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"KMR announced that demand for its products remained high at the end of 2023, just not high enough to support a more solid price. However, with these lower prices, we note titanium pigment feedstock supply has been flat with little resource expansion to cover the medium-term and long-term. The largest source of new supply has been from increased ilmenite concentrates entering China where the preference has been to purchase ilmenite for beneficiation over the more expensive high-grade feedstocks. This demand was felt by KMR in H2’23. These challenges for the pigment producers led to reduced pigment inventories and as such 2024 will require inventories to be resupplied. We expect this to support demand as supply gets impacted by the prices. KMR has achieved a strong order book in Q1, however this is at reduced prices QoQ. Overall, we expect lower realised prices for KMR’s products in 2024 than in 2023; we assume a 12% reduction in revenue/t shipped. "
2025E projections were a little surprising for me! It suggests there will be a considerable decline in dividend in coming years.
The capital spend in this report for 2024 along with soft pricing has made me lower my buy price. I've been invested since 2018 and the impression is that of a well run company, but given the (increased) large investment needed for the move, I can see why the share price is well down today. Needs higher product pricing to restore my faith.
On website as 20th March
Fair point, however, supports my point earlier is that there is a plan to deliver WCP move, paying dividends and generating cash with strong balance sheet upon completion.
The board should show the plan and how institutional investors can buy in now, get well paid along the way and realise a significant capital gain.
KMR is not a 2x multiple of EBITDA.
The board should address the perception of the Company head on and all it needs is a glass no empty approach, which is the current tone.
Perhaps Inflation up and interest rates up equities down
Correction should have read 30 pence a share dividend due in April
Tried to buy 10000 Kenmare on IG at £3.36 p
They won't let me only let you sell
They running scared we at the bottom of the market
These guys are scared
How big the bounce coming
A 30pence share coming in April
I can 3-4x multiple reasons why an opportunist Buyer would make an Offer.
The Shareholders Offered to sell a lot of shares in last tender offer, indicating they would take money off the table at £4.20 ish…
I wonder would they take all of more off the table at ££7.00
£7.00 feels like a long way away under this Board
And then probably back below after its paid. Not really sure why there is such a dramatic drop today. Its was more than 30% undervalued when the share price hit 500p.
Well said about the low PE.
I bought these shares based on their low PE buybacks and excellent dividends %
As mentioned earlier they should have saved some cash while the sun shone, given the upcomming capital requirement.
However surely this must still be a profitable company going forward.
That's the only positive I can see, that and p/e ratio of 2, oh and being undervalued by 30%.
Dividends to come
sp will be back above £4 as March approaches
I have come to conclusion that our management think only of their positions and salaries, they know we undergoing considerable capex when moves of wcp are required yet when the company has made good cash flow and profits over previous years has squandered it on buybacks on several occasions to let investors out.
This type of action is fine if there are no major financial obligations to the company on the horizon but not if like us we have considerable spend going forward, so the management are happy to burden the company with debt in a rising inflationary world, no wonder the banks love KMR.
These actions imo make us less attractive as takeover target, when I think about it much of these moves could and should of been mainly financed via cash reserves not bank loans.
In the CMD update early 2023 in their estimates both new barges were included,
plus we have the updates to existing plant with a design review in progress estimated at $41m to be confirmed which is extra spend.
This is a great asset, which is being financially mismanaged.
Well, strike off the last paragraph….!
It is disappointing to see FIL reducing its stake and supports my other point that the board need to attract additional institutional shareholders to support the business.
I would love to see an activist investor getting involved here as the asset is 💯 underperforming its potential.
I think you called it last night when you said glass half full approach.
I’m ok with the Buy back as a lot of investors were willing to sell and wanted a capital return. The no. Of issued share is down and in time that’s positive.
I would be happier if the debt was simply repaid, as it’s a sign of balance sheet strength and would say to the market that the asset is here producing cash and come get it when you are ready.
In an ideal world, if the glass was half full, I think the board could present a case to the market whereby the forecast to reach Nataka, continuously producing, paying dividends and with a net cash balance of £xm.
Again this would send a very strong message to the market, from a share price perspective, allowing fund managers to see consistent income via dividends and potential for significant capital growth.
I know that a lot of that is said, behind a glass half empty screen, but come out, state it have some confidence in the asset, management team and ability to deliver.
All that said, nice to see FIL buying some more shares, the board need to attract more long term holders here to realise the actual market capitalisation the investors deserve.
Well after a quick read through first impressions are I am surprised the market sees it as positive in today's environment.
At the end of the day it comes down to the financials which in my opinion they have wasted $30m on buybacks which have done nothing for the sp and reduced the mcap of the company. Only for this money to borrowed again when they refinance their terms.
At 31 December 2023, Kenmare had net cash of $20.7 million (2022: $27.5 million net cash). Cash and cash equivalents were $71.0 million (2022: $108.3 million) and gross bank loans, including accrued interest, were $50.3 million (2022: $80.8 million).
So we should be sat on $50m net cash, secondly do they know what they are doing with the move to be $71m out in their estimations in the space of 9 months or so, and their reasoning seems to be enhanced safety contingency if I am reading it right.
Thirdly guidance is down on this year which was down on last year this is a suprise to me because last year from memory we had the lightening strike and slimes issues which have been addressed so I am surprised we are not beating this years numbers.
It’s a guilty pleasure at this stage. Really should get a hobby!
Buy the dip, sell the rumour, I’M BACK!!!!
Good luck tomorrow, let’s find a silver lining!
Here's hoping the drop in share price is likely due to the state of markets being crazy at the moment. Most investors are probably fearing war or a recession and prefer to stay in cash until there is more certainty on commodity trading. But I second your opinion on management @raxfactor. They are hard pushed to comment on the future positively which has has likely influenced share price decline since their last update. For me a 12% yield is not to be scoffed at! Once the move is done I am hoping there will be more in the kitty for shareholder distribution. I doubt we will get a buyout at this stage of the cycle and particularly with the planned move.
@contango always do like it when you are posting even if you are slightly more negative. It reminds me that there are still investors in the game here. I agree with you its a quality asset and the share price makes it very tempting to buy more. gla and here is hoping tomorrow is a better day
Well played, deserved returns!!!
It’s been a journey and I’m well up but I 💯 agree with you that a Buyer could appear once the WCP move is largely complete.
But the price will be higher then and more cash distributed in the meantime.
I suspect I’ll be here to see it out!!!
Good Luck All, 🥂 to a good Q4 update and happy times ahead.
One thing management can't detract from is the asset it's self which is up there with the best, long mine life so even our management should be able to make good cash flow, and with the capex they have spent on power surge breaker, green credentials new barges etc they must be running out of ideas after this next move and the updates to other areas, so I can see an end to the expensive cash burn items and more sustaining the operation we have, so ultimately a cash building situation, the building blocks are in place for this to happen, lets get the wcp move out of way and see.
I sold half my holding back at £4.50ish but have added back at these lows hopefully we can get back to those highs.
If you have been holding decades it would be a shame if we fall back lower however markets are crazy at present and we do have a quality asset at a low sp hopefully this quality will shine through in the end.
Still not on the website and should have been up a week ago.
Rax,
Fair question, I’m think I partly looking to solicit a conversation. Partly, feeling the frustration you already feel.
But, my biggest point of frustration is seeing the share price down 10% because the board have failed to announce dates in a timely manner.
Their comments on dividends and pricing in December was unnecessary and spooked the share price. Then when the market expects the Q4 update the go silent. It is extremely poor.
From investor relations
We are expecting to announce our Q4 production update tomorrow at 7am UK time.
Hopefully tomorrow we will be singing the company's praises not long to wait.
Well Contango what's changed for you to take such a drastic change of opinion from .....I will buying this dip, ... to .....no better place to park your money in 2024, all in the space of a few weeks.
I unlike you don't rate the management with their half glass empty tone at every announcement so no doubt when they finally do post the update there will be caveat attached which will detract from what should be good figures from this world class asset.
In the unlikely buyout scenario can't see that happening with the wcp move in the offing, although after is a possibility, with these duffers at the helm probably 30% above the average trailing sp.
" I’m increasingly uncomfortable that the Q4 trading update has not been announced."
You are not alone Contango but if it's positive or negative is the question?