The latest Investing Matters Podcast episode featuring Jeremy Skillington, CEO of Poolbeg Pharma has just been released. Listen here.
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Sibanye I agree would be a good shout, I just wonder if the Harmony deal might make them rethink their position. Your valuation looks reasonable, which is precisely why the current state of play might flush out a bid in the nuts well below it. I would not be surprised to see a bid come in 15% up from here with a final close 20%. The turnaround in operations and the rising gold price have not managed to push the price forward as much as many would have hoped and that makes it a buyers market.
pickedpeck I think you're right. PAF being acquired by another SA miner is a possibility but the field of candidates is shrinking. I thought Sibanye would the most likely source given the desire to double its business and it might fit well with the interest in DRDGold, but Froneman has said he is no longer interested in SA assets so that only leaves a small number of players (Harmony, GoldFields, ?). Full acquisition EV including assumed debt would be at least £400m with a 30% premium which is big chunk.
Otherwise a merger between DRDGold or even SLP might make more sense to create a larger precious metal recovery business. Whatever happens I think further consolidation in SA is inevitable.
I agree Eish. They are planning on moving their listing away from the JSE in the final insult. That combined with:
- SA imminently being downgraded to junk status by all 3 ratings agencies
- an inherently corrupt political system driven as much by egos as anything else
- the perpetual risk of asset expropriation and changes to the mining charter
- the constant risk of union action, combined with very high unemployment, leading to a high risk of civil unrest
- power outages for the next 18 months at least, but more likely 5 years
Can anyone give a recent example of a foreign company buying assets in SA? I can't think of any. I can think of plenty of examples of investment in Russia, the situation in SA makes Russia looks like a haven for investment. The Russians and Chinese are investing in Zimbabwe ahead of SA.
Wish you are inadvertently highlighting an option I hadn't really considered, PAF exit through company sale. Now would be a really great time for a potential buyer to acquire them. The current share price under values the asset base considerably particularly considering the recovery in progress, that's the reasoning behind why I am invested here. On the back of earnings recovery and subsequent dividend escalation I expect to get to 15-17p reasonably quickly.
Having said that I believe most holders would right now be in favour of an offer 20% up from here around 15p a share, that would still be enormously cheap for a buyer able to consolidate assets and production.
The AngloGold deal with Harmony is pretty much bang on the PAF mkt cap at $300m, and "Harmony, backed by billionaire Patrice Motsepe’s African Rainbow Minerals, has been hunting for deals to boost declining reserves and grades at its South African mines" according to press reports.
Note the s on the end of deal...
Just noticed that AngloGold has sold it's mines to Harmony for R4,4bn. Now if there was not an element of "toxicity," this giant miner, the Oppenheimers built the infrastructure of the Witwatersrand would NOT be leaving SA! It must be bad or at least taken note of? Reasons are ? Ask Sipho Pityana?
Tiger, consider the hang-over if they implement their policy of redistribution without compensation? Some claim this has started. Ask any Rhodesian what happens next ? Or care to see for yourself what the consequences are in Zimbabwe today! Not nice! Coupled to questionable "law and order" and you are close to toxic. Then I will re-phrase and claim the anc is toxic! LOL! But get your point about other jurisdictions being high risk. Maybe just a touch bitter!
I don't think South Africa is toxic. Difficult, yes. But no worse than that.
It's strange to me how people will put money in gold mining companies that operate in Russia / Ukraine / Mali / Burkino Faso / Azerbaijan / Tanzania and so on, but not in a South African one. At least as regards South Africa, Russia, Ukraine, Azerbaijan and Tanzania I do know well of what I speak. And, IMO, South Africa is BY FAR the safest investment option of those countries.
Tiger and rag, it has always seemed logical to me that investors are now seeing SA as toxic. Only thing that would attract investors is huge profits and a jolly good dividend etc....
PAF seems undervalued to me, given the guided EPS issued recently and other news.
Perhaps the interims will jolt enough people into taking a fresh look at PAF and realising that?
Cost performance will be key and could be a surprise. While they have managed to meet production targets, inflationary pressures in SA have been immense, the rand is weak, impacting on imports, wages are as usual taking large jumps and energy prices are all over the place. Cobus has guided AISC in below $1,000/oz so anything below that will be pretty good
Anyone think there will be anything unexpected in the results or is the value already baked into the price?