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TigerByTheTail - I'm still wanting for your fundamental analysis on this and given that you mostly go personal you don't seem to have one. That therefore puts you in the gambling category. Fyi, you're the one who was buying 40x earnings and is significantly offside, i'm the one who was buying <2x earnings and is making major gains. Oh and as for FXPO being situated in a war zone, again i'd love to know what you're smoking !
A fool and his money will soon be parted. Especially, a fool he thinks himself oh so clever.
As usual, as regards FRES, your misquoting figures or quoting highly selectively. Others have already pointed this out.
And, to repeat, FXPO's "former" boss is a wanted criminal suspect, and its main business is situated in a war zone inside probably the most corrupt country in the world. To trust your money to that company is truly and spectacularly dumb. Yes, its headline numbers make it look cheap at the current price. But actually it is very expensive, because all investors in it will lose 100% when the inevitable inevitably happens.
TigerByTheTail - odd that, haven't seen your cashflow or balance sheet analysis yet. In addition, we wagered the bet when this was mid 600s and FXPO was in the 1.20s. Which one is out-performing? Yep, FXPO. Why? Because it's trades 1x book, a forward pe of 2.2, a FCF yield of 41%, throws off a base divi of 7% but around 12% if including the special.
I'm sorry Tiger but if you think a business that makes a paltry $168m from ops over 6 months (before capex, interest, leases) is good for a £4bn market cap then i'm keen to know what you're smoking !!
Nickel Investor!
"Accounting for Dummies" is actually quite a good book and it will help you to not make a fool of yourself here. You are bluffing that you know what you are talking about, and it doesn't look good.
By the way, have they arrested your Ukie oligarch yet - you know, the shadow boss of your share promote FXPO?
"obviously short" ! Indy - you must be a newcomer to this forum then. I've been OPENLY short since 800 ! The difference here is that i'm prepared to provide the ratio whilst most are just plucking share price figures out of the air. It's for that reason, that i'm little bothered in short or medium term price action as it's the number crunching that ultimately delivers... and the big boys know that too.
For those that are trying to find a bullish reason to invest, i simply state that there are companies adding material cash, paying material divs, with long asset life that are trading at far superior FCF, PE, EV/EBITDA, dividend metrics. FRES is under pressure operationally and financially and that's not going to change anytime soon
NI is obviously short, myself and Carvegyber are long and Rastuss is sitting on the fence. Lets see how this plays out but i feel confident we will see 750 before 400. I will humbly get my coat if I am wrong.
PM's holding up very well considering the positive nature of the markets currently. Correction coming in Jan maybe sooner!
I'm afraid to say that some on here are in total denial about the cash eroding picture which isn't going to change. The analysis has been sent out and there's no denying that's the case. I have factored in the improved metal market but some of that is also offset by falling production - to that end, production has been downgraded twice already this year. The cashflow situation isn't going to rapidly turn around and that's only going to put pressure on the business to review it's dividend and re-consider it's capex plans. The current climate doesn't facilitate cash growth so a weakening one is going to really batter the finances and the share price. Those getting up tight perhaps are offside by some margin which i sympathise with but i've made the call since 800 and it's playing out.
Indy, that's right and he had the nerve to come on here accusing people of being clueless!
Rastuss, WRT to not casting aspersions, fair enough but there are times when enough is enough especially when NI starts accusing people of being clueless.
I really don't know how obvious I need to make my calculations. My 10yo daughter would have grasped it by now.
sound like a broken record.
NI If you really looked at the cash flow statement you would see the $689m to $362m is from H1 2018 to H1 2019, Not YR end 2018 to H1 2019! It actually dropped from $560m to $362m. This as per cash flow statement is a drop of $198m! in 6 months of which $123m was a dividend!
You are beginning to
Nickel, you keep harping about H1 but have not looked forward to H2 at all. H1 had $200m lower revenue and paid $120m more in dividend! That combined is $320m more cash freed up in H2 compared to H1! If you do some investigative work and actually work it out for yourself, it is as obviously at daylight!
You are either clueless or set out to mislead by repeatedly beating your old news H1 drums.
Rastuss, to get to the cash positions, it is best not to use the balance sheet. Best to look at the cashflow statement. That gives you a full picture of where cash is spent and generated. I am not saying the $168m figure is yours. NI mentioned it and it is in the cashflow.
In 2020, there Is an expectation of improvement in ore grades and efficiencies do to the capex investment and new mine. These will bring the cost of sales down. Rastuss, as you rightly point out, if PM falls, then this will fall but if it increases, then this will fly. That is expected isn't it. It is afterall what this stock is all about.
Carvegyber - Capex has now been readjusted downwards to $585m for the whole of 2019. Of that, $248.4m was spent in H1 which means that $336.6m is spent in H2. The original allocation was higher but they have postponed $65m for 2020 and it's pretty obvious to anyone looking in at that that's because of the very weak cashflow statement. For 2020, capex is targeted at a huge $670m.
As for the $168m figure, that's not mine either. That's what's in the company accounts! I say it respectively but it's clear fron these forums that many don't have a clue how to navigate their way around. Go to to the top line in the cashflow statement - that's the net amount of cash generated by FRES in H1 BEFORE capex, dividends, interest, leases paid etc. The net result was that cash eroded from $689m to $362m! I am making the case that the net cash generated will be higher in H2 given higher metal prices but will still be dwarfed by cashflow outgoings - the $337m capex in h2, the interest payments, the leases etc. What's going to be the overall impact? Cash is going to tumble again!
And then as for 2020, the picture is likely to get much worse as both gold and silver production are now guided to fall. Unless metal prices really rocket the financial status and the valuation are far from attractive propositions
Rastuss cash of $168m is based on ore grades and volume of H1. They have already updated the market that H2 is broadly similar to H1 if not slightly improved. Therefore, cost of sales could well be lower and therefore more cash generated. I am just using known FACTS. I haven't used any assumptions. The extra $200m from higher PM prices is also a fact because H2 is effectively over and PM has held and hasn't collapsed. All the sales would have been locked in. We just have to look forward to feb for the reports now. In mining, there always could be curve balls but at the moment, none has been reported for H2 apart from the $6m theft that was insured.
No it doesn't fall well short of capex because capex in H2 is $300m but cash will be $168m(take your figure)+$200m(additional revenue due to higher PM prices) = $368m. If I am not mistaken, $368m is higher than $300m.
I don't know how many ways do I need to write this before you can finally work it out for yourself. Metals have already surge from H1 to H2. H1 is old news! In finance terms, we are effectively already back to levels of 2018 because PM surged in July. Cash will not run out. If gold is $1350 and silver $15 again, then I would worry. From this level in, there is no danger.
carvegyber - with respect, i didn't call the original figure wrong though did I. You stated $316m from a headline, i went straight to the cashflow statement. I've also already stated that cash from ops should be c$200m+ in H2 but that's still not a given and it still falls well short of the required H2 capex sums which will lead to a continued erosion in the cash pile. Beyond that, 2020+ will see gold volumes drop which with another bumper year of capex is really going to cause stresses again. Unless metals really surge this is going to stay under really pressure.
Nickel, yes that is right but what bit of H2 revenue will be $200m higher do you not understand? You say to look into what is not in the statement and I have done that for you. Add $200m to your $168 and you get $368m in H2 (projected due to higher PM prices). You then need to pay $300m in capex and $20m in dividend. The $300m capex figure is in the capital market update recently. It is not $405m as Rastuss claimed.
LET ME SAY IT ONCE MORE. THERE WILL BE $200M MORE CASH IN H2 BECAUSE OF HIGHER PM PRICES IN H2!
Now look forward and get that into your calculations. Jeez
Cash will certainly erode because of the size of the capex and the downgrades to production. As I say, ignore the headlines in the rns and go straight to the top line of the actual cashflow statement. For the 6 months ending 30 June, net cash from operating activities was a tiny $168m
Rastuss, as per the figures i provided, cash flow will be fine in H2. If they were really worried about it cash they would have raised further funds by now as protection which they have not. Anyone can pick and chose numbers from a cash flow statement. Its the details which truly show whats going on.
Look at the markets today. Usually with the type of news flow we have had PM would be down and down a lot taking Fres with it. The fact that they are slightly up as i type says a lot. FRES bounced off 600p resistance as i thought it would. it may retrace back down to 530ish or lower but i would not be surprised to see this touch 700 in the short term either. All depends on how long this buzz around the election results and news about a mini trade deal last. I have half my holding in oil which is doing well today. I plan to ride this next wave up before switching back in to PM.
DC2007,
Euroclear provides data for all stock out on loan. It wouldn't surprise me if there are some undeclared positions above 0.5% as my fellow investors on the PMO forum have recently found out. The latest figures for the end of November show stock out on loan around 28%.
https://my.euroclear.com/apps/en/monthly-stock-loan-data.html#month=eq:10&year=eq:2017&limit=0&search=1
Access as guest and select Novembers data.
Carveygber - Open up the cashflow statement for H1. For the 6 months ending 30 June, net cash from operating activities reads $167,696m or c.$168m!
Indy,
Where do you get the near 30% of the stock shorted from? Shortracker shows 0% at present.
Atb
NI, your headline is wrong and misleading. The cash generated in H1 was $316m. You are using a lot of outdated and factually wrong information to mislead. Out of the $316m, they paid $140m in taxes and profit share which will be smaller in H2 because the profits are lower. The outstanding capex for H2 has already been stated to be $300m in capital day. After the capex, that is only dividend to factor in which IS $20m and that has been paid.
You also repeatedly failed to factor in the fact that revenue in H2 will be higher because the PM price difference from H1 to H2 is around 20%. The PM prices will mean that the revenue will go from $1b to $1.2b so an increase of around $200m which directly contributes to the cash generated from operation sum. There should be no increase on cost of sales because PM prices have no effect on that. So you have a cash generated in H2 of $500m, and out of that you need to pay taxes and profit share (less than $140m) and $20m dividend, and what is left of $340m goes towards the capex $300m which will leave the company with cash surplus of around $40m. I have assumed the max taxes and profit share, if this is lower, then there will be more surplus. This can be gleaned directly from the cashflow statement which you seem to constantly flap in our faces but repeatedly getting it wrong.
You are the one that preaches looking to the future into what is not in the published statements but seriously, you surely can't ignore the most fundamental mover of this stock which is the jump in PM prices from H1 to H2.
I would invite you to reply and pick holes in what I just posted directly please. I have told you what you got wrong. Now tell me where I am mistaken! Go on....
NI, I guess we will find out soon enough. Well done on your short, Fres at 1500 it was overvalued, at 800 it was overvalued, at 500 its good value at 300 its a steal. As i said i will be topping up along the way up or down.
Be aware though, nearly 30% of this stock is on loan, there are not many shares left available to short. When the MMs decide to bail from overvalued shares the always jump into PMs. I hope you don't get caught in the squeeze when this happens.
GL with all your investments, other than you short here in Fres ;)
Indy, no need to get personal. Let's keep it strictly on the analysis.
This £4bn valued company only made $168m in H1 - that was the net cash from it's operations. The capex deployed was $248m which confirms that capex alone was far greater than cash generated ! They then deducted $147m in financing activities which all compounded to the eroding cash position.
Now the next point is that capex for the whole year is estimated at £655million, that's a further $407m capex that needs to be spent in H2! The last reported cash position was $362m. Even with greater cash generated (i estimate above $200m in H2) there's a massive dent to the cash balances once again and to that end I only see confidence in this play further eroding. That capex isn't going away anytime soon either as the requirement in 2020 is very big again. I've been short openly since 800 and the trend is playing out. I too am little interested in the daily upwards or downwards movements but have my eyes firmly focused on the fundamental setup. To that end, I see an extremely poor one for a company of this lofty price tag.
Nickel; Let’s go through the cash flow.
Year end 2018 cash and other liquid funds were US$560.8 million. H1 results reported US$362.1 million. Cash flow in H1 was US$316.1 million. So yes you are correct in that they spent US$198.7 million of the 2018 year end cash in addition to the H1 Cash Flow (Well done clever clogs for being able to use a calculator)
Now let’s delve into the detail. Dividend payments were US$123.1 million and Taxes and Employee Profit were US$140.1. This accounts for more than Net cash decrease. No dividend payment in H2 and taxes are also inherently H1 geared.
Now let’s look at production, the cost of production and the price of gold and silver in H2 compared to H1. Based on H1 production (27.6moz silver & 432koz gold), Q3 production (13.6moz silver & 209koz gold) and estimated lower range production guidance (55moz silver & 880koz gold), H2 silver production is pretty much 50/50 and H2 gold production is slightly higher. That shoots down your lower H2 production statement to pieces!
All in sustaining cost for H1 was $11.83/oz for silver and for gold was $1025. Realised H1 silver price $15.25 and for gold was $1,320.74. H2 average price for silver are around $17 and for gold $1,460. All in sustaining costs should be lower in H2 but let’s say they will be the same as H1. This equates to additional cash flow of US$48 million for silver and US$60 million for gold based on H2 production guidance. This gives H2 cash flow of US$340m+ after Interim dividend of US$19.2m, Taxes of US$40 million a (conservative) and interest payments of US$20m.
H2 capex is estimated to be US$407m. There’s more than enough cash and H2 cash flow to cover H2 capex and a final dividend of US$100m. This is a smaller final dividend than the last one, but still a dividend during a high capex and growth period and they will still have US$150-200m in cash in the bank. H1 PM Prices will start 2020 higher than H1 2019 so I estimate worst case for 2020 is that we eat into the cash and maybe drop the dividend.
However I expect silver prices will hit $20+ next year and gold also looks well positioned for a good rise. That’s more cash for Fres.
A good company is one that can grow, within available cash resources and free cash flow and provide dividends. Fres is doing this at the moment all be it very poorly. Bringing cost down over the next few years will help reduce all sustaining costs. Let’s be honest, it couldn’t get much worse at some of its mines. 2022/2023 Fres should easily be making over US$1000 million in free cash flow.
I am in for 200k and will double that over the next 12 months. I’m not concerned with daily movements and it wouldn’t surprise me if this hits low 500s/high 400s. But in the medium to long term this will be 1200+. PM will have their bull run and when this happens Fres will be very well positioned.
GLA