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Updownflat, get your facts right, they didn't buy a helicopter, they took it from IRC for monies that were owed to them, and probably the value of the helicopter was overstated as well
Rusty, in 2019 they didn’t act like a company that was "strapped for cash".
Read through the accounts, they didn’t cut back on local social fund investment, they gave excessive pay and bonus increases, they bought a helicopter they didn’t go out and mine more gold from their ever-increasing reserves.
Kenj, you know as well as I do the company at that time was strapped for cash, stumping up money for a convertable bond, is much different to a bank or someone else lending us the money.
People on here who post saying there was loads of options are deluded, our credit rating was not good after being cut.
I am not saying the extra $25m was a good idea, I never have. The point I am making is rolling it over on less generous terms than the existing deal was not as big a deal as some on here are making out.
What do you think they should have done, and how would they have done it. ???
spot on kenj. the $125M CB was a sweet deal for the friends, at the expense of the shareholders, who could not take part. and that is one of the reasons why at the AGM I voted against their re-election. i still want hambro&son out of POG&IRC. and this time i voted for the audit. transparency is needed.
"The mere fact they added $25 m to the bond issue, suggests to me people were not exactly queuing up to lend us the money."
POG added another $25m because the offer was over subscribed.
What that suggests to me Rusty, is that the offer was too generous. Previous CB issues were capped, enabling the issuer to force a buy back if the share price reached a certain level. This one was uncapped and thus very attractive to speculative bond holders.
In fact, they are rather dumb. They got caught, because the price of gold rose. They were priced for bankruptcy due to the terrible BOD and executive. This is why the share price has risen so much. I honestly think new management would be good. I think Pavel understands the local situation, but is not interested in making this into a first-class gold miner. He is quite happy the way things are.
I agree with you, the 2019 convertibles will go down as one of the worst financial decisions in history. Financial transactions are not POG's strong point. Thier were many options avalaible to them.
Workingstiff, you think they could have got a loan to pay back the convertibles. It wasn't small beer it was $100m as a minimum, we have bank borrowing in the past, which was paid off by the larger bond issue, and people disagreed with that.
But, the bank held all the cards and we had to go cap in hand just to spend money, which is why it was changed to bonds.
The mere fact they added $25 m to the bond issue, suggests to me people were not exactly queueing up to lend us the money.
At the time were we not actually borrowing money from Gazprombank to support IRC.
I am sure it wasn't as easy, and I would "hope" they explored all the options. The other thing is When were the old bonds due to mature ?? I can't remember but if they were not due to mature its a totally different ball game about repayments.
On the last point, I can't be bothered to go back through all the old bond details because I didn't have as big a problem with it as some on here.
PVX233, I believe you may be wrong in thinking Pavel isn't liked. If there was a poll on here asking who they preferred to have a CEO I would think Pavel would win hands down.
If you had a poll asking who trusted Pavel 100% that would be a different vote. The 2 are not the same. Personally, I don't think there is anyone better qualified to run the show.
I assume that by 'compensation' it means that POG pay Tamesis for the coverage. Still I remember their last target of 26p was published when we around 10p so let's hope they can repeat the trick with 50p!
Even with the conversion of the bonds, UGC only have 24%. With the loss of Fortiana their total votes are actually less than at the last vote. Around 35%. That's not enough to win unless they have persuaded other major investors to switch. But I don't see what they have to offer. Turnout with all the publicity is going to be high. People do care about their investments. The loss on the last vote was down to covid and apathy. That has changed.
I know Pavel isn't liked on these boards, but he delivered POX and he has the support of his staff. The support of the workforce is essential to further success.
Resolution 19 will probably pass. I see this as a positive. Though I seem to be in a minority.
I note Tamesis have increased their price target to 50p. This is based on gold at 1900. Their metrics are:
'At our price target of 50p the company
would be trading on a supportive EV/EBITDA of 4.7x 2021 estimates and PER of 7.2x'
A PER of 7.2 is ridiculous. The average Russian gold miner has a PER of over 15.
I also note net debt for POG has reduced to $538 million. With the conversion debt has now dropped to $459. That's going to be around .8x edibida for 2020, making refinancing the bond so much easier.
2015 bonds that should have been, not 2015 shares
On the first point we'll agree to differ. I think that last year POG would have raised a loan to buy back the 2015 CB's if they had been acting in the interests of all shareholders, but I take your point that the dilutive effect would have been greater if the 2015 shares had been allowed to mature. Maybe Pav's intention was to roll these CB's over ad infinitum, at an ever increasing conversion price, but I doubt it.
On the second point I think UGC have converted their bonds to increase their voting power at Monday's GM. If they win they get control. If they lose decisively - such that they don't think there is a realistic chance they will ever get control - then they may decide to take a stonking profit and take their predatory instincts elsewhere. That doesn't necessarily mean they will flood the market with shares. They may seek to identify a buyer. Hence my fantasy about the Norwegian sovereign fund.
Working stiff, on the second part of your post, I do not think it would be good for UGC to sell up, unless of course there was someone willing and able to buy the whole lot. With the amount of shares they have especially after the conversion option, if they were to sell there would be a massive chunk of shares available and I could see the shares going into Free-fall.
However, I do not think that will happen, because, I can not see why anyone in there right mind would exercise an option on convertible bonds which were paying a coupon of in excess of 8% if they were going to sell there shares, just does not make sense.
A better option, in my opinion is that Pavel and them get round a table, and find a common ground to move forward on a positive note.
Personally, I don't think it is a bad thing to have a large shareholder, who has lots of a product that they can not process when we have the very facility to make there product into real gold.
We should not be looking at the short term, we should be looking at the longer term, in excess of 10 years, and we could be a good compliment to each other helping both companies to make additional profits. As ever AIMHO, and happy for someone to come and try to shoot me down.
Workingstiff, sorry, I disagree, I will tell you why I disagree then you can give me your opinion. Because at the end of the day, you have your opinion, I have mine. When the bonds were coming to maturity, the convertible price was about 8.5 there was $100m. They took the opportunity to add another $25m to it, that was the bad part, apart from the fact we were still not in a position to be generating lots of money, and the pox hub was not quite finished, and gold price was not at the levels it is at now.
The new bonds had a convertible price at about 12.75 which was at about 50% above the level of the first bond issue. If the first bond issued had matured,, we wouldn't have had the cash to repay, by refinancing at a higher price, I don't think the shares to be as converted are as high as would have been needed if they had matured at the due date,
I haven't done the calculation ( but, I would suggest they are getting less shares now, at the new price, than they would have if they had matured at the maturity date ).
Now, if you would like to tell me why my reasoning is flawed, I am very happy to listen. But for some to say it was a terrible decision, I would suggest they don't fully understand how convertible options work. The Big negative to me, is the fact that these were issued in $200,000 units and personal investors don't get the chance to participate, because I am sure there would have ben plenty of investors who would have been only too happy to stump up more cash.
As I say and this is open to anybody, please post if you think my rationale is wrong. I have not seen anyone comment on the forward pricing monies in the accounts or my rationale on the convertibles, just a lot of posting without knowing the full facts.
There have been many posters on here over the years, who have thought this was just a license to print money, without knowing anything about the company and the way it does business.
They profess to know it all, well, unless you are a fly on Pavels wall, You DONT.
I don't think he needed to issue convertible bonds last year, and certainly not at such outrageously generous terms. The gold price was on the up, the POX hub had been built, the corner had been turned.
No, I think last year's bond issue was a gift to the major shareholders at the expense of the minor shareholders. Pav showed us his colours then. He is what he is - the least worst option at the moment. If he survives this time, at some point he will want to repay the majors who saved his bacon.
The perfect outcome would be that Pav wins well enough for UGC and co to sell up, and an ethical investor - like the Norwegian Sovereign Fund - steps in and replaces them. Over time it would then become a better, more responsibly managed company. Ah, the dreams we dream :-)
That sums up ("I believe this has been caused by a combination of the new share issues and uncertainty as to what will happen on Monday."), some of my concerns, workingstiff (also resolution 19),.....resulting, in my reducing our POG Gross Average s/p level, for our current POG shareholdings, to a Gross Average firstname.lastname@example.org,......positioning, for either outcome Monday.
WORKINGSTIFF, PERSONALLY, I DONT SEE THE COMPANY ever, GOING DOWN THE CONVERTABLE ROUTE AGAIN, MY TAKE ON IT, FOR WHAT ITS WORTH WAS, WE WERE DESPERATE FOR MONEY TO COMPLETE THE POX HUB, GOLD PRICE WASNT PARTICULARLY HIGH AND WE HAD CASH RESTRAINTS FROM THE BANKS..... DIFFERENT ANIMAL NOW.
You posted for months that the convertibles would stop the share price from going past 11p (since then it's reached 42p). Now you're saying that having converted the share price is likely to decline as the rise in value can't be justified.
I think you're wrong again. I both cases the market is fully aware of the conversion issue and has and will discount it.
Even with the conversion POG is too cheap with gold at 2000.
There may be some churn and some selling leading to a bit of volatility. Also, the rise from 24p to 42p was pretty sharp and some pullback was likely.
I disagree it will be close. UGC, Everest, Slevin have about 35%. Fortiana have sold out. 35% isn't enough, and I can't see where or how they can persuade others to vote for them. 30% didn't vote last time. The vast majority of those are probably happy with the status quo given the 300% rise in the share price over the last 12 months. Haven't seen more than 1 pi post against Pavel either. That's another 10% against UGC.
They just don't have the numbers so much more likely Pavel will be back. Though there's a good chance resolution 19 will pass imo.
If he has got some of the bond converters and he gets a turnout of 90 - 95% he could win well. This vote has had a lot of publicity and it may be that the unaligned see him as the least worst bet. I suppose the options are:
1 He wins well and (after a potential sell off by the losers) the share price runs north until he does something stupid like issue more CB's.
2 He scrapes home and the uncertainty continues.
3 He loses. Then Strukov either a) takes the company private or b) reverses his company into POG. Option b would probably result in a massive share dilution as POG issues shares to "buy" UGC.
As I say, if it's option 1 I'll throw my HGM proceeds at it. If it's option 2 I'll hang on to my current holding for a while to see if Pav can reach some sort of accommodation with UGC. If it's option 3 I'll cut and run. In an environment where the gold price is rising there are other fish to fry.
I can't see Pavel winning well. He will be lucky to scrape through imo.
Let's hope that some of the 586.6m new share conversions were made by Pavel supporters, otherwise I fear he's toast!
With regard to whether or not POG is at fair value, given the issue of additional shares -
1 I believe the rejection of the old board at the AGM has constrained the share price since June 30th. It had rising momentum up to that point.
2 Despite the uncertainty the share price rose sharply after the H1 trading update on 23rd July. It has fallen somewhat in the last week or so. I believe this has been caused by a combination of the new share issues and uncertainty as to what will happen on Monday.
3 The shares issued so far to cover bond redemptions represent a dilution of around 17%. The closing spot price for gold on June 30th was $1785. The closing price on Friday was 2035 - an increase of around 14%. When you take the increase in the GP over the period together with the reduction of net debt and associated interest, I think this cancels out the dilution effect of new shares issued - so far.
So my conclusion is that - if Pavel wins the boardroom battle convincingly enough for the pre June 30th momentum to be gained - once people get their slide rules out they will see value here. I intend to buy more on Monday if Pav wins well.
Sorry, just spotted that RetiredBanker was saying that we would save $40m if all of the $125m CB's were converted, not the $79m that already have been.
"RetiredBanker, Your calculations make sense. Nevertheless, more value than the $40M savings in interest was created."
Not to me they don't L3Trader!
$79m worth of bonds have been converted.
This will save paying 8.25% PA for 4 years on this sum.
By my maths that is $26,070,000, some way off $40m.