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.
The SP is stubbornly fixed to what seems to be an expectation that the current gold price will not be sustained - I can't think of any other reason as other gold miners appear similarly bogged down. The multitude of experts/pundits/analysts whatever you wish to call them have done all they can to persuade everyone that $1800/oz is just too much of an ask.It's nonsense, and it also misses the point that companies like Highland are exceptionally well placed and profitable at current prices, essentially 3% below 1800.I think the bears are so fixated because once $1800 tumbles the phycology is that it will push on to $2000/ozPI's are distinctly uninterested in this company, a pity in some ways but II sentiment is much more resilient and mot chasing a few pennies profit or fretting over paper losses and in the end it will pay off for the patient.
I continue to top up in small lots. By my reckoning mid July will confirm an average sale price of $1700+ for Q2, and over $1,650 for H1. Thats roughly an extra $50m EBITDA over H1 2019. IMO this is a bargain. DYOR
Some entity (entities) appears to be using an algorithm push the SP around, down at the moment - loads of small automatic trades provide clear evidence.
They probably noticed it is under traded and vulnerable to significant movement by creating their own agenda.
Medium/long term IMO there is no mileage in it, we have very significant and firm shareholders, who have provided assurances they will not interfere, so they will in theory, not move it to support. We don't have a huge band of PI's to panic and run for the hills. However, this is a company operating Russia, having invested in various Russian companies and sectors over many years, strength in respected and all is considered fair if you can get away with it and IMO Russian investors put up with very little and will react if necessary. Irrespective of assurances, they'll get mates to step in and buy.
So, I'm currently wondering what any entity trying to manipulate expects to achieve here! A few % points profit perhaps, from an investors perspective that simple provides an opportunity to accumulate for short-term traders it is more problematic.
'IMO, this is a bargain', you say, rylidan - certainly agree with that and in this income starved environment, the near 6% yield currently applicable underscores the appeal of this one all the more. Been in HGM for yonks now and very happy with the growing total return...
A decent upturn in the sp looks overdue to me - sasa.
Anyone got any thoughts on why this has a P/E of about x6 whereas Centamin trades off around x30 - am I missing something here in terms of assets or something?
If off radar for some. It might be perceived as risky as it's based in Russia. But that helps the cost structure. Has been a gem for me swell. Great dividend too.
Good question, that, Thunder and, regrettably, I don't know why that is, either.
The Russian location is a bit of a 'no, no', for many but if you compare the 5 Yr records of both / their respective sp performances over the period, HGM has much the superior achievements.
I expect the better showing to continue, myself, especially when Kekura really gets going next year and into 2022 - sasa.
Best value gold miner at current share price listed on the London Stock Exchange imo.
"Anyone got any thoughts ...." It's a bit of a conundrum. They are a low cost producer with a track record of turning a profit in good times and bad (an uncommon trait amongst gold miners) . They have a healthy resource and reserve position, solid plans for growth and pay great dividends. They trade unhedged, so can take maximum advantage of the recent advances in the gold price. They are carrying some debt, but at a reasonable rate.
There are things they could do to work up the share price - a main FTSE listing, a dual listing in Moscow as previously mentioned, but they seem content to go quietly about their business, leaving others to kick up the dust. I have held these for years, dipping in and out occasionally to take advantage of spikes in the sp. Of the gold miners I hold (including CEY) I consider this to be the most dependable. I have a substantial lump in POG which I will be looking to exit in the not too distant future. If these are still languishing then I'll use the proceeds to up my holding here.
workingstiff - I think it is summed up as "RISK Management"
It oozes out through every RNS that they are being prudent, latest this morning with the update on C19.
Remember they are in Russia, any company that hits hard times in Russia is fair game for very bullying chancer/entity to mount an assault (companies have been known to be taken over using armed thugs as paying a fair price is seen as weak) - many years ago there was an article in the times(as I recall) that discussed the problems of doing business in the east of Russia port of Vladivostok including threats of execution or sell business. Maybe not that bad now but all companies must stay within the accepted regime, links with banks, local/national government etc. Highland behave properly and don't take aggressive expansion moves against their peers - in effect grow gradually and continuously and enjoy support without upsetting anyone. If they overstretched the risk could be terminal (same for any Russian company), IMO they are doing fine. I suspect the above is why the big multi-national miners don't try to buy assets.
Highland are a mixed Underground and Open pit outfit (some are totally open cut) and expansion is not as easy as simply buying more equipment for a new open cut endeavour. Evidenced by falls of ground and losses of reserves when the mining is not undertaken carefully enough planning is more difficult and expansion can be prohibitive/ unattractive when the operation is very profitable (right sized) as with Highland. You can't just go a dig a new hole if the gold price rises. Any growth takes time to initiate - new ventures can take years even over a decade to develop and are costly. To some extent the same applies to open pit as a major knee-jerk investment could be met with a disastrous fall in gold prices by the time the production starts.
Finally, I would point out that we had a period of stress on gold prices until recently and Highland have controlled cost and advanced projects to increase production in the coming years and critically have the finances in place to execute that plan. To expand rapidly I guess they may need to look overseas as to the best of my knowledge there are no distressed assets in Russia - I don't think they are up for that.
So, I think Highland are doing fine and should resist the temptation to throw caution to the wind and expand with excess debt - we'll all be grateful in the end and as/if the cycle changes in the coming years then they will be strong position to mop up cheap assets.
Companies operating in Russia need some political cover to be able to conduct their business safely. In the case of HGM Ibramovich used to be and perhaps still is a major shareholder. My guess is that he would still have some clout in Moscow.
I hold shares in bot POG and HGM, but this is far better managed and much more transparent than POG imo.
Totally agree.
I think HGM has some big oligarchs as major shareholders . Eugene Shvidler, Roman Abramovich, Valery Oyf and Ivan Eugene Koulakov are all powerful people in Russia I assume.
Despite the Russian connection HGM seems very well managed and tranparent company , paying a healthy dividend for at least as far back as I can check.
Dividend per Share $0.17(2019) $0.17(2016) $0.13(2015) $0.13 (2014) $0.06 (2013)
Year Ending Revenue
($m) Pre-tax
($m) EPS P/E PEG EPS Growth Div Yield
2015-12-31 276.18 13.89 $-0.03 -26.2 0.0 n/a $0.05 7.9%
2016-12-31 305.90 66.23 $0.15 11.9 0.0 n/a $0.10 7.4%
2017-12-31 316.68 100.32 $0.20 11.5 0.3 39% $0.14 8.2%
2018-12-31 311.15 108.25 $0.15 11.7 -0.5 -23% $0.17 12.1%
2019-12-31 395.39 158.73 $0.49 5.3 0.0 216% $0.18 9.1%
"I hold shares in bot POG and HGM, but this is far better managed and much more transparent than POG imo."
I also hold both of these shares and fully agree. The beauty of HGM is that the company is stable, they are not constantly trying to do deals, mergers, or take overs, and there have been no nasty board room battles either. That, and as you say they pay a handsome dividend.
Bridgewater's Ray Dalio says capital markets no longer 'free'
Dalio also said that investors should favour stocks and gold over bonds and cash because the latter offer a negative rate of return and central banks will print more money.
https://www.bloomberg.com/news/articles/2020-07-02/capital-markets-no-longer-free-markets-ray-dalio-says