The latest Investing Matters Podcast episode featuring Jeremy Skillington, CEO of Poolbeg Pharma has just been released. Listen here.
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oops bank dont owe money they have lent money to kaz is what I meant....
But if you understand that chines are sitting on huge cash $USD which they will be willing to loan to any one who can then use that to engage Chinese businesses..... of course that doesn't mean Thant kaz goes on wild spending spree but what it means is that loan repayment to Chinese is least of the problem... the biggest challenge is to ensure that they bring in external investor quickly to mitigate the risk just as they have done with 70m USD NFC’s equity investment in Koksay it just derisks the project, reduces cash flow and debt.
I think they should get NFC to pick up equity in Baimskaya even if it is at acquisition cost just to mitigate risks. a 250 m-500m investment for 20-40% stake would substantially reduce the risks...
most if not all Capex is being spent through Chinese contractors and at this stage where the Chinese desperately need more business they will be more than happy to project finance like the one they did for phase 1 (300m) as delayed payments and through Chinese banks... remember NFC is state owned player and so are the banks which owe money to kaz.
if the banks were European and contractors were Chinese or vice versa then I would be worried....
Thanks to all who have posted it's nice to see us all pulling in the same direction as we all want the same thing
Hash,you obviously know more about accounts than I do so good to see you try and put things into perspective in a way that the Bod are looking at it
well additional 80 m Capex spent on Baimskaya is a bit of surprise for the market and raises a few questions as to why now and why wasnt it budgeted before which raises a question that this can happen again ...
bringing forward 100 m Capex seems to be positive means project will go ahead before schedule and that the management wants to keep up their sleeves...
cash flow at h1copper prices was about $600 / annum. I think increase in working capital is more of a one time issue. (In the first half of 2018, inventory levels rose by $65 million due to higher consumables needed to support the ramp up of Aktogay and Bozshakol and from an increase in finished goods due to the timing of sales.) copper production was up 6% but copper sales volumes were up only 3% which means rest 3% is sitting in the inventory.
so at h1 prices annual cash flow is about @600/annum at current cash prices it will be I guess @500 m/annum. next 18 months Capex budget is 1000m...
so net shortfall as I see it at current copper prices is only 250m. so what are we worrying about? basically at end of 2020 debt would go up by 250 m or so
even in h1 the net debt has gone up by 568 m of which 435 m was one time payment for Acquisition of Baimskaya. and 131 m change in working capital (both one time). so the current cash flow are sustaining other future Capex except Baimskaya which is great...
as long as they dont overspend on Baimskaya they are ok in my opinion even if copper went down further 5%....