Roundtable Discussion; The Future of Mineral Sands. Watch the video here.
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Thanks kenj, I feel your pain. But past is past. I do not expect shareholders to get screwed as a result of the merger, it is not in the interest of institutional investors with whom Strukov should agree the terms. As for the transparency ... Usually Russians start to care about it only when they are planning to sell the assets. If they hold for themselves they would not care. At some point they might think about selling POG, cashing out and getting out of the reach of Mr. Putin. It seems the time did not come yet :)
UpDownFlat,
I agree with you on IRC. The offer of 10 million is way too low. IRC can make 60 million of ebitda this year. So you're buying that revenue at a huge discount. Normally, it would be the other way so a purchase of 60 million would be X3-4 ebitda, so around 240 million at least.
We're being ripped off.
The reason though is POG's shift to a high tech processing company. That's now their vision. Without POX, POG would be in terminal decline.
Do you think Strukov has bought 22% of POG for it's mining operations. That's nuts. He's bought a percentage of POX because it's a fantastic fit both operationally and technically. It's the future. Which is why the merger is a real possibility and soon imo.
When it happens, you'll have a near 2 million oz production combination. The market loves these synergies.
Equanimity,
I have been a shareholder of POG since 2011, and I am sitting on a nice profit - at last! I have no intention to buy any more POG shares; I hold too many as it is, thanks to the 15.7 for 1 Rights Issue back in2015.
And, no I am not working for Strukov and trying to damp the price before the merger? Frankly I do not want the merger to go through as I suspect that the shareholders will not get a good deal. I have stated previously that I believe this company is being run for the benefit of the bondholders, and sad to say that I do not fully trust the BoD.
"These issues are quite easy to resolve once there is a motivation to do so"
I agree but only if the BoD start to be more honest and forthright with their shareholders. I was far from the only one confused, bewildered, or suspicious of the Final Results.
KRSS,
Great idea to buy back the bonds! Assuming anyone would sell them, of course.
The CB's must be worth a fortune with an option to convert to shares at c 12p.
Anyone selling would have to be criminally insane.
The ordinary bonds would be easier to buy back, but I can see little profit in doing that.
POG will have to pay 5 or $6m extra for extending to May 2021, But
If they buyback Bonds in June, interest savings can be 12 to $20m(dont know exact figures). So its worth delaying TEMI, Moreover, TEMI can be paid by shares when SP is above 50p and POG will be paying very less shares.
POG didn’t pay for TEMI and delayed it to May 2021 for possible two reasons, 1) to retain cash. 2) Probably, there is more value in buying back bonds, mainly to return value to shareholders. By the way, I already had predicted that TEMI decision will be delayed to May 2021.
Hate to be the negative one regarding this PVX233, but if POG sell IRC they will have to W/O the rest of the asset. Cheaper to keep it since it seems we are locked into our debt anyway.
No one likes debt, but you need perspective. POG's debt to ebitda has dropped from X6 to X2.1 falling to around X1 this year.
Poly has nearly 1.7 billion in debt. No one seems to mention that.
It's quite likely that POG's contingent loan guarantee is history. Even if it isn't IRC is in much better shape and a few million payment is nothing to maintain payments. Also, it's worth noting that someone is happy to take on that guarantee and still pay 10 million for the asset.
kenj, that's why POG is so attractive. All these issues are quite easy to resolve once there is a motivation to do so, and all the debt is easy to pay out if gold price stays where it is now. Then sp will be valued fairly which means factor 2-3 appreciation to what it is now.
Out of curiosity, are you working for Strukov and trying to damp the price before the merger? Or is it that you are trying to get in on a big size? I observed a lot of negativity on this board recently which also looks quite bullish to me. I would rather avoid a stock that everyone is happy with.
Not that I really care as a long term holder, just curious.
Kenj very interesting post about the interest rate payable. Once POG gets their house in order you would think that going forward, they will be able to benefit from lower rates. ( Hopefully ) Or if we take what aimtitan says, just repay them from the loose change of the 13 billion pound company.
Yes, KRSS, 1 million oz is certainly technically possible with POX as I've tried to show despite all the negativity.
Comparisons with HGM may be valid to some extent but HGM don't have a 1 billion POX hub which has enabled a 70% increase in gold production in Q1.
Rusty, you say POLY has much more transparent reporting. In that case what are the margins they are making on autoclave production? That would be a much more useful point of comparison given both are now industrial processors.
All this about third party concentrate. My opinion ( and , its only my opinion, the price of third party concentrate will have some correlation to the prevailing gold price. I would expect that if gold price goes up the price we pay for concentrate will also go uo. And vice versa, so I don't believe that third party concentrate production will ever bring in the profit some on here are wanting and expecting.
I believe thats why they wanted to buy the rest of TEMI. And are we not going to be processing from Temi towards the end of the year anyway. ?
Rustybucket, Gold Price is high, like other producers, POG will increase its production.U never know they end up producing over a million ounces. For that they need to buy third party concentrate to take full advantage of POX hub and Gold price
Rusty,
Now we are in the FTSE250, Unit Trust and Pension Funds managers will be running the rule over POG. They employ highly trained analysts and forensic accountants to check the figures before they invest their money. The lack of clarity in the accounts will have been noticed, and the turbulent recent history of POG will not help either. The big funds are looking for stability as well as good corporate management.
A brief history for newbies:
POG almost collapsed in 2015, as Bond Holders fought to seize control of the company, over a debt that we could not repay. A massively dilutive Rights Issue was needed to save the company, and like him or loathe him Peter Hambro fought hard to keep the small investors in it. The cost was horrendous, but anyone who stumped up the full amount suffered no dilution. PH and most of the board were then sacked in a boardroom coup; only Pavel remained. Then he resigned only to later organise another coup to eject the new board that he was initially happy to join. Over the years there have been merger or acquisition talks, often with obscure holding companies based in foreign tax havens, plus a fresh rumour this weekend. POG are also encumbered with the guarantee for the $240m Gazprombank loan to their one time subsidiary IRC.
The chequered history of POG also helps to explain why HGM have a higher value despite producing less than half as much gold as POG.
"To lock in lower interest rates, the Company drew down US$60 million in long-term debt from open credit lines in March at an average interest rate of 3.36%, bringing gross debt to US$326 million and net debt to US$254 million as of 31 March 2020. The net debt/EBITDA ratio remains comfortable at 1.2 and additional open credit lines worth US$340 million are available"
Don't get excited that update was from HGM, not POG.
All of our loans are at above 8%, yet HGM can borrow at less than half the cost!
Exactly Kenj, I remember reading the results of I believe Polymetal. Clear and concise. Then I looked at Pogs, and though, What ???
it looks to me as if Pavel thinks he has the authority to do what he wants when he wants. He doesn't, thats why you have shareholders. I wonder, when we eventually get out of the coronavirus world, whether the company will be challenged around their opaqueness.
Well aim titan if your theories made sense, I wouldn't need to write so much. Short enough for you ?
I swear looking at rustybuckets response is like reading my ex's messages whens she's **** ed. The guy just writes essays, far too much time on his hands. I'm theory M&A multiples for mining are 7.8x of EBITDA.
£6,...I assume you are seeing, the possibility, of Fiat currencies, falling, considerably, in their purchasing power,......combined with POX Hub technology, starting to bear fruit (Gold),.....not quite that pessimistic, on Fiat currency, myself.
BW
Six, fantastic. I'll order new calculators
What you on about, I meant £6
"I believe that since results people are realising that things are not quite the same as are made out,"
Rusty,
Whether intentional or not, this bit of non news has drawn the focus away from POG's results and their worrying lack of detail and clarity!
The all important bit of that article was highlighted by Drunkinftl
''The most optimistic Petropavlovsk analyst has a price target of US$0.51 per share"
That is a projected maximum price of 41p, and some joker puts that forward as evidence that the sp is headed for £5. Didn't the same guy predict 2019 profits at $250m? Missed that target by a factor of 10 times. Says it all really!
aimtitan, part of your post reproduced.
Despite these upgrades, the analysts have not made any major changes to their price target of US$0.37, suggesting that the higher estimates are not likely to have a long term impact on what the stock is worth. The consensus price target is just an average of individual analyst targets, so – it could be handy to see how wide the range of underlying estimates is.
The most optimistic Petropavlovsk analyst has a price target of US$0.51 per share, while the most pessimistic values it at US$0.21. This is a fairly broad spread of estimates, suggesting that the analysts are forecasting a wide range of possible outcomes for the business. Have you not advised them of your forecasts of £5 per share ?
Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. One thing stands out from these estimates, which is that Petropavlovsk is forecast to grow faster in the future than it has in the past, with revenues expected to grow 53%. If achieved, this would be a much better result than the 4.8% annual decline over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in the industry are forecast to see their revenue grow 1.4% per year. Not only are Petropavlovsk’s revenues expected to improve, it seems that the analysts are also expecting it to grow faster than the wider industry.
Its all well and good talking about revenue growth, but the figures, are based on where we were before, so there HAS TO BE rapid growth from where we were. Pox hub operational, Gold price high, benefit of lower rouble and oil prices. But not to anywhere near the levels you are talking about.
Now lets get one thing straight again, I don't want to over pessimistic about this share, and posting negative stuff, but sometimes you need to be realistic about things.
I believe that since results people are realising that things are not quite the same as are made out,
Even today, we have a contradiction, The telegraph saying they have had a discussion with Pavel, and Pavel saying X, only for the company to deny it. Now I don't know whether its a journalist having a conversation and adding some stuff on to make it a bit more like a headline, Or the company suddenly having to backtrack as its not just Pavel that counts. Possibly a bit of both. But again, I would suggest there has been some conversations. Never a dull moment with POG. Always something bubbling.
Somethings going on....there was a hint in the update last week. Whether anything comes of it is another matter all together.
''The most optimistic Petropavlovsk analyst has a price target of US$0.51 per share,''
so you are predicting a substantial devaluation of the £... you could be right!