We would love to hear your thoughts about our site and services, please take our survey here.
London South East prides itself on its community spirit, and in order to keep the chat section problem free, we ask all members to follow these simple rules. In these rules, we refer to ourselves as "we", "us", "our". The user of the website is referred to as "you" and "your".
By posting on our share chat boards you are agreeing to the following:
The IP address of all posts is recorded to aid in enforcing these conditions. As a user you agree to any information you have entered being stored in a database. You agree that we have the right to remove, edit, move or close any topic or board at any time should we see fit. You agree that we have the right to remove any post without notice. You agree that we have the right to suspend your account without notice.
Please note some users may not behave properly and may post content that is misleading, untrue or offensive.
It is not possible for us to fully monitor all content all of the time but where we have actually received notice of any content that is potentially misleading, untrue, offensive, unlawful, infringes third party rights or is potentially in breach of these terms and conditions, then we will review such content, decide whether to remove it from this website and act accordingly.
Premium Members are members that have a premium subscription with London South East. You can subscribe here.
London South East does not endorse such members, and posts should not be construed as advice and represent the opinions of the authors, not those of London South East Ltd, or its affiliates.
I done the same a few weeks ago I needed the money I sold some but bought back in under my company SIPP lost a few hundred but it's in there for the long term
Let's hope we get some good exciting news soon
I actually sold out yesterday, my intention is to buy back into CGH in about 3 to 4 weeks time, I've done this twice now, once in March and again in May both times increasing my holding without paying out anymore money. History shows that the last two holding RNS's pushed the price up, only to fall back again 3 or 4 weeks later, so I'm happy to take the gamble that the same thing will happen again now.
Pablo are still going to sell a few when it reaches 34p good luck
Good old Martin.
Think it's very critical of some folks to say he's just propping up the price, I think it's fantastic. To have the chairman, and indeed the BoD, with so much skin in the game is the greatest security we can have.
Gives me every confidence that our debt will be serviceable and the project(s) will all come to fruition
Don’t like comments that if it weren’t for Martin we’d be useless. He’s gradually taken his anonymous holding (Wilsher Fasanara) to become Chairman and the linchpin of the company, built the Board and team and we’re really moving now, the dark Dekel days are well behind us.
Just thinking in a lot of Aim companies the Board often have a fair slice but usually they took them at company start-up at next to nothing. Not the case with our Martin, I would reckon his average might be over 20p.
Looking good
Further confidence from MA.
That is just a generated report. They pop up all the time.
Interesting view from Yahoo finance.
https://finance.yahoo.com/news/chaarat-gold-holdings-lon-cgh-124726646.html
Fascinating. You have spent an awful lot of time producing this yellowhammer report. Thanks for that.
I am not going to rebut every point, although there is a great deal that I would disagree with, I think that the clearest evidence of the valuation of the assets is the fact that they seemed to raise the necessary finance for Kapan relatively easily and the fact that Ciftay were willing to contribute a decent sum for 12.5% of Tulkubash/Kyzyltash.
Personally I am invested here for the future rather than the past and this looks pretty strong to my mind. There is no doubt for me that Tulkubash/Kyzyltash will ultimately prove to be multiple times the current size. If you look at interviews with Dusty he is pretty much stating this without committing. This is district scale and I expect another significant increase in both resources and reserves when the latest season's drilling is incorporated.
I suspect that this would be a poor short target as Martin has shown that he is willing to support the share price through purchases under the waiver. Let's face it, he wants a strong price to support convertible pricing to limit dilution to himself.
Sure thing Shakhatar. Whatever. Good luck with that short if you manage to put it on. I happen to have a different opinion. Gigantic (and I mean gigantic) reserves. Loan term sheets in place. First class board that will succeed in commencing to extract those reserves. Rising gold price. Very ambitious vision for M&A. Management aligned with shareholders. It may not be tomorrow, but before long people will wake up and realise this is way way UNDER valued. I for one am happy to hold. Have a great weekend!
I would do whatever I want, Tractorhead, and will express my opinion, or not, as I please, and as long as I please; so please don’t tell me what to do - you are not in Kyrgyzstan!
I would love to short this share, if a) there was some liquidity in it, and b) the spread on IG was not that ridiculous.
Perhaps someone could recommend a platform with narrow spreads on aim penny stocks so I could short this? Otherwise it’s too expensive given leverage and long holding period. No liquidity means this will likely drift in the current range for sometime before one day people would wake up to a 50-70% drop in an instant.
Shakhatar, have you taken a short position here? Obviously you will not be investing that is clear. Will you move on to look for other shares to invest in or will stick around and spread your doom and gloom? I hope the former. Not much point for you in the latter is there? Bye and good luck elsewhere. I do appreciate an alternative view so thanks for that but hope you will not go on and on banging your negative drum. Unless you declare a short and then it will make sense to us and fair enough - you have a view and you are putting your money where your mouth is.
Let’s talk about debt just a bit now. All $83.5 million of it. That is MASSIVE for a company with an $7.7m annualised ebitda. Net debt to EBITDA is what? 10? And they expect to raise project financing debt of further $80m? The G&A expenses for $10.5m for 6 months! That’s $20m per year on an ebitda of $7.7m? or even $15m? or even Artem’s make-belief $20m! They are burning cash faster than you can say “fast running horse”!
They are done! Bust. $17m extended to March – this will come very fast. Then convertibles in 2021. I’m sorry, they will run out of cash well before debt is even due to bondholders.
And Artem is in a dreamworld that he can deliver construction with no further equity. He, and Martin, too, are both either delusional or are lying. And everyone in this circus is due for a rude awakening.
RUN RUN RUN!
PS. “Legacy issues that have been identified since acquisitions” - read “Dear shareholders, we didn’t do the due diligence properly – that’s how bad we are despite our 2000 years of combined experience in the industry! We thought we were paying 0.53xNAV for Kapan but in fact we paid more than it’s worth on a good day, and we’ll be lucky if our auditors don’t make us recognise an impairment loss against it in the annual accounts when they get a chance to look at this mess we got all of you, our dear shareholders, in. We live and pray.”
AND YES, IT IS ONLY AN OPINION. DYOR
In summary, we have a sum-of-the-parts EV as follows:
Kapan $75m
Tulkubash $35m
Kyzyltash $35m
TOTAL = $145m
That’s before debt, as I pointed out several times.
Turning our heads to the latest available balance sheet:
Borrowings = 51347 + 4629 + 27492 = $83.5 million
Cash = 4905k = $5 million
Net Debt = $78.5 million.
Net working capital seems to be positive, so we will generously assume it is hopefully adequate.
EV $145m less Net Debt $78.5m gives us EQUITY VALUE of $66.5m. With 418.23 million shares in issue, that’s 16 cents per share or 13p at today’s exchange rate.
OK, not quite the 7-9p range I mentioned earlier, but I was feeling uncharacteristically generous today in my assumptions underlying the above analysis. The market, when it functions properly, is not that generous, so my 7-9p guesstimate is actually not that far off the level where this share would trade, if it was, indeed, trading. And no, 2-6 trades a day is not trading, it’s a joke! It's not even a lame donkey, this so called "fast running horse" - it's a dead tortoise.
Kyzyltash…
There is this expression in that part of the world - and for Chaarat (being the “fast running horse” and all) it fits rather perfectly – that, when roughly translated from Russian, goes something like this: “the horse hasn’t even rolled about yet”. They say this because, apparently, just before a horse is harnessed to go and plough some fields, it likes to roll about on the ground. Well, you get the meaning…
Anyway, with Kyzyltash, the horse has’ even done that yet. It’s just a resource estimate, it’s not even a project yet. And it is underground. And it is refractory ore. There is so much unknown about Kyzyltash and so many risks there that I don’t want to even spend a minute trying to give it a sensible valuation.
I did laugh out loud (literally) when I listened to Artem’s interview the other day, and how he used the in-situ resource (10m ounces) and multiplied it by the current gold price of $1500 to get 15bn value, then adjusted it 50% for resource to reserve conversion and deducted further 50% for cost of extraction to get to a wonderful valuation of 3 bn (or 4, or 5 billion - he couldn’t quite do the math). So, a “massive, massive underwaluation” ))) That was soo-o-o funny, priceless ))))) If this is how he really thinks and manages this company, then I don’t know, I’m speechless. I hope everyone here realises how wrong it is to make such calculations, how completely ridiculous he sounded. Unforgivable for a serious CEO. Utterly unprofessional.
Anyway, back to our estimate, and I said I feel generous today, so let’s do this. Let’s just assume it has been built and it is operating and producing 250koz per year at AISC of $1000/oz. That would be EBITDA of $110-120m, at 5x multiple, EV of $550-600m. And to get their they would have spent some capex – let’s assume $100m for underground development and equipment, $150m for the plant, $50m for the tailings facility, $50m infrastructure and $50m other (contingency) – in total $400m. That would give us a back-of-the-fag-pack NAV of $150-200m. Given it’s still a horse that didn’t roll about, we fair value it at 0.1x-0.2x NAV – so a very generous EV of $30-40m, call it $35m.
To be continued…
Turning to Tulkubash…
Oxide at 94koz annual for 5.3 years. That’s not much at all. They give it NPV of $70m. Note it’s done at 5% discount rate. That’s for a project in Kyrgyzstan! For a company with so much debt it’s about to go bust (more about this later)! And for a project – not an operating mine, a project! They must be joking, really.
But let’s be generous – I’m in a generous mood today after all – let’s take their own NPV as a universal truth and run with it, with a small adjustment for this being a project, not an operating mine (and rarely do operating companies trade at 1x NPV). This is yet to be financed. It is yet to be built (and boy do I have my doubts on Cifrey’s abilities to build a mine, but that’s for another time). In other words, all the risks are still there. A discount to NPV would account for some of those risks to NPV, which is why projects at this stage of their development normally trade at 0.3-0.5x NPV. Let’s feel generous again and give them 0.5x NPV. That’s 0.5x their very optimistic NPV of $70m. This gives us fair value EV for Tulkubask oxide of $35m (again, before any debt).
To be continued....
Just to show that I listen to constructive criticism, here is my view, in more detail.
Let’s try doing a quick some-of-the-parts. We start with Kapan in this message.
EBITDA of $3.2m for 5 months, annualised that’s $7.7m. Ok, let’s hope (and pray) for some improvements. Gold price is on the rise, after all.
Quick calculation ($31m revenue less $3.2m ebitda, divide by 23.327koz AuEq sold for 5 months) gives us $1192/oz AuEq cash cost. Let’s say that they can manage to improve cash costs to an annual average of $1150/oz. Let’s assume Au price at $1450 (a very optimistic assumption, at least $100/oz higher than long term analysts’ consensus estimates and ignores any hedging they might have). This gives us normalised annual EBITDA at $300/oz times 65koz, or $19.5 million.
Now, this ignores that 65koz AuEq production estimate was calculated using Au price of… wait for it… $1250/oz – did anyone notice that? And prices for Cu and Zn were $6000/t and $2500/t respectively. Ignoring Cu and Zn (which by the way both currently trade at lower prices!) and just adjusting for Au price (to the one we use in our forecast above) results in annual AuEq production dropping to 56koz. (That’s why I hate reporting in AuEq). So, in reality EBITDA for the year will likely be closer to $16.8m. And that’s if everything goes well (prices stay high, costs go down).
In real world, things are never that perfect, so expect cost inflation, price volatility etc. etc. EIBTDA will be somewhere between the current annualised run rate of under $8m and our estimate above of $16-19m. I’d consider it “well done” if they achieve $15m annual ebitda from Kapan going forward.
Based on $15m EBITDA, we can work out EV – let’s use a generous EV/EBITDA multiple of 5x. And for an asset with current life of mine of 4 years that is VERY generous – in reality one should use 2x, maybe 3x. Our generous multiple gives us EV of Kapan of $75m (EV, that’s before debt!)
I know this is not particularly precise, but it is impossible to be more precise given complete lack of information and lack of transparency from the company. All this Gold Equivalent reporting business is complete nonsense – Kapan is producing copper and zinc conc. Stop translating it into gold for us! Why not into bitcoin equivalent? We are not stupid.
To be continued….
7-9 pence maybe, but personally I wouldn't even buy them at that level, they are a basket case IMO
Shakhtar what would you say is a fair price for this share in you opinion
I wonder how long they can keep this boat afloat. Whoever is lending them money either has huge cojones or just has to keep hanging in there because what's the alternative? Default and cross-default on all facilities and getting next to nothing through settlement with all the lenders? But the music will stop one day and there just won't be enough chairs left.
I suppose Martin will have to step in and bail them out, and then probably convert into equity, increasing his stake substantially (75% maybe?). He'd probably want to keep it listed though (taking private at this price would be stupid anyway). In the meantime they are paying 12-13% on debt and Martin keeps getting paid, reducing a little bit the cost of his eventual bailout. Retail shareholders will never see any money from this share. I am amazed that some hard core LTHs (a total of 3 or 4 ) are still in this when they can sell now at what is really a great price! Their exchange on ADVFN keeps me entertained when on occasion I check it out ))
P.S. And to think that they were bidding $1bn for Kumtor! What audacity!
Ariel i hope you did not lose money sad to see old faithfuls go good luck
Ok Ariel, pity. Sp hasn’t done much these last months and know a lot of people are frustrated.
For interest, are you able to say how many you’ve sold lately?
Been here for a few years but sold out now, GL guys.
Good post apart from the fact that not a single part of it was accurate!
So the low key message Wednesday means the company is in default on the 10 million loan.
seems like bad news aplenty. no new money and now the default. The clock is ticking for Martin to put his hand in his pocket again. or the share price will tank. interesting dillema
ArielArrow i know what you mean i need to off load some this week as i need the cash so i am hoping it does not go down lets hope we get some good news soon and see the share price rise