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Gold back above $1800 and £HGM is at the bottom of a disappointing range looking like it could go sub 220p. What if gold drops?
HGM was a recommended in the Numis Notes (8th July 2020) "For UK mid caps we prefer HGM for its growth profile and dividend yield, which is the most compelling in the sector in our view. "
Generally agree your comments on HGM of late, t_s - the next figs. should see a reasonable boost on the back of the much higher gold price and likely increase in the divd, too.
The shs are already yielding a safe 6% currently, so a good recovery in the sp looks well overdue to me - sasa.
Interesting thoughts mate. I am not sure if it is one factor only or indeed a combination of the four mentioned but worth considering how fellow Russian goldies have performed recently.
TSG has been trading in a tight range since the end of April, struggling to add value despite the stream of good news (debt refinanced, resource increase, divided and solid FY results) . POG has risen about 30-40% in that time, although most of that has been added in the past week and can be attributed to the court case proceedings. POLY rebounded well off March lows but has trickled lower in the past month despite gold breaking 8 year highs.
From what I can tell this isn't to do with wider debt or company debt fears. There are plenty of debt laden producers that have risen like PUR, RSG, HUM, PAF.
If Covid is having an effect it is probably minimal at this point but I know Russian cases are still quite high. The reason I say this is because HOC didn't fall much after they announced production was suspended and all Russian producers have been clear that they are operating without many issues.
HGM has been harder hit than the other Russian miners so my suspicion is that weak investor demand coupled with the heavy selling pressure from one of the big investors is to blame. Operationally speaking I don't think we have anything to worry about as the gold price is $400/oz higher than the start of the year. Russian relations have been fairly poor for years but it could be political tensions keeping bigger buyers at bay. I remember last year SHG had a distressed seller and the stock went down to the 4p level before doubling shortly after so I think there will be a rebound after our seller is finished.
I thought about it, and am now certain it is one of 4 things:
- Sanctions between UK / Russia somehow impacting it - the p/e is insanely low here vs Centamin - why!?
- Lower production vs last year (despite this being inline with guidance) -less convinced by this theory as there was a rise on announcement of Q2 trading update, was just sold into
-Further liquidation of large stake by the seller that TR-1'd earlier in the month (most likely)
-Debt/covid jitters
I mean, theoretically, this will slide down to a point where the wider market just swallows the seller's stake but at what price that will be I do not know. Very surprised there is no broker coverage, only found this on Investor Chronicle really (they have it as a buy). I guess patience and trust required, but on AIM that sometimes comes at a high price - more frustrated at missing the gold bounce. Hopefully when seller clears the price will re-rate, so could actually be an ideal time to buy in if nothing untoward is occurring. GLA
Same felt here, with this share being 30 percent of my exposure to gold my patience is wearing thin
Still dripping lower, I mean, what is it with this share at the moment - very frustrating. Feel like price will be punished on any gold price pullback despite it not rising on the way up.
"Kekura and Klen will be subject to zero or reduced income tax, precious metals royalties, land rental, land tax, and property tax over the first five to ten years of operations. They will also pay a unified social tax on payroll of 7.6% versus the statutory rate of 30%"
RNS Number : 3200E
Highland Gold Mining Limited
03 July 2019
HIGHLAND GOLD MINING LIMITED
03 July 2019
Kekura and Klen Admitted to Special Economic Zone
Highland Gold Mining Limited ("Highland Gold" or the "Company", AIM: HGM) today signed an agreement with Russia's Far East Development Corporation officially confirming residency in the Chukotka Advanced Special Economic Zone (ASEZ) for the Company's Kekura and Klen projects.
The Russian government's ASEZ programme is designed to spur new investments in the country's Far East Federal District and covers 19 geographic areas. The Chukotka ASEZ, in which Kekura, Klen, and the Company's Valunisty mine are located, was created earlier this year via the expansion of an existing zone.
As residents in the ASEZ, Kekura and Klen will be subject to zero or reduced income tax, precious metals royalties, land rental, land tax, and property tax over the first five to ten years of operations. They will also pay a unified social tax on payroll of 7.6% versus the statutory rate of 30%, and be entitled to an expedited refund process for value added tax expenses.
Kekura is Highland Gold's premier development project, with construction currently in progress, stripping and preliminary ore mining set to start later this year, and commercial production expected to begin in 2023. The Kekura project has audited JORC-compliant gold reserves of 2.0 million ounces at a grade of 7.0 g/t, and is designed to produce an initial 172,000 ounces of gold a year with forecasted total cash costs (TCC) of US$511 per ounce. The Company estimates that residency in the Chukotka ASEZ adds approximately US$100 million to the project's net present value (NPV).
Chief Executive Office Denis Alexandrov said: "Highland Gold would like to put on record its thanks to the Russian federal government and the Chukotka regional administration for their support of Kekura and Klen, which will bring substantial jobs and tax revenue to Chukotka over the full life of the projects. In addition to the ASEZ, the government is building a power line to Kekura as well as a year-round road not far from this remote site. This level of support confirms Chukotka's beneficial investment climate and Kekura's importance to the development of the region."
Thunder - you're right of course - we should question things, especially for investments in countries like Russia.
I just don't see a HGM specific problem at the moment - we're most likely being swept along by macro-economic pressures IMO - but time will tell and investors with any sense will keep their eye on the ball.
The general commodity sector has been downbeat today, lets see what tomorrow brings.
I will also share this: I worked for a multi millionaire, and when we discussed the stock market, he had little input on his investment. His wealth was managed by someone else. (id like to think my portfolio is probably up in % over his since C.V. Lol).
Join the dots, its always worth questioning why the price is going the opposite way to where it should. There was no rerate here since the POG rose to $1800 - and that was after the large spike to £2.80 earlier in the year.
Anyone else notice all those small AT sells multiple 100 200 etc ?
Been going on here for months !
We're not going to find out the reason, but to assume there is some sinister reason or deep meaning to the action of sellers when there are a number of very plausible explanations backed by real information in the public domain is stretching it.
Billionaires are a strange bunch where their wealth is a balance of their assets minus liabilities and in good times they thrive by rising asset values and their ability to easily service debt - we are at a moment of extreme stress and all bets are off, the recent collapse in Gold mining shares was attributed to sellers liquidation to cover other positions.
Richard Branson offered his prized island as security to borrow recently and let one of his airline investments go bust, who would have though that Multi-Billionaire would be strapped for cash - rich or superrich if you can't service debts it's over - happened to Robert Maxwell, Alan Bond (at one time one of the world richest) and many others.
Gotti - there is no reason to believe its manipulation
We can't assume anything, just hazard a guess, but I don't see any demons here.
Stocks are up, but so is gold — and analysts say the metal’s rally is just getting started
It seems that POLY and HGM are both trading a bit lower than one would expect. I also hold CEY and that seems stuck too. I am not reading much in to the individual buying and selling. My own view is that money is leaving the wider market. Ftse gone down all week. Gold rising not helped us much (yet). If the index falls, this will just fall less, even if results are good.
from +6% to to-2% with great Q2/H1 results released and record levels POG, that's AIM ****** manipulation at its best, seriously wtf
If a billionaire needs to sell such a tiny value stake to cover margin then there is something wrong. I feel like there is some other reason for the disconnect, but not sure I will find out anytime soon.
Thunder - as I said the other day, IMO the most plausible explanation is that like business leaders around the world our seller(s) has probably been caught out by the collapsing economy, it is apparently especially acute in Russia and combined with the sanctions, $$ swap problem and collapsing Rouble means some Russian asset based investors only have the choice of selling overseas listed entities to raise capital at the moment.
I would also mention that Russia has hundreds of Banks not all fully backed by the government, those entities could be exposed to some very bad loans which could bankrupt them (many Russian companies have a problem in having $ debt and Rouble income that's why Commodity and Gold assets are so prized). Our seller from the other day has Russian based assets that may require support and only have income in Roubles) I took great comfort from HGM being able to secure debt at a reasonable interest rate recently - speaks volumes for the security offered. Sorry if I'm preaching what you already know, but you asked.
If the bulk of selling is indeed down to a single or a few entities as appears to be the case that should be very reassuring that the SP will recover strongly
IMO - there is a 10 to 15% rise in the SP due just to get back to where the SP was wrt its peers, without adding anything for the strengthening gold price or solid news - like today's, we now know there are no nasty surprises due for last quarter.
Some serious selling going on...question is why?
This share appears to be becoming one of the sector laggard, it normally responds in line with it's peers, I suspect it is due to our seller/s dumping into the buying.
Not a problem if you're in it for a decent time scale as any delay in repricing will simply lead to a bigger jump later as long as HGM continue to perform well. If you want to get out quick at full value - tough luck unfortunately.
Despite lower production we are still on track to produce 290-300koz this year.
A forecast 165-175koz in the second half at gold prices of $1800/oz+ and we are still trading at 240p!!
Record-High Gold Prices Are in Sight
Read more at: https://www.bloombergquint.com/business/record-gold-in-sight-as-virus-woes-keep-prices-above-1-800
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