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The problem with the markets is that you never know the future. What if gold gets to $2000. What if iron ore breaches $190?
Those who think they are great investors because gold has risen significantly in the last 4 months are not that great just a bit lucky.
But POG is slightly different in that its business model has been transformed with POX. If you listen to the webcast, POG's roll out of POX clearly has been an outstanding success. This hasn't been reflected in the share price imo.
Only 4 weeks to the next update.
If POG sells IRC stake , it will be 20% along with Gurantee, not 31%. That’s why bank has reduced it to minimum 20%. After this development, POG has number of options.
You need to change tactics Freddie and stay at home, or better still a caravan and confuse the bugger
This aint right lawrence im on holiday and its going down , dropped to 9.09 for a split second just now
Still disappointingly lethargic though, but if that is the case and I believe you are right , what pointers should we be looking for in terms of positive news. Nothing in the financial calendar now until Q3 trading update on the 17th October in exactly a months time. The only other driver I can see at present outside of POG is the gold price rising yet again, outside of that it just wait. I haven't mentioned retired bankers 'basket case'.....oops I just did!!!!
I am certainly not negative on POG. If POG do what they say they are going to do and start making profit to reduce debt, the company share price will increase markedly. The problem here is the market " has heard it all before" from both Peter and Pavel. They need actions now, not words, once that comes, it will turn around.
It is very unlikely that POG will sell 31% controlling interest even just to offload Gurantee, rather it is possible multiple major shareholders are in the cards on IRC share register. IMO , IRC is now an asset and can double their production with just $50m further cash injection. If that cash injection comes from Evraz with out POG participation, EVraz will be much delighted if POGs controlling interest gets diluted to %20.
IF Evraz (EVR) wants to build a major stake in IRC, hopefully they'll knock on Pavel's door and he will say "if you take the $240mm guarantee off our hands we'll throw in the 31% stake for free"
In my opinion the moment that transaction got completed then POG share price would rise by 2p ... wishful thinking
But the point is that IRC are making enough to pay their debts. So the contingent guarantee isn't relevant thus far. It's when they can't meet obligations that it becomes an issue. POG getting $8.9 million a year for the guarantee.
Also, IRC was .05 and .15 so a 200% increase in the share price. You might say that's an irrelevance, but it isn't in my opinion. A change in valuation is always of relevance.
Remember circumstances change and businesses grow and die. It's a huge mistake to have the same mindset. I get the feeling that most on this thread are negative towards POG and IRC. Maybe POG will become a centre of refractory gold processing and IRC a reasonably successful mining operation close to the Chinese boarder.
I remain an optimist with the turnaround in fortunes. Certainly think POG is worth more than £350 million.... put it that way.
As Retired Banker has alluded to.
There doesnt seem to be a rush to invest in IRC, They are running at nearly maximum profit and making very little money.
When eventually amir bridge is opened it may just allow then enough to pay back their debts, but, ultra profitable. Highly unlikely unless iron ore price goes through the roof.
Saying that I dont class it as a basket case yet ( unlike Retired Banker ) But, I may be wrong.
RB,
For example, IF Evraz (EVR) wants to build a major stake in IRC, POGs controlling 31% interest can hinder it.
Recent developments have opened the avenues for Institutional investors,
KRSS - clearly the rest of the investment community in HK doesn't share your enthusiasm for the "lucrative" IRC.
It is trading below the level it was at through most of 2016 - 2018 and by the beginning of 2016 it had lost 90%+ of its value from 2011/12. This basket case will continue to be a drag on POG for the foreseeable future but will provide lucrative employment for the two P's sprogs !
Kenj,
in corporate World, it has slightly different interpretation. Under London stock Exchange rules, 31% is above 30% threshold, means POG can increase its stake as much it wants( dont know about HK rules), but i guess they are complying with both).
In nutshell, IRC capital structure has become very flexible and lucrative.
IRC can raise funds easily
POG's 31% has become very lucrative for any buyer
POG can sell 11% of 31%.
It has created more charm for IRC investors, as there now more avenues for investors
KRSS,
POG must maintain a minimum holding of 20% in IRC for the duration of the $240m Gazprombank loan. If IRC issue more shares, which would push our holding below 20%, then we must purchase enough new shares to restore the 20% share holding.
The guarantee is a separate issue. We are guaranteeing that the $240 will be repaid by IRC. The guarantee is rather complex, and the amount guaranteed varies over time. However, we are liable for the full amount owing and any added charges if IRC miss payment dates.
By crunching figures you can calculate now at what price IRC can place shares at Hong Kong stock exchange to raise $50m. After Amur Bridge, they are definitely going to increase production to double. As costs will go down and profit margins will be up
Kenj, reducing from 31% to 20% stake as Gurantee is very positive step forward, Through corporate actions, IRC can raise funds to production or reduce debts with out POG participation. POG can still participate to maintain its stake.its all set up to pace up things
"IRC--- POG's Gurantee reduced from 31% to 20%"
I think that you have got that wrong KRSS.
POG can reduce their 31.1% shareholding in IRC down to 20% if they can find anyone stupid enough to buy these shares. However, they are still fully liable for the the $240m loan to IRC from Gazprombank, despite all the ****e spoken by the boards about removing this obligation.
PVX233, Thanks for that, being at work, I have only scanned through them. Thank you
They may hedge further, and higher up, but the present low level of hedging expires in December...
And the payment is referred to in the interims ... see also Tamesis last update
Under the New Recourse Agreement, IRC has an obligation to pay the Company a monthly fee to compensate Petropavlovsk for entering into the guarantee of the two facility agreements
-- It has been agreed with IRC and K&S that the fee will be calculated as 3.07% per annum, commencing 12 March 2019, on the maximum amount that may be payable by the Company under the facility agreements of US$240 million
Rusty, the hedge expiry was from the last FT article on results day... see below...
Still, the company did not fully capture a rising gold price since half of its production, or around 90,000 ounces, remains hedged with Russian banks, Mr Maslovskiy said.
That hedge, which was put in place in 2016 when the company restructured its debt, is due to expire by the end of this year, he said.
pvx233, Please advise me how POG are getting $8.9m a year for the guarantee, and how you feel the company will be unhedged from December.
The company has a track record of making bad decisions on the gold price and I do not believe they will not hedge future gold sales and take advantage of the high price going forward.
Alya sold her bonus shares if my memory is correct
Above 4 millions shares buy trade , normally directors buy after results, Pavel or Peter or Alya
POG is a different company now to 2017. Companies change as do circumstances.
POX is a success it would seem. The evidence suggests it is at least.
500k tonnes going to be processed next year. That's a lot of gold selling at $1500, with the company unhedged from Dec. Never mind the non-refractory contribution.
The same with IRC. Iron ore stronger and downward pressure on costs might make it profitable. At least POG is now getting $8.9 million a year in fees for the guarantee. And IRC are meeting their debt obligations.