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And another thing, L3. Do we know what value is attributed to the gold we use to repay Gazprombank? At base cost, a fixed price, a discount to Market Rate, or full Market Rate? Come to think of it, at what is inventory valued? Under the usual accounting rules, inventory is valued at the lower of cost or NRV (net realisable value) and therefore any profit is only booked when invoiced/sold.
Waiting for ..... Part 2....
Going out for popcorn brb
L3Trader - Thanks for the analysis but (and please be gentle with me) why do we need to bank-finance a product which we are producing. I understand that we have costs such as refractory ore, energy, processing overheads etc, but the output is inventory which has a far greater value than the sum of the inputs - i.e. Gross Profit and whether it's sold at market rates or increases the stock held at an agreed rate then it should still be Profit in the P&L. You then seem to be equating Trade Payables to Sales and Stock values, but surely Trade Payables would only equate to Cost of Sales (including finance costs). Like Rusty, I just can't get my head round this because whichever way you look at it, our net return appears minuscule compared with our output and market price of gold.
PVA.... The business model is fantastic BUT who's modeling the business.....
That is a great concern at the moment, nothing more than a gamble definitely not an investment until the BOD is elected.
Aimy.... Im starting yo confuse myself.....
That said, in cash for now but looking on POG, was looking at buying at 34.95 this afternoon.... But the risks are TOO great at the moment
i never know when GRIMS is IN, OUT or SHAKING the bull sit about
Still waiting for the wedges and double tops saying gold going to $1700
Sure looks to me like the bottom - buy time
100% in cash means your money isn't working for you. Buy, short, do what you want. But don't do nothing surely...
I continue to buy pog. With gold set to push through 2000 and then some, pog is just too cheap.
Debt has come down with the conversion of the bonds.
Looking great if you ask me..
Nice analysis L3Trader
Whilst I agree the business model and growth prospects are lucrative as a business.....
Its who reaps the profit that counts.
Holding 100% cash....... Waiting on the sidelines.
All,
- The UGC takeover is more than priced in. As otherwise this would be above 50p. In fact, even if UGC win I still expect this to go up. What is priced in is not a clear winner but a protracted battle. This has left the SP at a bargain. I expect IIs to be accumulating at a decent pace.
- Cash. Pls see last year's report. POG "borrowed" money from Gazprombank which will repay with gold. Where did that money go? It is all shown in the accounts. At the end of 2019 inventories increased from $158M to $309M. Flotation concentrate in inventory increased from $26M to $98 (difference +$72M), gold available to sell (in circuit) in inventory increased from $17M to $38M (difference +$21M), ore in stockpiles (to be used within 12 months) increased from $36M to $68M (difference +$32M). Bullion in process went up by $4M. This all adds up to $129M. You have to finance all this increase in inventory. POG did so via that loan from Gazprombank (which appears in trade payables). This is effectively gross debt going up. And you could argue that is net debt too. But the inventory has value (e.g., what is best to have in hand: Cash or gold, like POG has in inventory? Cash's value does not go up. But gold's value went up! By more than the 8% in interest Gazprombank receives for the money that it advanced). In addition the inventories of spares and parts went up from $69M to $87M (difference +$18M).
Now note that the advances from customers (i.e., US$152.5 million and US$34.9 million advance payments
received from Gazprombank and Sberbank, respectively, under gold sales agreements), were only $57M more than in the previous year. Also note that in trade payables there ae $81M for flotation concentrate purchases, of which there were none in the previous year.
If you balance everything you get $138M more in trade payables and $147M more in inventory. So, I would not be much worried about the money advances from the two Russian banks. But I will say more in part (II) of my post.
- IRC doing better by the day. Iron ore prices are up, which means deleveraging will happen faster. Efficiency levels are high so all on track. Finance costs will go down faster than anticipated.
Summary: This is a gem and that is why everyone wants a part of it!
GLA