Roundtable Discussion; The Future of Mineral Sands. Watch the video here.
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It's not a joke at all, it's an extremely clear policy and makes no bones about clearly stating the lower of Net Profit OR free cashflow.
With very clear projections on Capex and growth particularly in 2022 & 2023 in the same presentation, it should be obvious to most there will be no divs until late 2024/ 2025, depending on gold price and repayment terms + timetable for any finance/loan packages. Who knows could be earlier depending on whether they go for financing/loans or a mix of equity.
Overall its a very good presentation, step change in both concise and detailed information and due to quality should have been a RNS if just to get more attention/ exposure.
The dividend policy is a huge joke....anyone reading the headline numbers will be disappointed.
"25% of consolidated net profit OR 25% of FCF (lowest)"
More realistically (truthfully)...shareholders get nothing until thay have finished developing the mine(s)...which could be many years. I have no problem with that but would prefer a bit of honesty.
PS One 'hidden' danger is that the controlling family at some point make an unconditional offer for the company that materially undervalues the business....and they accept it!!
Some time ago there was 'discussion' that there were in fact 3 processing plants to be built....a second plant at Sekiskovkoye and a 3rd plant at Teren-Sai. That was news to me and I questioned it at the time. The latest report sort of confirms that the current Sekiskovkoye plant is 'only' being upgraded to 1Mtpa (from 850Ktpa).....a new plant 'MAY' be required at Teren-Sai...."In the future as production grows an additional golf processing plant may be required (at Teren-Sai)" (pp11 of report)
I think the 'plan' is to truck ore from Teren-Sai to the current plant....presumably until the 1Mtpa capacity (post upgrade) is exceeded when they will 'presumably' look at operating a second plant at Teren-sai.
"Interestingly I can't find that report on the website any more and the links in the RNS no longer work."
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I think you will find it filed under BIN. It is amazing it ever saw the light of day with such a glaring error....that is Altyn's faux pas (another one).
"That sort of blows a hole in the daft research - limiting gold production to 26,000 oz pa for next 3 years -that was paid for and promoted by Altyn."
Yep agreed, it was that report that killed the upward momentum the SP had. Interestingly I can't find that report on the website any more and the links in the RNS no longer work.
Well no RNS but I've put an order in here to increase my position as that presentation showed a lot of confidence and professionalism - I think its fairly clear the exit rate for 2021 will be somewhere around 9000oz per year so this is way undervalued.
Trans Siberian Gold was taken out for around £100million in August - production was about 45000oz per year, TSG had better grades, but ultimately the AISC was around the same. Political risk is at worst the same, if not higher for TSG and crucially proven reserves and resources for TSG were far far lower and there was significant ongoing spend on exploration to try and extend resources and mine life.
For me this offers comfortably better value than TSG did, due to the much larger resource and clear path to substantially higher production.
"Clear growth strategy aiming to double production in the next 3 years.....2 x production to 1Mtpa WITHIN 3 years from 2020 level of 506Mtpa (sic)"
That sort of blows a hole in the daft research - limiting gold production to 26,000 oz pa for next 3 years -that was paid for and promoted by Altyn.
Presumably as the presentation is date sep_14 it is officially released tomorrow and I guess they’ll be an RNS.
I think it could cause some interest.
Outstanding presentation - significant step forward from the research note that had production flatlining at 28oz per year.
Full year forecast for 2021 is 30,000oz and I struggle to see the company would put that in a presentation now without having a high level of confidence it will be achieved, which would mean 17,000oz produced in H2 and then 2022 forecast is for 38,000oz.
I suspect Q3 production report will show around 8000oz of gold produced and then Q4 should be 9000oz.
Nice - pretty comprehensive presentation. Given capex requirements for 2022 of c$60m, and $100m over the next 2 years, I reckon we must be gearing up for some additional fund raising soon..?
This would finance expansion to c60k ounces p/a, then I suspect 2025 expansion to 100k+ will be self-financed through cash flows - then there is a 30+ year mine life at low cost, with good grades and many years of excellent dividends presumably?!
It is just this funding uncertainty holding us back right now imo. If this can be achieved on reasonable terms then we will be off to the races and an easy solid long-term hold. Shame if we have to dilute at this share price, but it does feel we are held down here at the moment and would expect a debt/equity mix.
IMO this can be like an AAZ style rise over the next few years (AAZ did similar raising over $50m and paying back over a couple of years) - but here we have far greater defined reserves already and better gold grades with similar costs, and showing ambition for near double AAZ current output, just earlier stage right now. This can easily be £250m market cap in a few years time - and maybe much higher dependent on gold price.
Thoughts?
Baldy, current plant good for 850,000 tonnes. Need more U/G machinery to expand production.....on order....as per latest presentation...
HTTPS://145908.selcdn.ru/files.altyn.uk/presentations/AltynGold%20Investor%20Presentation_Sep14_EN.pdf
The current processing plant was designed & built to handle 800,000 tonnes per year (from memory). I cannot see how any 'research' could cap gold production at 26,000 oz for the next 3 years...it is absurd. For them to limit the mined ore to circa 500,000 tonnes per year they would have to identify a bottleneck and 'management' would surely invest in fixing a costly issue like that....in terms of restricting gold poured by circa 14,000 oz (53%).
Even 40,000 oz could be an underestimation IF grade reaches the levels suggested by the reports but ALtyn will always be a company that under delivers (IMO). But 40,000 oz should be 'easily' achievable .....speaking as a self professed armchair mining engineer.
The entire junior gold mining sector is a but unloved at the moment which isn't helping things so momentum keeps being taken out of the share as gold dips back below $1700.
I think the two main things that are holding back at the moment are.
- The research report that shows that all free cashflow is being invested back into mine development over the next 3 years, but there is no substantial increase in production beyond current rates of about 26000oz per year until 2025
- The fact the company keep referring to the need for capital, so there is nervousness about a placing.
I can only think the company must have been sandbagging for the research report - after years of overpromising and under-delivering, now go the other way. I find it inconceivable with all the investment happening to increase mining, increase grades and improve processing they cannot increase production up towards the 40,000oz that you highlight.
On the capital raising side to get to 100,000oz per year they do need it sometime in the future - however, if they can get production up above 30,000oz and beyond, the amount needed comes down quickly and there is more chance of a large portion being financed by debt.
I'm convinced they will move quarterly production towards 8000oz by the start of next year and potentially towards 10,000oz towards the end of 2022 - then as capital need recedes I would expect this to move up very quickly as its impossible to ignore the cashflows compared to market price.
It seems that despite record gold production for ALTN there is no increase in the SP, so absolutely no reward for shareholders ....not even any dividends. I wonder what ALTN have to do to catch the market eye. What is putting off potential investors?
Given the increasing gold production profits are being generated that could fund the upgrade in the current processing plant to 1Mtpa (assuming gold price remains high).
800,000 tonnes at 1.9 g/t with 83% recovery gives 40,562 Oz. That is a lot of cash IF gold remains close to $1800.
"144.5 145.0 spread now 0.5p"
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I doubt that is the real spread.
Seems to be buy at about 137p and sell about 145p...so the spread is reducing...slowly from 12p this morning.
144.5 145.0 spread now 0.5p
Consistency is what we needed and that is what we got !
Assaubayev's are heavily invested (at around 250p if my memory is correct) so have plenty of skin in the game to turn this company around. At around 25k oz producer I feel this is worth almost double current price, but it is the future growth potential that could really see us make some money. H1 '20 7k oz ; H2 '20 10k oz ; H1 '21 13k oz .... if they can continue that growth into 2022 then our previous high of 306p would be smashed. It's been a long wait but hopefully worth it !
Spike, I agree that numbers are looking good. I also have no problem with investing in the mine. But splashing the cash is easy...spending it wisely is the difficult bit.
The management have to be given credit for raising finance and stepping up production. But there are huge investments needed in the next few years and that is going to need very experienced managers...possibly why they have invested in new staff.
Hopefully the market will start to take Altyn seriously and spot the potential. Market cap of £40m is ridiculous IMO. Teren Sai is probably worth that on its own (undevelopped).
Someone is making money. Yesterday the spread was 5p, today it is 12p.
Reminds me of the days when ALTN was a 'penny' share (pre-consoldation) when the spread was extortionate.
"There is a sizeable profit but there also seem to be lots more ways to spend that money....consultants, equipment, mine upgrades, new highly paid staff."
True but mine upgrades and equipment are needed for development and as long as its not excessive I'm ok they spent money on consultants and decent staff to help them expand in the right way - the fact that the total cash cost is sub $800 shows at this stage its not excessive.
Cash might be only $3.5million but not current assets (i.e. cash, inventory, receivables minus payables and short term borrowing) has jumped to $15million which is very healthy.
Turnaround picking up pace now it seems. Looks promising with production costs dropping to $766 oz from $963 oz in H1 2020. Will the market like it? You never can tell with Altyn. GLA
There is a sizeable profit but there also seem to be lots more ways to spend that money....consultants, equipment, mine upgrades, new highly paid staff. Borrowing is high and they will be looking for more. Cash in the bank is falling despite the record profits. Hopefully at some point there will be a little bit left for shareholders but it doesn't look that way at the moment...not for many years.
If price of gold falls then things will rapidly look less rosy. They really need to be saving every penny to invest in the new production plant(s) & current plant upgrade. Just like a teenager with a new credit card there are so many wonderful things to buy.
But it is good to see grade increase....hopefully it will continue to rise.
Not an awful lot in the report that we didn’t know already but the all in cash cost of production at less than $800 per Oz is impressive.
Wait and see !
Spike, I seem to remember not too long ago (current management) 'suggested' that 15% of profits could be returned to shareholders in dividends. Unfortunately the chances of that are a big fat zero. Too much financing to pay interest on, too many places to spend any dollar profits, too many processing plants to build.....was that a Jason Donovan song??!!