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Thats one of the Major problems here, we have been promised a Dividend for years, keeping the carrot dangling is losing its lustre,
GLA LTH I just think they want to keep the cash in Country, will we ever see a return other than rises and falls in the Sp that can be traded?
Ummmm. Very pleasing comments from the Chairman which is welcome.
Record production but slightly disappointing metal sales, particularly gold. On the premis that the gold and lead prices have been transposed the revenue will be $3.3m less than my forecast. My EPS forecast s/be c not $ and revised to 5.2 and 4.83c. Annually this could be 19.3c and 17.9c (14.9p) but I hesitate due to waiting to see cost of production and admin costs in the interims. A p/e of less than 6 and even lower when deducting the net cash.
Morning all. Welcome to the start of H2 for GFM. No news but they'll be plenty to chew on in the next 6 weeks.
With the 3 month shut down it's harder than ever to guess H1 results. FWIW here mine:-
Ore processed 293,649 tonnes
Zinc sales 13,790 @ $2,917 = $40.2m
Gold sales 6,212 @ $1,692 = $10.5m
Silver sales 94,339 @ $19.5 = $1.8m
Lead sales 387 @ $2,187 = $0.8m
Missing revenue ($3.0m)
Total Revenue $50.4m
COS / Tonne $65.10
COS ($19.1m)
Gross Profit $31.3m
Admin Costs ($11.3m)
Other Costs ($0.2m)
PBT $19.8m
Tax ($6.6m)
Net profit $13.2m
EPS $7.56
diluted EPS $7.01
Obviously the zinc price is a long way below this currently but 3 months extra production in H2 and an extra $10m+ in the bank means the future looks very bright IMO.
Make your own minds up.
In the absence of any trades let alone news:-
In the next two months we should have:-
Zone II commence operations (not overly hopeful considering 1st July is a week away).
Q2 production and revenues on excellent zinc and gold prices - giving an indication of current run rate production
AGM in Bermuda without small shareholder accessability (probably no trading update)
H1 accounts giving an indication of current COS / tonne and annual overheads. Later in the day last year we have a tele conference which would be fantastic to repeat
And later in the year a dividend policy (won't hold my breath for that).
Just a reminder of the Chairman's comments with the 2021 results:-
"This bodes very well for the future results of the Company when Zone II is commissioned and in full production. Since the grant of the new mining licence over Zone II in January 2021, the Company has been working continuously and tirelessly on obtaining approval for the design and development of Zone II. That approval is expected shortly and drive development is planned to begin on the 1st July 2022. In the interim, the first drill platform for resource drilling at Zone II was constructed in September 2021 and diamond drilling commenced in early October 2021."
And further in the accounts:-
"Whilst the Directors do not recommend the payment of
a dividend at this time, the Directors have discussed and
will further consider a dividend policy later this year when
current political, social and economic circumstances permit
enabling such a policy to be instituted and executed over a
consistent, long term basis."
I'm guessing the urgent need to prop up the Chinese economy; still badly hit by Covid and influential parties urging the Chinese govt to intervene. We're forever in interesting times these days...
I don’t think the sky has fallen in, why the sudden fall and transactions? Anyone know.
Drilling campaign and need to get the new zones open and producing before the big pay day
Splendid results out & the market should react more next week after a few mentions in papers hopefully. £1 - 50 upwards will be most welcome. On GFM broker ratings, this reiteration bodes well.
09-May-22 Berenberg Bank Buy - 175.00 Reiteration
Gold seems to be good for bottom fishing & Seribi Gold had a mention in CITYA.M. today with Peel Hunt revealing they have had a boost to their monthly output at their Palito operation in Brazil & it's April gold production level has marked the best month so far this year. Their target price is still above £1; being £1 - 10.
Not leaving too much cash in here for another 3-4 months will put where it will pick up some revenue in the form of a dividend then maybe come back later, in times of inflation you have to do the best to make the cash work for you, i know its a risk , it could be higher , but we still have no idea what kind of returns they are going to be, it could be 0.5p or 1p ?? who knows?, just seems to me they like to keep hold of as much cash as possible???
GLA LTH Stay safe ,
Well missed the trough, but at these prices, it is still a strong buy, BUT AND A BIG BUT... Why the lack of clarity on Dividend and the lack of Buy back ??
This is the time Long time Investors have been waiting for and for me I feel a little flat, which is MAD on such great results.
Results are good, but why still no dividend!!!!!, surely they have confidence going forward , they have been saying they will look at Dividend returns for the last couple of years, its about time they delivered Meaniningful !!! returns
GLA LTH Another 6 months wait , and lets see what they say then?
always buy on good results in a bad market
GFM will eventually rocket
With the promise of future dividends mooted, as well as pretty stellar results, I think the market should view this as positive. Just the relative strength of the dollar impacting in the near term.
No early birds here then. Pretty astounding numbers. Will the market agree?
Thanks for the link UB, very useful.
With regards to ramp up to the higher target level of production, I always like to be pessimistic, in that it will take longer than expected to rise to that target (with great consolation that at the current level of production it's already a cash cow and plenty of wriggle room for any inflationary costs, energy, smelter ...)
Not specific to GFM, but I don't believe Board's really care about us Private Investors, albeit we are Shareholders; Boards say they communicate with and aim to build shareholder trust and value.
The extra bumper profit from zinc, for the period of end of Q1 2022 til date, for my own calcs, entirely covered Q1 2022 shutdown profit shortfall. So going forward we are starting to move ahead of this time last year comparison and that gap will only widen.
I have more research to do, but this does seem to be undervalued at this initial point and perhaps has just beaten down by overall global market sentiment and natural profit taking and de-risking that ensued. One to watch as the story unfolds.
I do my thinking on spreadsheets but a quick reference is the profitability set aside the historical price of zinc
https://www.lme.com/Metals/Non-ferrous/LME-Zinc#Price+graphs
And then consider the ramping up of production with the chairman's assertion that mining is essentially a fixed cost business.
If only the Board would communicate with us and yes, Roger's assertion that it was difficult to find shares to buy rings very hollow.
The extra profit from period zinc was over $4,000 would pay more than 1.5p per share in dividends. Option holders wouldn't get this though.
What I do like especially, is that they are profitable/cash cow at lower production and prices than those at present, giving great wriggle room for any downturn, furthermore no dilution/funding required.
Many thanks UB, great post!
Lots of positives highlighted and a cash cow indeed. However, I do agree that more can be done to create shareholder value namely, restart the share buybacks (watched an interview and was not convinced with the explanation of it being difficult to buy), in fact, even use this retrace in SP to buy. With the incoming additional bumper revenue this year, on the rise in Zinc price over last year, pay an annual dividend, an amount that they can sustain going forward. Both of which will support a higher SP valuation; benefit shareholders.
Let's think..... Is GFM a cash cow @ c. $3,500/ tonne?
Production increasing to 1,500,000 tonnes (upon final go ahead for new zones)
30+ years of mine life
No debt
Conservative FD keeps high cash balances
At current rates of zinc mined per tonne would give fully diluted eps in excess of 40c
Cash generation could easily top $80m in 2023
Market Cap £166m
Reasons for not being a cash cow
No dividends
Buy backs have stopped
Will PRC allow cash to be taken out of China?
So currently a mega cash cow for the company at zinc prices well below $3,600 but will that translate to a cash cow for us shareholders?
Even at current circa $3,500/tonne these are a cash cow, am i missing something, added to my watchlist for research over the weekend.
I wonder if we have tested for Germanium? Rockford just found it in their zinc/silver/lead deposit in Greece.
I am getting very tempted to increase holding, after saying I wouldn't and having sold half my holding previously, but I see upwards of 20% to 50% growth in the short to medium term. I am surprised not to see buy backs with cash flowing as it is?
Don't know is the short answer. From today's trades it looks like 1 or 2 sizeable sellers. Why have they sold? Could be:-
Seen a better opportunity;
spooked by the steep fall in zinc price;
worried about a slowdown in China;
worried about lockdown at the mine - Hebei province has imposed draconian lockdowns in cities;
despair at no trading update from the AGM;
something else.
Personally I'm very happy to stay in GFM and would buy more today if I didn't have a more than full investment here. I think low 90p's a fair price for GFM at c.$2,850 for zinc, c.$2,600 when production reaches 1,500,000 tonnes per annum.
I am wondering what I have missed??
Anyone?
I am tempted to buy more,but don't tell the wife!