Roundtable Discussion; The Future of Mineral Sands. Watch the video here.
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In answer to my own question, spotted this in the accounts:
"e) Including US$16.0 million interest paid in relation to advance payments from Gazprombank and Sberbank.
This suggests that POG have been paid for their gold well before it was produced and delivered.
Are we really so short of ready cash that we have to accept advances from Russian banks?
This is not a little advance either!
Assuming 8% PA interest we would have received pre-payment of $200m for a full 12 months to knock up $16m in interest.
If the pre-payment was for just 6 months, then we would have been pre-paid $400m.
EBITDA is significantly high, and interest rates are historic low. POG can move from bonds to commercial loan to pay CB, while combining cash from Gold advancements. It’s very cheap option and very likely.
Unfortunately, the weaker you are the more you get screwed.
I don't pretend to understand the complexities of POG'S financial history. It was touch and go at one point and they've had to pay to survive.
But not much mention of the 70% increase in gold production in Q1. Pog growing at 100% a year. With success you can call the tune.
8 weeks till next update.
On a production run rate of 740koz a year. 50% more than cey valued 2 billion. Half the size of poly valued 7 billion. Pog 800 million...
Does anyone know what this is about?
"2019 US$16.0 million of interest on prepayments on gold sale agreements"
"2018 US$7.2 million of interest on prepayments on gold sale agreements."
These seem awfully large payments for something that I do not even understand!
The only thing that might change that is to get these blood suckers off our back. That however, would mean paying off our loans, rather than extending or renewing them. Something, that POG has never done in all the years that I have been an investor, so I won't hold my breath.
Kenj
"IMO this company has been run for the benefit of the bondholders, rather that the shareholders."
Maybe the new chairwoman will make a difference.
BTW Copper3,
The audited annual results for the year ended 31 December 2019, as well as its Q1 2020 production / sales update and guidance for 2020, is available to download from POG's Website.
Copper3,
The ordinary bonds ($500m) are due in Nov 2022.
The Convertibles ($125m) are due in Jul 2024.
POG's accounts always seem to disappoint and are are usually as clear as mud.
The simple interest on the two bonds is I believe just under $51m PA, so you are pretty close there, but there is more than just that.
"Interest Expense US$71.6m
Interest expense for the year comprised US$42.0 million of effective interest on the Notes, US$13.0 million of effective interest on the Convertible Bonds, US$16.0 million of interest on prepayments on gold sale agreements and US$0.6 million interest on finance lease (2018: US$41.9 million of effective interest on the Notes, US$12.6 million of effective interest on the Convertible Bonds, US$1.1 million of effective interest on bank facilities and US$7.2 million of interest on prepayments on gold sale agreements)."
They also like to spend a lot on Head Office staff and costs.
" The Group has corporate offices in London, Moscow and Blagoveshchensk, which together represent the central administration function. Central administration expenses increased by US$13.3 million from US$39.2 million in 2018 to US$52.5 million in 2019."
Then there are taxes, hedging losses, impairments, and reversals of previous write downs etc. They can soon whittle their way through large amounts of earned revenue
Rusty,
While I had little difficulty understanding the old 2015 CB issue the current one might as well be written in a different language - 251 pages of indecipherable drivel. There is though, no reference to POG calling in the bonds if the share price hits a defined level, as far as I can see.
If there is anyone on hear with legal / banking experience, they may be able to make more sense of it than me.
Hi, I thought the bonds had a termination date in 2022,2024. I am somewhat unclear on recent 2019 financial reults., and so any guidance appreciated. There is no audited accounts as yet to help. . The main issue for me is how to reconcile $260 m EBITDA down to $25.7 m profit
Interest on bonds is around $52m , and the figures imply overheads of $90 m. , cap ex £103.8m - I presume this must be fully accounted as expenditure , devaluation of assets - TEMI $23m as previously over valued. , and then tax etc. Perhgaops i shoulnt be invested ina company im not able to undertsnd, but future prspects do look good. Roll on Full half year resultas.
As Kenj alludes to the bondholder offer is shrouded in mystery, and small print. I have tried to read through some of this, but it seems contradictory to me, and I am not sure whether they could do that.
Again as Kenj alludes to, it is unlikely the bondholders would want to convert and lose their coupon. Some people complain about the terms, but the terms were a slight improvement on the previous offering.
There were rumours that the last time they were looking to raise capital, Pavel personally was going to get a large chunk for "negotiating the deal" at terms that were worse that they eventually settled at. Of course this is hearsay, but, it was never denied. As ever interesting times and as muddied as ever.
Ah well.
Wishful thinking Workingstiff!
To the best of my knowledge, POG cannot force the CB holders to sell up. Unlike with the previous CB issue, there does not appear to be a cut off price at which point POG can force conversion. Consequently the bondholders could be paying less than 12p for shares worth £1 or more in 2024, and collecting 8.25% interest PA.
IMO this company has been run for the benefit of the bondholders, rather that the shareholders.
Rustybucket - If they threatened a share issue at - say 25p - to cover the cost of buying back some or all of the convertible bonds at face value plus 50% (Kenj will have chapter and verse on whether or not they can compulsorily do that) I wouldn't be unhappy. It would either force the bondholders to convert now, saving the company 4 years at 8.25%, or sell up, reducing the shareholder dilution.
It would also mean the management would be owning up to the mistake they made last year, though.
Debt refinancing
? As at 31 December 2019, the Company’s debt amounted to $609m, comprising of $500m of guaranteed notes (8.125% coupon, maturing November 2022) and $125m of convertible bonds ($109m at amortised cost, 8.25% coupon, maturing July 2024)
? The Board is actively considering a number of liability management options with the aim of reducing the Company’s leverage and cost of debt. Are they proposing another bond issue or Possible rights issue.
The forward selling of gold to Gazprobank.
And the hedges they have in place for both ruble and gold. I wonder why there are 2 RNS about directors but no RNS about results on here.