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Just back from hols, and there's been plenty of news flow while I've been away not posted here yet.
For example, Golden Rim announced positive drilling from Kada, where CAPD are the contractor. In particular, there are "plans to commence a second round of exploration RC drilling to test the target areas along the Kada Gold Corridor in March/April 2022":
Https://www2.asx.com.au/markets/company/gmr
Firefincha nnounced good results from Morila, where CAPD are the contractor, with " follow up drilling to be rapidly implemented":
Https://www2.asx.com.au/markets/company/ffx
And from Cora:
Https://www.investegate.co.uk/cora-gold-limited--cora-/rns/2022-drill-programme-at-sanankoro-gold-project/202202170700079248B/
"Cora Gold Limited, the West African focused gold company, is pleased to announce that it is due to commence a new 2022 drill programme at its flagship Sanankoro Gold Project ('Sanankoro' or the 'Project') in Southern Mali.
HIGHLIGHTS
? Capital Drilling Mali SARL ('Capital'), a subsidiary of Capital Limited (LSE: CAPD), appointed as drill contractor and mobilising to site to undertake circa 7,500m of reverse circulation ('RC') drilling
? Drill rig mobilisation has started, with drilling due to commence in March
? Programme dual focussed on converting existing resources from Inferred to Indicated category as well as targeting the discovery of new Inferred resources"
Thanks ??
Mandello, the maximum to be bought back is 2m shares - it's all outlined here:
Https://www.investegate.co.uk/capital-limited--capd-/rns/share-buyback-programme/202201040700122501X/
No. This is a separate contract to CAPDs work
Do we know how many shares they're aiming to buy. Apologies if I've missed this
Will CAPD be affected by this?
96,000 shares bought back on Friday at 95.4p - a new record.
And Chrysos is about to IPO, with a potential valuation of between $600m-$800m.....
CAPD doesn't have any shares in Chrysos AFAIK, but this valuation shows how well Chrysos is doing and the potential which investors can see therein:
Https://www.afr.com/street-talk/gold-analysis-biz-chrysos-fronts-investors-as-ipo-plans-ramp-up-20220130-p59scv
"Gold analysis biz Chrysos fronts investors as $800m IPO plans ramp up
Jan 30, 2022 –
Gold testing business Chrysos Corporation is back in front of Australian fund managers, this time with Barrenjoey Capital in tow.
Chrysos will spend the week in front of fundies, updating those it has met before and trying to win over newcomers to its story, ahead of a potential initial public offering valued at between $600 million and $800 million in coming months.
Chrysos is an Australian technology company, conceived at Australia’s national science agency CSIRO and the product of 20 years of research and development.
It’s expected to tell fundies its PhotoAssay technology is the first major advancement in gold assaying in centuries, and already used by blue-chip customers including Barrick, Kirkland Lake Gold, Intertek, SGS, and ALS.
Revenue from sales of its PhotoAssay units was said to have jumped more than 80 per cent in the 2021 financial year.
Barrenjoey arranged this week’s roadshow and is understood to be mandated for the potential float.
In booking clients for this week’s meetings, Barrenjoey’s equities desk pitched Chrysos as “a fast growing, profitable tech business” and said that its profitable business model was underpinned by contracted, infrastructure-like annuity revenue.
The non-deal roadshow comes less than six months after Chrysos raised $50 million for a $430 million valuation.
Its existing backers include domestic institutional investors Regal Funds Management, Wilson Asset Management and Tribeca Investment Partners, and the Commonwealth Bank of Australia."
Over 93,000 shares bought back yesterday at 95.5p, the highest to date - and the total buybacks now total over 1m shares:
Https://www.investegate.co.uk/capital-limited--capd-/rns/transaction-in-own-shares/202202040715016753A/
Good to see major investee company PDI's share price up almost 14% overnight on news that they're getting ready to “accelerate” exploration at Bankan and "highly encouraging new drill results":
Http://newsfile.refinitiv.com/getnewsfile/v1/story?guid=urn:newsml:reuters.com:20220201:nASX38GczV
"Predictive’s full technical team including Country Manager, Aime NGanare, new Geology Manager, Norm Bailie and Chief Geologist, Dr Barry Murphy will be working with Managing Director Andrew Pardey and Executive Director Paul Roberts in the field in February-March to develop detailed plans to accelerate exploration on the Bankan Project, both on the known deposits and these new emerging gold discoveries"
Continuing to move up - buying coming in at 96p now.....
Cheers Jlite, appreciated. Much, much more to come here imo.
Yes, lovely to see. A belated thank you for all your posts. Keep them coming as they are much appreciated.
Hopefully this is the start of a re-rating up to a more sensible level. If so, then there will need to be some decisions to make, from a nice place of course.
GLA
JL
...and now at 95p. Moving up lightning fast now by CAPD's standards :o))
Buying coming in at the 92p full offer price now.....
https://twitter.com/surprised_trade/status/1483341480710352897
FY 2021 revenue of $226.8 million, up 68%, Q4 saw the strongest quarterly revenues in the Group's history, and the momentum has continued into 2022 across all business units; ...
.CAPD have embarked on a share buy back programme that is expected to complete during February 2022
Tamesis broker have set a 140p target
Yesterday Berenberg reiterated their Buy and recently increased 134p target price:
Https://investing.thisismoney.co.uk/broker-views/CAPD
Good to see CAPD featured as a Buy in the FT in their Investors Chronicle round-up:
Https://www.ft.com/content/8708e3cf-8530-4a4f-8381-cf2f23156826
"BUY: Capital (CAPD)
The value of stakes in mining and exploration companies has increased substantially, writes Michael Fahy.
Mining equipment provider Capital said revenue for 2021 came in at $226.8m (£189.7m), 68 per cent higher than the previous year and slightly ahead of recently-revised guidance.
The company posted its strongest quarter of growth in the final three months of the year, with revenue up 8 per cent on the third quarter and 92 per cent on the same period a year earlier.
Throughout 2021, the company grew its fleet by 16 per cent to 109 and increased utilisation levels substantially — 78 per cent of rigs were used, compared with 57 per cent a year earlier. Average monthly revenues per operated rig also grew by 6 per cent to $181,000.
The Mauritius-based company has also been increasing stakes in mining and exploration companies, an activity it aligns with securing service contracts. These investments recorded (largely unrealised) gains of $29.1m, doubling in value compared with the second half of the prior year.
Investment in mining activity boomed last year when compared with a pandemic-disrupted 2020. Exploration budgets increased by 35 per cent globally to $11.2bn in 2021, according to a report published in November by S&P Global Market Intelligence. It predicted that growth will moderate this year, but exploration budgets will still be 5 to 15 per cent higher than last year.
Capital’s share price rose 4 per cent, bringing its 12-month gain to 47 per cent. Broker Peel Hunt said that despite its re-rating, it is still only valued at “the lower part” of its historic trading band, suggesting it has much further to go.
The broker forecasts earnings of 13.1¢ per share for the year ahead. Capital’s shares are currently valued at nine times this level, which is below both its peers and the industry average. Given that the industry shows few signs of a slowdown, we maintain our buy recommendation."
Very good and "high-grade" drilling results announced this morning from Altus' (ALS) Diba gold project. CAPD are the drilling contractors and get name checked as below....hopefully a lot more to come from this:
Https://www.investegate.co.uk/altus-strategies-plc--als-/rns/excellent-gold-grades-from-drilling-at-diba--mali/202201270700107797Z/
"The current drilling programme comprises up to 10,000m of DD and RC and is designed to test the potential down-dip and along-strike extensions of the Diba Deposit and the Diba NW prospect. Drilling is also planned at the Lakanfla Central prospect at the Company's 100% owned Lakanfla licence, located approximately 5km east of the Diba licence. Once completed, the drilling results will feed into an updated MRE for the Diba Deposit and a potential maiden MRE for the Diba NW and Lakanfla Central prospects. This work will be followed by an updated Preliminary Economic Assessment for the Project. We look forward to updating shareholders as further results are received."
Diba Licence: Drilling Programme
The drilling programme is being undertaken by Capital Drilling Limited and comprises up to 10,000m of DD and RC across the Diba Deposit, the Diba NW prospect and the Lakanfla Central prospect. To date, approximately 5,400m of RC and 1,360m of DD has been completed."
Here's a new article about the expansion of MSALabs in Saudi Arabia flagged up in the recent trading statement.
Perhaps this may also give CAPD an edge in terms of winning drilling work as part of the "major push" outlined below:
Https://im-mining.com/2022/01/18/capital-drillings-msalabs-modern-mining-testing-jointly-establish-major-analysis-lab-mining-saudi-arabia/
"Capital Drilling’s MSALABS and Modern Mining Testing to jointly establish major analysis lab for mining in Saudi Arabia
Posted by Paul Moore on 18th January 2022
Global provider of geochemical laboratory services for the exploration and mining industries, MSALABS, recently signed in October 2021 a Heads of Terms with Modern Mining Testing Company in the Kingdom of Saudi Arabia “which will seek to establish a major hub laboratory in the region for the analysis of mining samples from within Saudi Arabia and other international jurisdictions.” The lab is set to be established in Riyadh and will support Saudi Arabian mining and exploration companies as well as East African and Central Asian operations. The development is indicative of the momentum in Saudi’s mining sector, which was also highlighted at the Future Minerals Forum event last week, attended by IM.
The news was referenced in a FY 2021 trading update by Capital Drilling, which owns MSALABS, which is headquartered in Langley, BC in Canada. MSALABS analytical services are cited as being suitable from greenfields exploration through to production and include sample preparation, a complete range of analytical techniques and construction and management of on-site laboratories at minesites. Modern Mining Testing is part of Saudi company Modern Industrial Investment Holding Group, which is headquartered in Riyadh.
Saudi Arabia is pressing ahead with a major push to scale up its mining industry. On the exploration side, this has been moved completely from paper-based to a digital platform. The Vice-Minister of Mining Affairs for the Ministry of Industry and Mineral Resources of the Kingdom Saudi Arabia, His Excellency Khalid Al-Mudaifer recently told IM: “We have gathered all the existing geological and exploration information we have from the last 80 years and combined it in a new national database called the National Geological Database and spearheaded by the Saudi Geological Survey. Information is now easily accessible from anywhere. All of this is a necessary prerequisite to increase the rate of development of our mining and minerals industry.”
The Kingdom is highly prospective for a number of minerals and metals, including iron ore, gold, lead/zinc, nickel, cobalt, copper as well as a range of industrial minerals. A number of deposits have also already been identified and have the potential to be fast-tracked into production."
Desert Gold's shares were up 15% overnight on positive drilling from Mali. CAPD announced in 2019 that they'd won an exploration contract in Mali from Desert Gold, so I assume this is their drilling work, and there's more to come:
Https://finance.yahoo.com/news/desert-gold-traces-gourbassi-north-103000260.html
"Additional AC drilling and auger drilling is planned to test for extensions to the Gourbassi West North Zone and to delineate potential parallel mineralized structures.
Bybacks seem to have settled at a decent amount of around 50k-60k shares per day now.
Got a few more today, in the January sales.
Last year CAPD won a new contract with a new client, Shanta Gold, at its West Kenya site.
Shanta has today announced good progress at West Kenya in its update, with more drilling having commenced last quarter:
Https://www.investegate.co.uk/shanta-gold-limited--shg-/rns/q4-2021-production-and-operational-update/202201240700153045Z/
"record drilling results at West Kenya"
"West Kenya
· West Kenya continued to deliver encouraging assay results with further results to be announced in Q1 2022;
· At the Isulu and Bushiangala deposits, visible gold was identified in 7 intersections across 25 holes drilled. Year to date, visible gold has been identified in 30 intersections across 93 holes drilled; and
· Regional exploration drilling commenced during Q4 at a third drilling site - the historical Ramula target - where highly encouraging assays were reported on the first drill hole including 5 separate mineralised zones of visible gold and intersections including 7.2 metres grading 8.31 g/t from 155.8 metres and 15.6 metres grading 9.37 g/t from 187.9 metres."
Good to see Capital recommended as a buy in this Sunday's FT Money Investors' Chronicle section. It will be interesting to see if this has any influence on the price this week.
The size of the buybacks continues to rise - 57k shares yesterday, at 89.8p:
Https://www.investegate.co.uk/capital-limited--capd-/rns/transaction-in-own-shares/202201210715081608Z/
Also, good news from Aya Gold, where CAPD last year won drilling work for the Tijirit project in Mauritania and will see drilling starting soon:
Https://finance.yahoo.com/news/aya-gold-silver-record-annual-120000472.html
"Additionally, a 25,000m drilling program will be carried out on the Tijirit Project in H1-2022. The program, which will consist of 3,000m DDH and 22,000m RC drilling, has the aim of converting resources into reserves in support of the feasibility study."
I was pondering why there was such a muted response to the Q4 trading statement alongside the PIworld video earlier. Clearly the institutions don't see CAPD as under valued, a mistake in my opinion and presumably most on here. Equally, the muted response presumably reflects the fact that all of the good news was already factored into the price. All recent RNSs have been overwhelmingly positive, the huge increase in revenue from the Sukari contract was already known. So in fact there was not that much new there. A few new contracts, all positive of course, but probably not enough to show where the next couple of years growth will come from.
I calculated the quarter on quarter growth over the last year and of course this is slowing down massively. Most of the increase being due solely to the Sukari contract. This year, we will certainly see huge year on year growth per quarter as there was little revenue in Q1 from Sukari and then it ramped up through the year. But what else do we have to look forward to this year...
1. More contracts - likely but rig utilisation at 79% does not leave any room for further growth. They could continue to increase the rig count but this is unlikely to lead to more than a few % QoQ growth.
2. MSALabs - again very likely to grow significantly but from such a small base as to be immaterial this year. This one is definitely more for 2023 onwards.
3. Another monster Sukari 2 contract win. I have no idea on the likelihood of this, or even if they are actively pursuing many bids of this size currently. But I don't think we can count on this to deliver much growth this year unless it arrives in H1.
4. Investment portfolio. I doubt they will repeat the recent stellar rise from 2021 this year. At best, if they hold onto and consolidate gains then that would be fine. They might even consider realising some of this instead of taking on more expensive dedbt.
So those are the rather lacklustre conclusions I came to. So why am I still confident, well the Year on Year growth should see the EV / EBIT multiple of well under 4 and a P/E of well under 8. That to me is simply too cheap. With a 3% dividend, share buybacks using up spare cash, and a little organic growth, they should be easily capable of a 10-20% return this year. That is enough for me in a year of consolidation, if the market is paying me while waiting for the next growth spurt I am fine with that. The following year, MSALabs could well start picking up, and there is also the chance of another large contract win.
There are always two sides to an investment coin so thought I would set out my ponderings for others to refute.
JL
The buybacks continue to increase, with 59k bought at 89.4p yesterday:
Https://www.investegate.co.uk/capital-limited--capd-/rns/transaction-in-own-shares/202201200715080142Z/
And two pieces of good news overnight:
- Firefinch's Goulamina lithium project, where CAPD is the drilling contractor, is "advancing apace" with drilling about to commence:
Https://www2.asx.com.au/markets/company/ffx
"In Mali, site works are ramping up with a sterilisation drilling program in progress ahead of commencement of drilling to target conversion of Inferred Mineral Resource to Ore Reserves. Early civil works will start in February.”
- and CAPD's drilling for Golden Rim is proving successful, with more to come:
Https://www2.asx.com.au/markets/company/gmr
"Following completion of the resource definition drilling, we have subsequently commenced our exploration RC drilling along the Kada gold corridor and we have a number of exciting target areas to test that have the potential to add more ounces to the Kada gold inventory moving forward.”