer, the previous Capex requirements were part of a plan that aimed to achieve multiple things simultaneously at times. Sometimes it makes sense to spend money in preparation for development in the future. With limited resources that wont typically be an option now.
So the $38m is 'probably' the minimum required to reach at least 850ktpa....but personally I'm not sure it will guaranteed 1mtpa (the current report is understandably a bit vague).
The $38m will defintiely not be enough for a 2nd 1mtpa processing plant....that has now moved firmly into the long term plan (aka wish list).
Need to revisit that September presentation as I recall capex required to get to 1m TPA was >$100m over 2022/3; now it is only $38m to achieve the same so clearly the dial has moved. Unless of course further processing plant capex is required on top of the 38m. This is part of the issue the numbers keep changing. There is also about $27m of debt to repay over the next couple of years so self funding out of FCF will still be tight. They could really do with rolling the $10m bond due for repayment in Dec.
I don't think we will see a significant re-rate here until the ownership structure is resolved however. It just seems that this, in conjunction with perceived geopolitical risk, outweighs the operational and financial progress at present.
DOF's comment re. HKEX listing of another Assaubayev vehicle is interesting and perhaps there is some read across here; although what that would means for the completely superfluous london listing is not clear.
I think the difference between the gold poured and gold produced is the gold recovery rate.
"The Company achieved its principal goals in relation to its current operations at Sekisovskoye being that of....., and producing gold of 34,258oz (target 33,634oz)."
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I'm not sure what that means. Gold poured was 28,450 oz (with a target of 30,000 oz).