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Great things happening at IRC. IRC now having KandS running at 100% capacity 24/7. Means that they will now produce 360,000 tonnes more than they did in H1 2019.
Now running 264,000 tonnes per month X 12 months due to drying room = 3,168,000 tonnes per annum X $81.54 per tonne current rate = revenue of $258,318,720.00
Sales volume 2018 = 2,223,945 revenue $151,549,000.00
Sales volume 2017 = 1,539,146 revenue $109,265,000.00
What do you guys think IRC making a healthy profit for the year will do for the share price of POG? They look set for great 2019 and even better 2020.
With IRC making a nice profit, it’s possible POG could off load IRC and maybe even make profit on the investment. Not that they will off load.
CofE - most on this forum know my views on IRC as a basket case millstone around our necks. I think you would be wise not to expect a "healthy profit" for year end from IRC. Last I looked they reported a net loss for the interims and a whole load of caveats on price achieved on sales during Q3 ... I would be truly staggered if they reported a bottom line profit at year end !
Shedulike - re the option price and your comment that "you see it more as a hurdle .... rather than an impenetrable barrier". I don't dispute this is the case, just that the hurdle (i.e getting beyond the exercise date of the options) was unfortunately moved back to 2024 ... so I do believe this will be a barrier (not impenetrable but very high) for some time to come
Rb that is a very negative post , surely at this time irc can only run at %100 , what more can they do ?
IRC doesn't have to be massively profitable. It just needs to make enough to pay down debt and keep operating. It's doing that nicely and paying POG $8.9 million a year.
Freddie, it wasn't so long ago when IRC "gross margin" was negative ... i.e they incurred greater losses the "more" they increased production ! I'm not entirely sure they have resolved that "minor issue" yet ... so running at 100% isn't necessarily a good thing. Lets wait until they are prepared to show us some actual $$$ numbers before deciding whether they are profitable.
Since the IRC stock price is back at the low level it reached in Q1 / Q2 2016 it would appear quite a lot of others share my views on IRC
RB I think the Amur Bridge and Chinese economy being stimulated by government infrastructure projects should be a big plus for IRC. Not trying to undermine your thinking, which is logical, but do you have any thoughts on why we've had so many institutional holdings increasing when you fear we are range-bound for the foreseeable?
Dear RetiredBanker,
I do remember the ramp up costs and the additional losses. However, operating costs are now spread over a far greater volume. IRC have also been cost cutting. Beyond this they have far better selling rate back to the market and with ramp up costs now finished it should look better. Also they have the drying room running which will allow 24/7 production regardless of temperature.
I know it was a basket case but so was POG 5 years ago. Still we invested for the future and this is now playing out with the share price twice the rights issue and four times the lows.
Sometimes we have to look forward a few years.
Also I was pointing out 2020 will be the biggest year as H1 2019 was not 100% capacity for IRC.
Beyond this POG have the POX and the build expenses are finished to. Gold is much high in value regardless recent down turn. Hedges are probably In place to skip dips. Eventually the will jump, at which point who will have the stones to hold and recognise the investment to its full potential? What would a dividend do or a buyback. Just think if they decided to half the profit to buyback shares. The market cap is only 351.1 million. Hey just buy back 6 million easy done. Credit ratings have improved and will continue to do so.
Also IRC in a good state could be sold even with some profit maybe.
Third party gold for processing, railway lines in place, infrastructure projects.
To me this is a strong buy and the market makers will pull ever trick to get the share we own cheap.
CofE
That's far too optimistic for RetiredBanker!
But I agree which is why POG as you say is X4 off the lows and why there are x4 as many institutions buying than selling.
At £340 million, with POX worth over a billion in itself, POG is just too cheap.
IRC isn't going to go bust either. It's hedged 50% of production when iron ore was $130 and is now in much better shape operationally with costs lower and set to decline further on completion of the bridge. A large iron ore producer next to China has a future. That's why its share price has doubled this year.
RetiredBanker was encouraging people to sell and more into other gold producers I seem to remember. Now he says POG has limited downside and could rise to 12p.
First of all lets use "facts" not fiction with the POG historic share price. The absolute "low" that this share hit shortly after the rights issue in 2015 was 4.4p - so this is NOT trading at 4x. In December prior to the RI the price of the original shares dropped to 12p and even blipped for a day or two to around the 5p RI price mark when people realised that the 'nil paid rights' were worthless.
PVX233 you're clearly a ramper for IRC but that's ok - we're all entitled to our views ... would just like you to produce some evidence to support the claim that IRC has hedged 50% of production costs at $130 - that would certainly impact my assessment, but meanwhile I'll wait for actual results to be published.
CofE - I don't disagree that 352.1m market cap for gold producer the size of POG is low - but in addition to the equity POG is carrying $500m regular debt ; $125m convertible debt and $240m contingent debt plus the dilution rights over 25% of the equity at 10.7p ... doesn't any of that give you cause to be cautious about future price rises ?
Shedulike - I'd like to know which institutions exactly holds the convertibles before guessing on who and how much regular equity is really changing hands.
Finally I still believe people on this BB should diversify. My assumption is that POG will drift upwards over the course of 2020 with an upside potential of 12p (so 20% from here). I only have a finite amount of money to invest so if I feel another miner has been unduly marked down and has 50% upside in the next year, I'l happily sell POG at 10p and invest in that better alternate
Dear RetiredBanker,
A few facts for you my good fellow.
21 December 2014 = 2.236p closing price. So 10.56p / 2.236p = 4.722 times higher.
Oh :) 14 December 2014 = 2.168p closing price. 10.56p / 2.168p = 4.870 times higher.
But do understand your worry regarding debt. All I would say is we hedged our investments when it was in a far worse state and now things are rapidly improving. Compare PE of POG to POLY. Plus market cap. This is a billion pound company which ever way you look at it. Will that be recognised any time this year or next, probably not. All I would say is look at EVR which jumped 10 times Its low 2015 value. Stranger things happen.
God bless all those we remember on this our Remembrance Sunday.
RetiredBanker,
I didn't claim the hedge was at $130, I said IRC hedged when iron ore was at $130. I don't know where their hedge was agreed.
I'm not a ramper of IRC and have never encouraged anyone to buy their shares. At best they may make a small profit. At worst, which is my point, they will keep afloat and reduce their debt.
As for POG, it has an asset worth less than it's total debt and contingent liabilities. You could buy POG for a billion in other words and get the mine and gold for free.
Your ebitda predictions for POG are also wide of the mark. Management have stated ebitda for 2019 at around 210 million. Rising to 400 million starting from December....
CofE,
When you're lucky enough to have valuable advisors like RetiredBanker, you should take advantage of it.
2.236p makes no sense and cannot be used as a basis for comparison. Nobody (of us)has invested at 2.236p-3p
Otherwise, POX worth a billion is a guess. Just because it was spent a billion dollars doesn't mean it's worth as much.
This does not detract from the potential of POG
Whosnext,
Poly are spending 450 million dollars to build one autoclave due to be completed in 2023. POG has got 4 autoclaves up and running. To build 4 functional autoclaves would cost 1.6 billion today. A billion only covers the build not the IP. Call it 2 billion as a generous valuation.
That’s why Polymetal would like to have partnership with POG, IRC valuation is also not reflected in POG’s valuation
Its the opposite, IRC has a negative value to POG, guaranteeing IRC loans has really screwed POG share price, one of Peter Hambro's worst decisions (the first was paying a maiden dividend a year before the bonds were due).
However, if they can engineer a way out of IRC combined with decent POX news then then a re-rating is on the cards in 2020.
"Oh :) 14 December 2014 = 2.168p closing price. 10.56p / 2.168p = 4.870 times higher."
CofE, You are talking rubbish, my good fellow!
As RB2 said POG's sp never dipped below about 4.5p.
The 14 Dec 2014 was a Sunday so the market was not even open.
The SP closed on Monday 15th at 7.61p.
You can verify this by using the POG Share Charts icon at the top of this page.
Have to agree with both Ken and Retired Banker. I have followed this for years, including in the rights issue, it never dipped below 4p and I believe the only reason it dipped below 5p were the shenanigans going on with Sapinda. There was also shares that were not taken up, they were sold on open market at the time.
I genuinely think all of us on this site want the same thing , theres no de ramping just different opinions , lets hope for a steady rise soon !
IRC’s debt restructuring should have increased POG’s valuation as well, because it’s 31% stake is controlling interest or can increase its interest with making an offer. There is different treatment for asset for sale in accounting standards if I remember correctly.
Correction, POG can increase its interest without making an offer
Dear Kenj,
You are correct on that day being a Sunday. I used my IPhone to access the charts and that gave me the dates and values. So hey blame Apple.
Regardless follow this Yahoo link old bean and set the dates for December 2014. Oh it did drop below 4p and drop below 3p :) or factual data rubbish too?
I actually remember it happening and kicking myself for not loading up following my rights issue payment. Thick I was a little upset that the MM beat my confidence for a few weeks. Still I believe this will one day return to a reasonable valuation.
https://uk.finance.yahoo.com/quote/POG.L/history?period1=1415664000&period2=1573430400&interval=1d&filter=history&frequency=1d
Dear Kenj,
7.61p you sure you have the correct year?
RustyBuckets view seems correct, two charts available but conflicting. Even after rights issue, SP went to 17p at Gold price very low. Today Gold at 1455$ and POX , IRC on the way to be an asset
"7.61p you sure you have the correct year?"
Yes CofE I am sure I have the right year. As I said check the Share Chart link at the top of the page. This only shows the daily closing price. It is possible for the sp to have dropped lower during the opening hours, but not that much. Sometimes silly prices are displayed, but that does not mean that you can execute a trade at that price. As I said the lowest price I remember is around 4.5p, just after the RI.
"I actually remember it happening and kicking myself for not loading up following my rights issue payment. "
CofE, The RI was in March 2015, how can you have nearly bought in Dec 2014 following the RI?
"Even after rights issue, SP went to 17p"
Another price that never happened KRSS!
The sp has not hit 11p since the RI in 2015, let alone 17p.