Cobus Loots, CEO of Pan African Resources, on delivering sector-leading returns for shareholders. Watch the video 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.
Some of the long term holders are funds that investors can extract their investment. As investors take funds out the fund has to reduction holdings across their portfolio. As interest rates rise sone investors are taking investments out of these growth funds to invest in bonds etc.
As a result some KMR share holders have to make small reductions in their KMR shareholding.
The impact of this in an illiquid market is a depressed share price.
My opinion is the board need to do bring to bring in new investors to stabilise the share price, such as the capital markets day and investor tour but they need to be more active in public.
Outflows I imagine - trouble with the illiquidity at KMR is funds have to sell when the price rises to reduce risk and positions (the unpopular share buy back) and will have to sell as outflows bite i.e. currently.
Make sense apart from: Funds getting smaller and need to sell
what funds?
On the investment from SGRF, they plus a number of other supporters stated that they wanted capital returns within 5 years. The board and shareholders (that remember) were aware of this.
I wish I sold my, but didn’t, so it’s my fault.
Why is the share price low:
Chinese economy and real estate decline.
Lower GDP growth
Funds getting smaller and need to sell
Illiquid market to sell into, coupled with point immediately above.
If you stay around long enough you will see it rise prior to the dividend announcement, as it always does.
Enough for tonight 🥃
There must be a hidden elephant in the room somewhere ..thus far I have only uncovered an idiot in the board room buying back shares on borrowed money earmarked for future capital spending
Thanks all for your responses ...in no particular order
1. Interest rate on loan is SOFA ( currently 5.31% plus 4.85% = 10.16%
2. I thought I read that there were ,$30 million of share buy backs planned so that is where the $3 million per year came from
Not a growth company ? Check out financial analysis on HL Website
Revenue has increased year by year , doubling from $262 million in 2018 to $525 million in 2023..
Over this period profits have increased from $50 million to $206 million
Net assets have increased from $890 million to $1.1 billion
The borrowings are to fund new Capex to secure production for next 50 years ...not to pay operating costs
Share buy backs are rarely an efficient use of funds
There are occasions where it is . Where a company or investment trust is winding down it's operations ..
None of these scenarios apply to Kenmare ...just ask yourself ..on the one hand buy back shares costing I think $30 million on the other hand , set up an RCF for $200 million at 10 % interest ....how can that be a sensible transaction ?
Sounds to me like the left hand doesn't know what the right hand is doing
There must be a hidden reason why this share is so cheap ..a reason that isn't implied by the information held in the public domain .. a company with a market cap of just £263 million pound , with £900 million of assets , trading at a PE ratio of 1.75
Markets rarely get it this wrong , so what is going on
Correct, share buy back part of long term plan to return capital to shareholders. This is not news.
The new debt is 4.85% above SOFR closer to 10% but not 10% either I don’t believe.
£3m per year to grow what??? Cash available but not growth opportunities. Any growth would be WCP D Willis would be hundreds of millions not 3
The debt facility funds the move using RCF so reduced interest versus a standard debt facility where you pay interest on 100% of available facility there a reasonable move.
They are not a growth company - they are a cash generating machine. The share buy backs were likely a strategy enforced by major shareholders which made sense to them at the time.
Correction
Should have read
Candid quotes 3 million a year interest
But according to Rns only 1.15 million a year
( 23.6x4.85%interest =1.15 million) not 3 million why the big difference
Candid
How did you get these figures
You say 10% interest
rns says4.85%
You say share it back costs 30 Million
Rns says cost 23.6 million
You say buyback cost because of board action
3 million a year
1.15million a year.Less than half you quoting
How did you come up with your figures ami missing something
This new $200m RCF at 10% interest just shows how crass the $30 million shares buy backs at £4.00 ISH when share price is now less than £3 and falling further ..
Had they not done the share buy back they would have been saving $3 million per year in interest payments at a time when they needed that $30 million funds they used up , to grow the business
Gross stupidity from a naive ( kind description )CFO who appears out of touch with optimal funding arrangements for a growth company
Anyone expecting an announcement from Fidelity today - down to some 6.5% s my guess if anything.
Was there an expectation of how much they were intending to reduce by?
How recent is this podcast ...haven't had time to listen to it but title info on web page suggests 2021 ?
And at the current price it yields over 10%
IMO from the limited detail this is an excellent agreement.
Operations continue profitably and a RCF allows the company to plan and manage the move, without unreasonable costs for unutilised funds.it is a good solution and as I’ve been hard on the BOD I have to give credit to them on this one.
The
Agreed but will have to wait for any positive reaction from the market. Always seems to take time for a positive sp to develop.
Here's hoping
Positive news on a debt facility today. My view was that this should be a key focus of the management team and it clearly was. LEnders will (almost certainly) have been provided with detailed technical reports as part of this process. ALthough there are conditions precedent to be satisfied before the facility becomes legally available, I suspect these are not hugely challenging. This is a major positive step forward in my view. DYOR
Https://www.ey.com/en_ie/podcasts/2021/09/cfo-outlook-exploring-the-rise-of-kenmare-resources-with-tony-mccluskey
may be of interest to the newer members
I think that is a very generous approach. I'd adopt it with my kids but maybe not with management teams.
Small investors are at a considerable disadvantage on this point. They don't get to share the room with management teams and really get to know them and see if they get it or not. Even then it is an art not a science in my experience.
I wasn't impressed with the video I watched of the management team here but then again, it may be that they were just "toning down" the content for a retail audience. Hard to tell.
Best of luck with it!
Yeah, the market seems to agree with my concerns (or perhaps others) but you keep backing your own opinion. I am not arrogant enough to think I am ever smarter than the market but rather try and understand a big divergence like this.
To be clear, I am neither long or short Kenmare so I genuinely hope you are right. I am simply trying to provide a rational explanation for the huge disconnect between the "asset in the ground" and the share price. My suspicion is that management credibility in relation to the cost & funding of capex is at the heart of this. I could of course be wrong.
FWIW I think if they can put together a credible funding structure, you will do well here. I think they will get there but I never, ever invest if I have concerns in relation to a management team and that is unfortunately the case here.
How to value an ETF?
I have a degree in finance, an MBA and 25 years of experience in investment banking so I am sceptical enough about most "financial innovations" but an ETF is not particularly complex. Anyone that can't understand an ETF should most certainly not be picking individual stocks.
There is plenty of simply drafted information on what an ETF is and why it might make sense for you all over the internet, so maybe take a look at that?
Making a call on the credibility / performance on individual management teams is much more difficult than getting a basic handle on ETFs in my opinion.
GeneK - Your "research" is 8 years out of date and wholly irrelevant in my opinion. Good luck with your investment.
GeneK - "ETF" I used to invest in these also. Then it dawned on me - how do you determine value of such complex financial instruments?! Each to their own as they say. Good luck with your investment as well.
The group will also fly over the Congolone ore zone to the north of Moma, which represents a potential future growth opportunity for Kenmare.
- haven't seen any estimates of net present value for this project..
I have always liked the Kenmare story. "Showing courage in the face of adversity" is what I am reminded of when I read this article. There were a number of bumps in the road in the early days and some almost terminal. But it sounds like management have learnt from their experiences.
"We want to just focus on making the thing sing, and let the people who put money into this investment feel that it was the right thing to do, that they've got a good return on it and it's working really well. And then we'll move on from there."
Thats good enough for me