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Why?
Tamesis has a target price of 75p based on POG at $1950 for 2024 and $1950 for 2025. But if we see $2150 for 2024/2025 that increases EBITDA from $25.5m to ~ $32.5m and for 2025 from $34.4m to ~$45m, against today's mcap of $57m.
AND then it's 2026 when an even sharper increase in production is expected as seen here:
https://twitter.com/Serabi_Gold/status/1767542059995394089
It's worth noting that other brokers for other goldies have started forecasting much higher gold prices for 2024 and beyond.
In the background here by the looks of things.
According to SRB web site, they reckon on doubling production by end of 2025.
Next resistance looks like 77 pence, then on to 90 pence for another 50% rise. Well done to all that bought at 20p ish for for a double bagger.
Up 160% over 6 months.
Always said it was going over 60p.
It's down to bitcoin fever. To be fair gold miners have been a lousy investment for a long time. Bitcoin on the other hand has been stellar. For anyone choosing between the two is going bitcoin.
When it turns out China secretly controls bitcoin, people will be much keener on gold (and gold miners) again. Or maybe China turns it off as ransom when they invade Taiwan...
Obviously I'm joking, but gold miners will pick up. Just maybe not yet in the US. To be fair they are not doing badly
Wouldn't disagree with that, and are invested on that basis. I still expect a violent rerate at some point.
The whole logic to investing in relatively high risk miners (vs gold) and in particular the higher end of the risk spectrum (small caps) is to receive outsized gains if it all comes together in your favour. Right now that's exactly what's happening here, operations are improving, the regulatory framework in which Serabi operates is improving and the gold price is highly supportive... and yet those outsized gains are yet to materialise.
Still think we could have a blink and you miss it move soon though.
I'm convinced that the share price weakness is to do with Shanta. Investors piling in there and selling Serabi in short term. Once, the shenanigans at SHG have finished, then SRB will re-rate.
It's an odd situation, putting it middy.
The commodity that Gold miners sell is rocketing, but the SP is not, okay SRB doing okay based on recent history, but the lack of interest in miners os a touch bizarre.
Is it perhaps a deeper shift that investors would now prefer to own the physical metal over the miners that mine it? Or just a matter of waiting until the great rotation and these stocks come back into favour?
SRBs five year high of 119p came in late 2020 so worth looking at AISC margin for 2020 and 2021.
2020 - $353 , 31200 ounces production
2021 - $347, 33850 ounces production
Now assuming $2100 ave gold price for this year and $1475 AISC we get:
2024 - $625, 39000 ounces
That's a huge step up from the figures posted in 2020/2021 when SRB share price was at its highs and would generate more than double the EBITDA.
And fast forward eighteen months and the target it more than 60000 ounces at sub $1400 aisc, possibly a doubling again in ebitda - the undervaluation is stark.
Not quite accurate. So we have this from the full year results last June:
'On 14 February 2023, the Group entered into hedging contracts with an international bank whereby it acquired sell options over monthly quantities of gold over the period March 2023 to February 2024 totalling 10,215 ounces of gold at a price of US$1,800.'
There's been no update on this so either a new hedging contract is being put in place now (at $2050 ish, perhaps?) or management are happy enough with the balance sheet and outlook to not reintroduce this.
Glad that Serabi doesn’t hedge their gold price like some other miners….hence will be able to take full advantage of the ongoing rising price.
https://www.fxempire.com/forecasts/article/are-we-at-the-beginning-of-a-new-historic-supercycle-for-gold-1415097
Gold hits an all time high and we hit an all time high of disappointment for me!
Still at half the price of 3 years ago with a much higher goldprice and prospects of much more production and much bigger profits....Catching up slowly but long...long way up to fair value in my opinion. 150p is my target for this year....with further big gains the year after....
Traders may think they can sell here and get back in cheaper. But they might lose their position as gold is still going up and might continue going up for weeks as it has been suppressed for so long. Gold $2165 has broken out and is at an ATH with $2500 not so far away.
Interesting at 50 seconds into the video Mike says 50,000 and quickly corrects to 40,000 ounces (RNS stated guidance for 2024).
What if that 50,000 was more than just a slip of the tongue and they are actually looking to beat guidance by 10,000 ounces 🤔
As Michael Caine famously said “you were only meant to blow the bloody doors off”
Yes, the State hydro power supply is coming to Palito which will replace diesel for power generation which is Serabi's second highest cost after labour. Then the electric supply will be going in to Coringa. This will reduce AISC for the company by a significant amount. AISC of $1400 is expected giving a $600 margin per oz with gold at $2000.
Road from Coringa to Palito has been recently paved which makes trucking of ore to Palito quicker and a lot easier.
Palito production of 30k oz can go on for however long! 400k oz resource 20 years ago. That has been mined and now the resource is 500k oz which is the most it has ever been.
Coringa is similar. It could be a 1 million oz resource with grades 10 to 12 gm/ton. Production could be up to 70k oz pa to get production to 100k oz organically but that would require capex that is not available currently.
Ore sorter for Coringa is on the water from Poland heading to Brazil.
This is great to see, Matt is notorious for actually challenging managers but in this case there wasn’t much to challenge, besides asking how they were going to take things to the next level, something that isn’t relevant til the valuation here has at least caught up with the fundamentals.
Some very interesting and positive nuggets in this video, especially the potential for $100 to come off the AISC thanks to the addition of the power line at Palito - add that to the record high bullion price and we will start seeing margins significantly improving.
https://m.youtube.com/watch?v=0D0gsCrcObA&feature=youtu.be
Based on a simple DCF, if gold got to $2500, the shares price should be around £3.
Might sound extraordinary, but gold miners have these kind of explosions. Let's see what happens, but all good for now, assuming nothing goes wrong at the mine...
Based on technicals, current move for gold might be heading for $2500. Fingers crossed. SRB profits would double in that case. Share price should rocket.
Another top up prior to Gold bullion record high posted today.
My estimates of profit for the next 3 years (which is the duration of the temporary Coringa license) is £70m (not $!). So that alone should push the share price up another 50% as a minimum. Even that would be a bargain as it ignores the current cash balance and on-going value of Palito. If anything positive happens, such as the permanent Coringa license finally coming through, the SP should be double that (as a minimum).