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Tiger and Ragnor -thank you for your response to my question--I have -for me invested heavily in here and SLP with profits from TXP--
Spread is tightening. I'm hoping that's a hopeful sign here...
Unbelievable that we are still here at these prices but that’s what an institutional seller can do. I’ve added further this morning as I do believe this will correct around 50% once FIL have done in a short time frame and 100% in the next six months providing that PGM prices and the outlook remains strong.
Yes amazing how chromium has declined in importance, like Hoc that was perceived as a silver miner (with some gold) but as the ratio changed became a gold miner without the market noticing. We are just now a rhodium (or PGM) miner with a bit of chrome, and as rhodium rises more and more so.
Chrome prices fell by $10/t last week to $152/t and are now down $25/t from their peak. Based on current prices revenue splits for Q3 are below. The narrowing gap between iridium and palladium is interesting!
- Rh 50%
- Cr 25%
- Pt 12%
- Pd 7%
- Ir 4%
- Ru 1%
Rhodium up at $29,500, approaching its all-time high at $29,800 (JMAT prices).
Palladium looking strong and nearing its all time high again as well - its only $40 or so off it.
Platinum back over $1,200.
Iridium steady at its all-time high of $6,200.
Ruthenium making a new all-time high at $425.
That has to add up to a new all-time high basket price, doesn't it?
As for takeovers, I agree with Ragnar that it would be hard for anybody but Samancor to buy SLP (and they are selling down their SLP shares), or that the buyer would have to go all-in and buy out Samancor as well. A takeover for Tharisa could happen, but why on earth would Phoevos agree to sell at anything less than double the current share price? He'd be crazy, and he isn't.
camdenlad, my view is no. The relationship with Samancor and lack of reserve statement make valuation of SLP difficult and too risky. THS more likely, although the founders have a blocking stake so it would have to be very friendly. But Theo is still young and the vibe I'm getting now is that they are looking to build something bigger and more diversified and that Tharisa may be a good vehicle to execute this so my guess is thats its not for sale right now. They got a very good price for Eland some 15 years ago which shows that they may be willing to sell but THS is still trading below its IPO price and even without the Vulcan and 40kozpa incremental production in the near term pipeline its incredibly undervalued. So I don't think the price is anywhere near what they would be willing to sell at (which I would say would have to be close to £3)
Tiger, I think Cey will rise faster than Tharisa just now. However I do not feel bad about having sold a hunk of Cey and Hoc for THS even if PM's take off as Tharisa is also exposed to PM's, particularly Platinum that is a mix of PM and industrial a bit like silver. I see Ruthenium is up to $29500 this morning, nearing the $29800 all time high of a month ago, third assault on $30k lucky?
Hi Tiger--Do you think Tharisa and SLP are on the radars of bigger players?I watched the Shares video of Tharisa today and the story is compelling.
Hi Sotolo!
I'm still tentative about gold, but I think that most of the "hot" money has now flowed out of the gold ETFs, and there is a reasonable chance that its slump is over. There is also the possibility that geopolitics (Russia vs. Ukraine or China vs. Taiwan) will make gold shoot up. I chose Centamin as I wanted to avoid Russian shares (e.g. POLY) and I was concerned about Peruvian politics (HOC). Hopefully, all of the bad is already in CEY's share price and none of the potential good (e.g. Egypt licences, West African news).
Meanwhile, Tharisa is still grinding higher. But for a company which is making so much money so quickly it is an agonisingly slow climb.
So sorry I forgot that Rance was the Chinese holder, out of Hong Kong quoted, held presumably for their Chromium. Tiger also glad to read over on the Centamin board that you have reviewed the unseasonality of gold over the last few days and decided it is time to return to dip a toe back in Centamin. It is not just a question of falling gold that accounts for a lot of Centamin’s tumble, but the wall which reduced output, increased aisc a lot and on top added an extra $200 an ounce in remedial capex, however in 2 years that will all be over and Cey may be a tier 1 mine with double the profit of now, and a divi higher than THS. I sold a chunk of Cey to buy a hunk here, but have bought a bit back
@TBTT - thanks on heads up on BOD. Going to do some research on it and look into your (as always) invaluable insights.
Hey TBTT, they know that reef inside out. The old presentations give a good idea of the geology. The reef they are mining is naturally lower in palladium than the northern limb. The expectation is that in future industry PGM supply growth will mostly come from the northern limb where there is more Pd, leading eventually to higher Pd splits and lower rhodium and PT. SLPs Volspruit is a good example of that, it has a very high Pd (and nickel) content compared to the western limb, but much lower rhodium and Pt
https://www.tharisa.com/pdf/investors/presentation/analyst-site-visit-07092016.pdf
The basket is ridiculous right now, the whole sector is looking so cheap. Even Impala, which is much bigger, more liquid, and with more diversified operations, is only trading around 4x EBTDA
Hi Sotolo!
My guess is that Tharisa know exactly what they are mining (which seams of the UG2 reef), and are deliberately targeting the areas higher in the minor PGMs (esp. rhodium). Which would simply be good business sense, if I'm right.
The "cost" of this is a lower proportion of palladium in their current prill split. Which is a price worth paying.
Note how Tharisa published their PGM results metal by metal this quarter for the first time, as if they wanted to point this out to us.
Our basket seems to be level pegging a little above $4000, now $4170. Also Lucky for us that Ruthenium, that now contributes 2/3rds of PGM profit, oz mined only fell 5% in this bad weather quarter compared to last, while Palladium which only contributes a tenth of profit, oz fell 4 times more, 20%.
Having said I don't do cash flow predictions I couldn't help a very quick calculation at today's basket prices.
Q2 threw out about $725 / Oz of FCF after CAPEX spending.
Allowing for today's prices for the entirety of Q3, an increase to 40,000 Oz and similar CAPEX (Vulcan will most likely hit it's highs on payables in Q4) then we will generate $60m of FCF in Q3 alone.
The numbers really are astronomical if this level of commodity prices persist.
Even 2 quarters at these levels makes the EV/EBITDA ratio absurdly low - which in my view it is now.
Hi TBTT
I am invested in BOD so would be very interested in your views. Will message you on the BOD board.
Thanks.
Rhodium, iridium, and ruthenium have all ticked up this morning (according to JMAT). So that's good news.
Peel Hunt lifting their target for Tharisa is also good news, though I think a price of 220p is still too low. I wonder how they justify it.
(Off-topic)
Hi Sotolo! As regards Centamin, I don't think this is the "season" for gold. IMO, gold needs "something" to happen to change the current "Here Comes The Roaring Twenties Again" zeitgeist. That "something" could be China invading Taiwan, or Russia invading Ukraine, or the emergence of a vaccine resistant and more deadly strain of Covid (Brazil P1 anybody?), or inflation rising quickly, or an unexpected economic slowdown, or a bond yield spike and the Fed implementing Yield Curve Control. But whatever that "something" is, it involves fear getting stronger and greed getting weaker, and so far it hasn't happened. So I'm watching and waiting on gold stocks.
(BTW, as regards HOC, I am also concerned about P1 Covid and about the Peruvian election).
If anybody fancies a wild gamble, I'd suggest taking a look at diamond explorer Botswana Diamonds (BOD). Early signs are that they may have hit the jackpot - a second Marsfontein. (The first Marsfontein paid for itself in its first 2.5 days of operation). I'll explain more over on that board if anybody is interested.
Tiger, given the different miners you recommend, just wondering is it time to return to Centamin? This quarter may be better than expected, news coming on concessions and W Africa, two year outlook very good as ounces rise in 2023 and costs tumble, just a thought as the price has halved on the recent problems that look like being overcome by decent new management?
TBTT to add a little more that I noted from the presentation:
Smelter - "Contracts with Impala & Sibanye end in Oct 2022, after that THS are free to smelt more of their own PGM's". It appears that the expansion of the 1MW smelter is not a technical issue its more due to commercial contracts.
"EV/EBITDA of 1.7 to 2.7 is based upon the forecast of 3 analysts and not on current figures." 2.7 is too low and also so are the forecasts that I have seen, so we will see a re-rate on this front.
Vulcan is Sept as mentioned but interestingly the PGM increase to 200,000 Oz will be incremental over the following 18 months which is good news, it will mean a steady increase in PGM's Oz's from 2021-2023.
Phoevos view on commodity pricing was that we should see some stabilising around these prices.
I also read the article posted by Nimrod which mentioned the Vulcan CAPEX . The author stated about 1/3 of the $54m Vulcan plant was paid for. if that's the case then $36m left. It won't all leaves the bank this FY but at least it's a guide.
If the share price doesn't move after the 6 month interims in May, where the full picture of a company throwing off cash should be set out in black and white, I will be amazed ( and very disappointed!!). This combined with a healthy interim dividend and more news on the potential expansion / diversification projects should really put the company under a spotlight for investors.
Its an easy 100% gain even from the 2.7 value.
Rhodium stable at $28,100/oz (JMAT). Iridium and ruthenium trading flat at their all time highs - $6,200/oz and $410/oz.
The Shares presentation last night was a bit of a mess technically-speaking, and Phoevos went over a lot of familiar ground as he pitched the company to new investors.
Some things that stuck in my mind:
It's clear that Salene Chrome is still an option going forwards. I don't know what the delay is in exercising the right to buy. Phoevos was clear that that it would produce a premium product that would command a price similar to Turkish chrome.
The messaging around setting up a smelting plant is getting more explicit - I feel we will hear more about this as soon as the Vulcan Plant is completed. I'm happy with this; it's a very good use of money.
Commissioning for the Vulcan Plant is scheduled for September.
Phoevos gave the impression of a CEO who is absolutely certain his company is undervalued. On one slide he quoted three anonymous analysts who had Tharisa's EV/EBITDA ratio at 1.7, 2.3, and 2.7 respectively. Even if you go with 2.7, that's still ridiculously low.