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Can someone please find out how many kt of third party concentrate we purchased for the $74 million we paid. As it has returned $63,751,500.00 after processing 32.5kt of third party concentrate. This would give some idea of further in come from the purchase. Unless the 32.5kt amounted to the total purchase of 32.5kt of third party concentrate, which would result in a loss for the purchase of the third party concentrate. Not the statement that the all in costs exclude the purchase of third party concentrate.
Dear Kenj,
You could be right I saw the prepayments of interest as a benefit. Bring payments into an earlier year to reduce the tax liability and securing a good start to the next year.
RUB to USD on our side so staffing costs should drop this year. Maybe buy the RUB now to pay the wages later? Instead of hedging gold. Also energy costs should drop oil is on side too.
maybe in 2021, 2022? 2024, 2026? depends how POG going to keep us lth.
If Greatland Gold can jump from 2p to 10p, POG can jump from 25p to 100p, amazing comparison
"When you can’t pay back your debt. You pay forward future expenditure and risk. Hence the prepayment of interest in the millions."
CofE,
Either we are talking at cross purposes, or I am not following your logic!
As I understand it we paid Gazprombank $16m in interest for an advance payment on gold that we were to later sell to them.
"Interest expense $71.6m
Including US$16.0 million interest paid in relation to advance payments from Gazprombank and Sberbank. "
ie; they pay us $200m at 8%PA, and a year later we return the $200m in gold and pay the $16m interest. I don't see that this is any difference to a loan, but it was not listed as a debt.
PVX233 suggests that the advance payment that caused the $16m interest payment was used to purchase gold concentrate for the POX hub. He may be right, but that does not explain the similar $7.2m interest payment the year before, when the POX hub was not operating.
These look like off the book loans to me, but WTFDIK?
"Would it be possible by introducing dividends higher than 8,5 % , so the bondholders would prefer to convert?"
WestEast,
An 8.5% divi would cost the company nearly £70m, which they clearly do not have. By the time they have raised this money the sp may well have climbed even higher, moving the goal posts further away.
This still would not entice me, if I was a CB holder. They can collect a guaranteed 8.5% PA for the next 4 years, and still choose to convert their bonds to shares for around 12p. They would be bonkers to cash them in early.
When you can’t pay back your debt. You pay forward future expenditure and risk. Hence the prepayment of interest in the millions. By reduce your profit you reduce your tax. It’s a smart move when you think about it. It also means come the point that the internet would normally be payable its already paid.
Read the report we spent $74 million in the third party concentrate this is also factored in. We have not processed all of this yet I fact only 32.5kt which produced 45.7koz of gold during ramp up 45.7koz X $1,395.00 per oz = $63,751,500.00 return. Just need to work out how many kt they purchased. Can anyone see? Also recovery rates increased.
Hi Kenj that was a slip about the 2022 and convertibles, I actually meant the $500m bonds.
I am not too worried about the convertibles as I think they will convert anyway, so although that gives extra shares it takes $125m of debt from us. I have tried reading up on bond issues and it looks like it shouldn't cost us too much as they will have done the issue using call options ( I think ). And in 4 years, if they do things right, this should be a totally different animal.
Hi Rusty,
You are right about the sale the of 30% of our holding in IRC. I would have mentioned it, but I do not like to include too much negativity in one post.
We have a provisional sale agreement, but this is dependent on Gazprombank releasing us from our $240m guarantee. I'm loathe to say that will not happen, but would you swap a guarantee from a flourishing FTSE 250 gold miner, to a little known Liechtenstein-incorporated investment company??
PS: Convertibles due Jul 2024
I don't know how you can say that any poster on here is costing investors significant sums. The things I have posted have once again become a reality, A couple of posters who came for the quick buck and shouting euphoria are waiting at the bus stop trying to get off.
The results which many people were waiting for with all the bells and whistles have come and gone again, shrouded in the usual mystery.
I have said many many times, I expect the share price to go much much higher than it is today. BUT, only if they play the game. Why can't this company publish accounts and put some reality into it. They come out with statements without backing them up. 2 prime examples the IRC STAKE, and the debt reduction. Now if they had come out and said we have come to a provisional agreement to sell IRC, and we also have provisional agreement for a release of the guarantee, that would make sense. But they didn't, they said we have agreed to sell, They say they are looking to reduce debt, but without giving details. Now, I don't know if there is a way to repay some or all of the convertibles due 2022.
I think there might be some scope there, and that could be done by forward selling some gold or through a rights issue. Another bond issue, doesn't do that as we know what happened when they re-negotiated the convertibles, they increased the amount by $25m and we had fees to pay for the privilege.
” So how the hell can POG reduce their debt?”
Would it be possible by introducing dividends higher than 8,5 % , so the bondholders would prefer to convert?
PVX - you may be right about the future, I hope you are, but you are not the first person to come along and castigate us old doom mongers, and many of your predecessors learned a hard lesson further down the track.
But as you rightly say the share performance over the last nine months has been exceptional, and this is the metric we should continue to judge them by.
Why is asking a question (which nobody has fully answered) negative?
God, there are some snow flakes on this board!
If you want negative, then how about this?
"The Board is actively considering a number of liability management options with the aim of reducing the Company's leverage and cost of debt"
That statement is complete Bulls hit. The $500m bond cannot be repaid before Nov 2022, and the $125m CB cannot be repaid before Jul 2024. So how the hell can POG reduce their debt?
Rusty,
I've been doing this for some 45 years. The rose tinted spectacles came off very early.
I'm fine with my investment since last year. I'm concerned though that the negativity (or as you put it the reality) is costing new investors significant sums. So I try to put a positive into the mix.
Nice ending auction today...
PVX123, You need to be able to distinguish between negativity and reality. There is a subtle difference. Just because some people put a negative slant on things doesn't mean they are negative overall.
It just means they have a balanced view and want to be able to understand things, rather than looking at everything with very Rose tinted petalled spectacles.
Still past calculations. Got to look forward not backwards. All I see is revenue growing at 100% and gold exploding upwards. That's all the market cares about and why the dip on results is just that. The market is a gamble .. it's simple. Absolute knowledge is unattainable. Set your targets, make some money. Move on...
But POG early stage transformation for me. A long way to go to catch up with its peers. And a billion in POX assets.
I'm optimistic despite the grinding negativity on these boards...
"So now, POG should start buying back shares and cancel them straight away."
A better bet KRSS might be for POG to buy shares at today's price and hold onto them to hand to the CB holders in 2024. But POG did not have the cash to buy TEMI, and I doubt that they could afford this either.
Kenj, no problem, then they can pay by shares when SP is near £, CB holders definitely would like to enjoy coupons until then. So now, POG should start buying back shares and cancel them straight away.
KRSS,
That is true, but not the full story.
If POG elect to pay in cash rather than shares, they would almost certainly have to pay the then current market value of the predefined number of shares, NOT the issue price. And with a rising share price, that could be extremely expensive in 2024.
Kenj, as a thumb rule, it’s always Company’s discretion to elect either pay cash or shares.
Rusty,
I had forgotten about it, but you are right about us lending money to IRC, obtained by POG forward selling gold to Gazprombank. However, from memory this was quite a while ago, so I looked it up.
Two bridging loans were made by us to IRC totaling $57m to cover their repayments while a new financing deal was negotiated. This was to be repaid by IRC on 21 March 2019, but I think overran by a couple of weeks
$16m is rather a heavy interest payment on a $57m loan, even if it were for the whole year, but for 3 months ??!!!!
And what about the US$7.2 million paid in 2018??
Hence I am still in the dark about this "US$16.0 million interest paid in relation to advance payments from Gazprombank and Sberbank." At the end of the day, an advance payment is just another name for a loan, so why is this $16m of interest payments not explained better?
RNS 15 Feb 2019
"The Gazprombank Facility will be used, inter alia:
· to repay in full the sum of approximately US$169 million outstanding under the ICBC Facility;
· to repay Petropavlovsk, by 21 March 2019, the Rouble equivalent of approximately US$57 million, in addition to any accrued interest and fees, as full repayment of the two Bridge Loans; and
· for the payment of approximately US$6 million which is owed by K&S and IRC to Petropavlovsk in respect of the guarantee provided under the ICBC Facility."
PVX makes a good point. One quarter's worth of third-party concentrate is around $100M of new working capital, constantly tied up. They would have need to acquire this last year and used the presold gold as a facility, on which they appear to be paying a large amount of interest. But they did say that the pre-pay has reduced $60M in Q1 and that it should be gone by the 2020 year end.
I wonder if gold has set a course to wrest its crown back off palladium?
Prepay is for 3rd party concentrate purchases I would have thought. Got to buy an awful lot of it with payment upfront.
Telephone numbers still there. I've got 740koz this year of production based on Q1. Perhaps more as production tends to increase in Q4. Plus an additional $500 per oz in revenue.
Kent I am sure we got the money to lend IRC by selling pre-sold gold to Gazonprobank ( or whatever they are called ) Thats why when we got the money back it just disappeared, because it wasn't ours in the first place.
The worrying aspect for me with POG all the time, is the fact we NEVER, seem to build up large cash resources. There is always something which comes to swallow up the cash.
There were a number of posters on here talking telephone numbers, who have seemed to disappear into thin air. The mere fact we couldn't buy Temi with cash ( at the moment ) tells its own story. Hopefully a little further down the line they can actually prove they can make money, especially in these positive times for goldminers
"POG can move from bonds to commercial loan to pay CB"
KRSS,
I don't think POG will have the chance. The CB holders will almost certainly elect to take shares rather than cash, unless the share price falls off a cliff.
As for the idea of swapping bonds for bank loans, that is rather ironic, as POG did exactly the reverse a couple of years ago, when they paid off their loans to two Russian banks with a new $500m Bond Issue.