The latest Investing Matters Podcast episode featuring financial educator and author Jared Dillian has been released. Listen here.
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Looks like it soon maybe time to go "dollar shop" shopping!
"Tempus fugit"
thanks for trying to enlighten me but it still didn't help answer why the directors have been buying shares all year. i took time to listen to the entire webcast again as of 30 june 2023.
https://stream.brrmedia.co.uk/broadcast/64e36d138e06f606d0f0cc7b/64f592ffc6e9d7476c27e94c
starting from net asset of usd$500m ye2022, the key takeaways for me are :-
1. near term(ye2023) expected net debt was announced as usd$100m, but as of end september in the q3 rns yesterday, it is still rather low at usd$68m. - good
2. the two primary drivers for income starting as early as q12024 is increased production at voiseys bay and kestrel mining at areas within scope of the royalty. it's already q42023 so not much longer to wait. - good
3. voiseys bay at final phase of switching from above to below ground which should ideally time it right for ramp up next year. the risk here could be adverse weather conditions with winter coming up it would have been nice if there was communication in yesterday's rns that this risk is mitigated - good with risks
3. seems like there is still around usd$100m+ headroom from the credit facility for all of next year. with my previous rough estimation, usd$40m per annum for operating expenses + dividend payments makes it about 2.5 years of runway - good
4. costs remain flat despite the inflation. - good
5. voiseys bay deliveries are currently below expectation but cobalt price isn't attractive enough to consume/extract supplies in the ground, which is sensible and smart. but the timing could have been better. - mixed good/bad
there are others but i'm tired of typing. i've been invested here for years and apf has always had prudent financial management so i am surprised at the share price. i reckon q42023 will be the lowest point of the share price before things start looking brighter from q12024 onwards. i also think an established uptrend would come within the next 3 to 4 months or sooner which is when i think i'll top up. i'd like to see chief financial officer kevin ***** buy more shares within this timeframe which should indicate that all is still well financially, or if cobalt prices gap up.
if you notice, the little calculations i have above negates cash in bank and any income for the next 2 years. this risk should already be baked in the sp.
my understanding of the director buys this year is now better understood and i shall remain invested because it's not too long to wait.
Suspect the market is worried that the dividend will not be supported going forward. Last reported cash at June of $6m vs borrowings of $50m. So net asset value of $480m aside, how do you continue to pay the dividend when the “core” portfolio ex Kestrel paid $4.8m this quarter / $19m annualised, less central costs and debt servicing / repayments. Dividends of 2.125c per quarter = $22m pa for a current yield of 7%. If that has to be cut, it will be difficult for the income funds and others holding for the yield.
Yeah once Kestrel ends we will be burning cash but operating costs are rather low. Let's say we burn USD$40m a year for operations & dividend payout: based on net assets of USD$500m at YE 2022, minus current market valuation at USD$290m+USD$43m hit from Kestrel depreciation, that's a negative equity of about USD$167m. Market is pricing in about 4 years(167/40=4.175) operations with zero income...which we know is NOT the case.
These are rough calculations to try make sense out of ECOR current valuation because I was wondering why on Earth are directors buying shares throughout this year if fortunes are supposedly as bad as what the market seems to be pricing in.
Dividend isn’t covered once Kestrel ends?
The royalty partners have been digging in the wrong place. Not on ECOR assets. Looks like that may have accounted for some of the SP decline of late and yet directors were happy to buy much higher.
Given the outlook and deleveraging prospects I think if this drops today it could be a good buying opportunity.
Commo’s will have their day again. Ecor is pretty inflation agnostic as the diggers absorb any cost increases. Ecor just get their cut.
Could be a nice income tuckaway here with sector leasing divi. But there has been little capacity to grow the divi.
I remain on the sidelines for now.
Usual caveats
Trek
End of 2022, net assets were circa USD$500m. At the current share price and current exchange rates, the market is valuing ECORA at USD$291m.
Kestrel depreciation hit is USD$43m.
Operating cost a year is USD$10m, dividend payments should cost perhaps USD$22m.
So on a very rough guess, perhaps the company should be worth :-
net assets of 500m,
-43m (Kestrel depreciation hit)
-20m (operating expenses for 2 years)
-44m (paying dividends fof 2 years)
=USD$415m! But the current market cap is USD$291m.
*not considering income this year & next, especially if cobalt or nickel rises again
**availability of USD$200m revolving credit facility, if needed.
What am I missing out, especially big ticket items?
What's needed is an announcement confirming that ECORA can continue to pay dividends at 7p a year for the next 2 to 3 years without requiring more capital.
Or, Santo Domingo surprises with an announcement of a nearer than expected income stream.
The only good news we have is that not one, but most board members have been buying shares throughout all of 2023. I wonder why.
What on earth are the mgmt doing here? Since Marc La Fleche took over this share has been a dog
Have been pound shop shopping Albus. :)
Hope you're well
If.... you look around your will see most/ many stocks are down and then down some more. We're in the middle of some sort of 2006 /2007 deja vu with Bonds (govies) melting up ie yields going through the roof and prices the floor.
Very possibly due to unsustainable Government across the western world particualrly the US. I think Sleepy Joe has tanked the economy or mkts by letting the spending rip.
Something is going to break.
As for this stock I haven't seen anything wrong with it. There are multiple opportunities for people to buy stocks with unusually high yields - again this could be bad news overall.
The debt stands at a low US dollar 45 m which is nothing given assets and income . Most companies would die for that so don’t understand your comment . Please explain.
Heavily in debt. Avoid.
Is open again - fill your boots
Ever since the "new" CEO took over from Julian, this share has been going downhill. Total lack of communications from their IR team. I looked the IR guy up and he was described as "worst in class" by an investor in a previous company that he worked at.
Can't see any reason to buy this with such poor mgmt. SELL
"The consensus forecast is for cash profits of $54mn for the full year, a return to 2019 levels. Buy."
https://www.investorschronicle.co.uk/news/2023/09/05/ecora-resources-transitions-to-lower-profits/
Well, back in 2019, share price was between 150p to 190p. Are we going to see those levels again, hope so.
I do hope so, if only they'd stayed with coal!
Following the run-off of our steelmaking coal exposure in 2026, we expect over 90% of the portfolio’s contribution will be derived from copper, cobalt, nickel, vanadium and uranium royalty assets.
Have we got a breakout. Commodities strong and rising
Well, you bought in at 16% under my base. Well done! GLA.
PS: IMHO in 5 years time, it'll make no difference.
Hope you're right on the recovery I've just brought in....Had my eye on this for a while now and think(hope) this is a good entry point....
Topping up as price has dropped to reduce my average price . Hopefully medium term recovery prospects
CoTec presentation live now - JT on the ball!
Do i read this right?? - we have outlayed $20m but dont get any income until 2029/30 at the earliest? or am i missing something?
seems very dilutive and risky to me
Been on holiday, so only just seens the q2 update. And it seems there is *still* a lack of the previously described income turning up from the Narrabri royalty, and zero explaination from management as to why it has not turned up. I still hold fair number of shares here at and average of sub 80p.. but I am extremely concerned as to the ongoing practice of management of not informing shareholders of what is going on. If no further income is realised from the sale of this asset, then they got an *extrememly* bad deal and sold at exactly the wrong time. Communication at the time of the sale was unambiguous as to the expected schedule of further payments, yet here we are, more than 18 months on - being kept in the dark.
As I posted previously(and someone also questioned during the recent q&a), further income should have arrived by now.
Oct 21 rns:
"Anglo Pacific will receive $21.6 million in fixed payments, of which ~$13 million is due within 18 months of the transaction close date. The remainder will be received in annual instalments until the end of 2026."
"Contingent payments totalling $5 million, payable in instalments, will become receivable upon the approval of the Narrabri South extension project by state and federal authorities in Australia, prior to 31 December 2026."
"In addition, Anglo Pacific is entitled to receive bi-annual contingent payments linked to future realised Narrabri coal prices ranging from $0.05/t if realised prices exceed $90/t to $0.25/t if realised coal prices exceed $150/t up to the end of calendar year 2026. Assuming Narrabri ROM production of 4.3-5.0 million tonnes for fiscal year 2022 and 7.0-8.5 million tonnes per annum in the southern panels, the Company would be entitled to receive approximately $9 million in price linked contingent payments, were realised Narrabri coal prices to be in excess of $150/t."