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Long term I'm sure they have plans to build a new processing plant but short term they might decide to truck ore - assuming they have spare capacity. It is far easier & quicker to dig a hole in the ground than it is to build a new processing plant and they will want to process at least some of that ore (stockpiling takes space).
I'm sure they have a plan but IF circumstances change then they will have to adapt that plan. Just because Altyn management have told us something doesn't mean it has actually happened.....'the plan' is more a vision of what they want to achieve (IMO). Whether the end product - especially in terms of timescales - meets that vision is another matter (IMO).
The results stated they wouldn’t truck Teren-Sai, but would build its own processing plant
The Teren Sai ore could be trucked , although I guess it would need to be blended in on a consistent basis. They make no mention of trucking it but maybe it will depend on how the gold price is performing at the time and whether it is viable. The gold price determining how their strategy plays out
Presumably at some point (TBC) an open pit at Teren-Sai will start to supply ore at quite high tonnage and that (in theory) could be trucked to the current processing plant at Sekisovskoye. So reaching 850KTpa isn't a good target (IMO).
Which is best, lower tonnage at higher grade or increasing tonnage at lower grade?
The company (at least initially) will 'probably' spend lots of money increasing processing capability but supply it with lower grade ore (it is what they have done in the past). But long term I suppose it creates a much larger business, with the ability to expand and takeover smaller operations. I suppose the question is what is best for small investors like us (not the majority ruling family & management).
I think every ALTN investor has become used to slippage.
One thing improves (mined tonnage) and another thing 'slips' (grade)....one step forward, one step back!!
But they seem to be inching forward!!
Typo "650t"....650k pa
Bald eagle
They also say 750k or ore has been accessed for 2021 ( 100k short of the 850k) unless they use stockpiled ore or purchase more equipment to accelerate access. So IMV they wont hit 850k this year so the 3 years at 850k could easily become 4 . I the current run rate at 1800t/ day is only 650t. Despite investment and some improvement s the family will run it at their pace , so every chance of further slippage IMV.
Dofmeister, thanks for 'finding' the capex table for me. ABove not below!!
It looks like they aren't expecting to raise the additional $40-50m in the next 2 years.
There are lots of questions that need answering (IMO). The latest set of results seems to pose more questions than answers (again IMO).
But IF they can get to 850kTpa over next 12-18 months and IF the grade gets back to 2.0g/tonne (& above) and IF they can keep recovery above 80% (hopefully nearer 85%) and IF gold price stays above $1800/Oz then 'perhaps' things will look clearer !!!
But things seem to be heading in the right direction....although I'm not sure what precise direction that is at the moment.
It's above..........
It's above..........
Under 'capital requirements' section of the results was: "The capex requirements for the next two years are detailed in the table below. "
Is it me - having a bit of a moment - but does that table exist?!
It is difficult to know at what point we have reached in 'the plan'. Timescales are always shifting (being delayed).
It was 'interesting' that they plan to sustain production at 850kTpa for 3 years...THEN ramping up to 2MTpa over 6 years. If that is correct then that's a 9 year timeframe and NOT the 6 years from previous plans.
"The long term plan still consists in operating the Sekisovskoye Mine at 850kt annual capacity for three years then ramping up production to 2Mtpa over a six year period"
bald_eagle - it is certainly what I hope .... but high quality information from this BoD has been in very, very short supply these past couple of years. I do however feel there is much more upside potential than downside here
C.$45m to achieve 150,000 TPA extra must be an error. I have messaged Thomas Gallagher for clarification.
RB, so you believe (& hope) that the $40-50m mentioned in the latest report is a mistake....it is the sum required to take processing capability to 2Mtpa NOT 1Mtpa?
It wouldn't surprise me because it did seem an absurd amount for 'only' 150,000Tonnes of extra capacity AND the management sometimes seem to be smoking something stronger than cigarettes. But they do need to correct their mistake (if it is a mistake) because it could put off potential investors.
The mention of $40-50m capital investment to get to 1Mt pa extraction is the joker comment in an otherwise very encouraging results announcement - it seems totally out of place ... but then what isn't with ALTN BoD.
Looking back at the 2019 results the 3yr plan seemed to be to get to 850k extraction rate by spending 18.3m in 2020 ; 9.6m in 2021 and 8.7m in 2022. Then after running for 3yrs at 850k a spend of $45.7m to get to 2Mt over 6yrs. In this set of results they still allude to 850k as the short term goal and have capex of $15.7m in 2020 ; then 11.4m in 2021 and 4.3m in 2022.
So it would appear we're a little behind on capex in 2020 (not surprising given Covid) but intend to catch-up in 2021 and maybe even have lower total expense to get to this initial target in 2022. The critical bit from 2019 results was "The plan consists in operating the Sekisovskoye Mine at 850kt annual capacity for three years then ramping up production to 2Mtpa over a six year period. This will be achieved by increasing the capacity of the existing processing plant to 1Mtpa from 0.85Mtpa for US$8.4m and constructing a new 1Mtpa metallurgical plant and tailings dumps for US$45.7m"
So IF, and as ever a big IF, you believe the well written 2019 report is more accurate than this peculiar statement - then we would appear to be on track for 30-40k oz production by end of 2022 so long as they manage to process and sell everything they extract. ... and again if they sustain this level of extraction / production for 3yrs it would seem quite plausible that they spin off sufficient cash from operations to be able to self-fund the $40-50m expansion to 2Mt production.
What do I think this implies - well if it believable (and I still have some faith) then sp should rise back to £2-3 on 2021/2022 activity and up towards £10 on the target 2Mt extraction = 80-100k oz p.a over the next six years.
But does anybody else believe this plan will be stuck to ?
The strange thing is that for all the lack of communication it does seem as though the past 12-18mths have been largely moving this plan forward on time(ish) and on budget(ish) ... I'm staying overweight.
DofM, I quite agree with you. Grade is what could hold back the SP and future investment.
The $40-50m for 'only' 150,000 tonnes extra capacity does seem a little steep.
The plan to add another 1 million tonnes capacity (taking it to 2m tonnes per annum) must be eye watering.....but presumably the company - if it ever reaches that point - will be in a different league by then, almost Premiership!!...OK, Championship.
It's only worth spending $50m increasing capacity by an extra 150,000 TPA if they have grades c 3g/t.
If they get 3g/t then at 850.000 TPA the market cap should be north of £250m, c 9 - 10p a share.
Besides the timing of the release, there is a lot to like in these results both in the figures and the confident commentary. PBT was $3.3 but there was an additional $4million in non-controllable costs such as share issue costs and FX moments so underlying PBT was nearer $7million.
Mining capacity is now at 1800tonnes per day which is 657kpta with further increases planned, so the path to 850kpta continues to look clear and with the main investments being in the processing plant this year, presumably the company will exit this year being able to reliably process that amount as well.
I notice that they indicate current grades are 1.75g/t, which I assume is known from the Q1 production results as Q4-20 was 1.7g/t - they also indicate additional increases coming from this quarter as well.
Subject to Q1 production being similar to Q4 - although wouldn't it be nice if they could exceed 7000oz, 30,000oz this year looks highly acheivable and given economies of scale that should reduce all-in production costs to sub $1000 so at current gold prices, $800 free cash flow per ounce, in which case $40-50million capex should comfortably be available through debt facilities.
They like to release the report as close to 30th April as possible. I would rather they release it at 6:21 than 4:21 as it gives more time to read it.
Perhaps they were planning to issue it at 16:21 but missed the first digit.
The production figures were known and the capital spending plans were known (in the bond prospectus).
The financial figures are good reflecting the progress made with production and the firm gold price.
I think it may be another year before they are ready to proceed with a $40m-$50m fundraise for that next large step up in production. Until then they can use spare revenue to make improvements/explore.
But by making known that they will be looking for cash, gives time for investors to consider it.
What they were really hiding was not the decent results but the need for a huge chunk of new capital?
Would not be surprised to get a further RNS at opening, as its strange to give good figures after market has closed on a Friday. As for financing. Its comparatively easy to get finance if a company has proved its competence and Altyn has. Its not as if the $40-50m is needed to maintain their existing work, it is to attain the longer term goals exploiting additional opportunities. Perhaps a sale of company in the offing?So where will they get £40m? A placing at current share price would mean the family losing control.
Nope. Almaty is GMT+6.
Therefore 4:20pm would be 10:20pm.....perhaps they work late over there?!
As an investor I am annoyed...especially when they write that they want to increase the profile of the company with potential investors. Bizarre.
By hiding what look like a decent set of results!!
Altyn is a company that does some very odd things - or things that appear odd to me. One is to release results on a Friday afternoon before a bank holiday, when presumably 'everyone' has left to avoid the bank holiday traffic. Bizarre!
Perhaps it is because the management are based in Kazakhstan where it might be early in the morning....but still.
"....the Company has recently appointed Renaissance Capital to operate as a Corporate Broker as well as produce independent research on the Company in order to increase its profile with potential investors." (from yesterdays results)
Here's a freebie Altyn, don't release results on a Friday at 4:20pm, especially before a bank holiday....unless you want to hide terrible or dodgy information. Bizarre...especially when the results look quite good. I must have missed something?!
PS No mention of dividends that I can see. Wasn't really expecting any, but I live in hope.
Baldie they have done it in the past not that you have been here that long , normally bad news get s released on Friday evening so no one notices but this lot don t seem to gave a monkeys ! At least it looks good compared to others and numbers look better , so lets hope production update is good as I think it will be ! some interesting comments about what they hope to achieve may this be the start of what should have happened 11 years ago . G.L.A.
Tuesday morning should be interesting as MR Market rerates or ? who knows ?