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Double dude. The VALUE of a company is its discounted future cash flows. An impairment of something the market attributes zero value to DOES NOT change the value of said company. You're clutching at straws.
Hey dude! Not so fast. Accounts do matter. To illustrate the point let's do a thought experiment.
Suppose SHG decided not to sell the gold mined? Result terrible cash flow, big bank debts but probably no problem. Why? Because the gold acts as collateral for the bank and as a ready store of value.
Now suppose a wondering geologist swings by and points out that half the pile of gold is, in fact, iron pyrites. Result disaster, the share price collapses.
Well accounts payable is also a store of value and can act as collateral for bank loans (it's called factoring).
Now I know that perspicacious fellows like yourself can see the illusion the management are weaving that, namely just a little bit more waiting will result in the full payment and have adjusted their personal valuation for the share accordingly. However, many investors won't have done and it won't be a pretty sight when the company finally does fess up.
Let's wait and see...
I am comfortable. They have nothing to complain about. Acacia were in Africa since 2010 and did tens of thousands of metres of drilling! There's nothing suspect at all on the face of things. It is still a prospect not mine-ready so if they want their share they 'll want it when it's closer to production, not now. The market is not pricing in the deal going through (oi even pricing Shanta correctly anyway!!). The competition authorities and other major requirements have already been cleared
I have to say I am quite concerned with the behaviour of the Kenya government of late and all might not be well on the deal going ahead. The Kenya government may now want a large piece of the pie. The behaviour of Trump over Tiktok has set a new tone of stupidity and what is actually legal on acquisitions and transfers.
Dude. Who cares if they even write down the VAT receivable? The market does NOT expect them to get it back, AND it would be a non-cash impairment. I.E. it makes NO impact to the cash flow of Shanta or the adjusted figures they would provide.
Well Colonel I'm reporting back from my posts in late July. If you recall we had a debate about the relative merits of SHG versus HUM which I at least found very enlightening.
In my post of 22/7/20 16:25 I gave a target for HUM to generate $16m in cash for H1 to match the figures to those which SHG had reported they had generated. Well HUM have reported on their operations and the relevant figure (allowing for gold inventory) is $13.2m. Consequently SHG on comparative figures "won".
I know that on the HUM board yesterday there was much speculation as to whether cash had gone on paying off trade and other payables plus the fact that they are building an airstrip for the site requiring oodles of investment cash. However, against that they received $2m from the Dugbe prospect deal. So all's fair in love and war SHG are the winners in this particular contest.
Does that mean I am selling HUM and buying SHG? No!
So why not? Well the HUM RNS was not brilliant but they do seem to have good prospects for reserves and resources as per their latest drilling results and a rising gold price tends to float all boats so I'm sticking for the moment despite the shenanigans of the Betts family.
I do have spare cash so why not invest in SHG? Well because the 2 big issues I have with it have not gone away. VAT receivables at $21.9m in the 2019 accounts have been adding up at 0.6m per month. At the end of July that would mean the figure would have risen to over $26m million. This has NOT been provided for in the accounts and would be a significant write down if the company finally admitted the money is not going to be forthcoming.
And my second issue? The Kenya gold deal. Still no announcement still POG goes up. It must be blindingly obvious by now that Barrick are not going to sign on the dotted line without significant revisions. Indeed this is beginning to look like a repeat of Acacia. Shareholders got right royally screwed then with Barrick sweeping up the remnants for a tidy profit. Why not again?
So no to SHG pending further news and no new money for HUM either. More interesting opportunities beckon elswhere...