Roundtable Discussion; The Future of Mineral Sands. Watch the video here.
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Anyone else looking forward to Q1 results? I am hoping we might be net debt free by now!
The share price started going down when they announced the Lithium exploration licences.
I think there was a sense that dividends were incoming, but this was replaced with a concern they were going to spread themselves too thin, rather than concentrating on the core business and spending capex on expanding mine life and Douta.
If they convince the market that this is all under control and can even pay a bit of a dividend, the price will go up quickly.
Yes, i didn't mention that the 2022 projections by ARC that i based my inv decision on was based on $1700 gold, now testing $2400.
Of course inflation has hit AISC but that's still only c. $1200, I think..and the POG has to hold up at these higher levels. Even so, this sharte is overlooke, under traded, and undervalued.
The share price is jumping because news is leaking about forthcoming results. Let's see and hope...
It's an amazing stat - to buy and hold from IPO in June 21 and be currently 25% down is crazy. The risk now is way, way lower as the debt is paid down and the gold horizon is so positive.
Of course weak wider market sentiment explains part of it but only a very small part, the rest appears to still be lack of trust in Segun delivering / general liquidity issues. This will change over time as successful execution is proved.
In June 21 this listed at c. 20p. At the time it had not started production, had $81.5m in debt and other liabilities.
At 30.9.23 net debt was down to $19m, should be less at 23 YE, and even with some capex at Segilola and explo costs at Douta, must be well cash +ve at 24 YE, if not well before.
Agree with Harchris that with a clear MLE plan and a PFS at Douta, 25p has to come as a minimum.
Add in a competent founder who has delivered this mine to plan. Life extension plans are a little later than some would like, but should be low capex and easily delivered.
Douta has also run a little late, but that's par for the course in the mining sector, and with Segun's record at Segilola I've no doubt it will be progressed soon. With gold testing $2400 this SP should be doing 50% from here easily.
There’s many factors at play but none that quite justify the current valuation.
My take - mine life extension of say 18 months alongside POG strength and we see 25p. Beyond that the economics need to be right at Douta and beyond that the eventual realisation of the lithium ambitions.
The downside from here only comes if none of the above occur and POG weakens.
I would buy more here, but the share is so illiquid I can't really justify it. Why does no-one want it? The PE should be less than onr at this point and the CEO holds plenty of shares. Nigeria is stable compared to the rest of West Africa. What gives?
Q1/24 production results next week? Last year was 17/4.
23- 25k oz would be nice.
Gold $2400+
Mine life ext is a given, and addnl capex for underground ops, increased rev costs for u/ground and near mine trucking, will both be easily absorbed by a co that will be cash rich by then.
Douta, and lithium, will require addnl capex, but that can be debt funded, or even spun off into separate entities.
Despite the persistently low SP I've got no worries here that THX is primed for greater things.
Absolutely ridiculous how we are priced with all known metrics , my U.S. producers have nearly doubled whilst this treads water.
It`s no wonder some co`s are thinking of pulling out of the UK markets .
Explo drilling is costing $5m to extend the mine life... and THX is throwing off $120m FCF per year at current gold price.
Thats 2 weeks of cash generation...
....as long as the free cash flow isn't swallowed up in exploring/developing new resources, which in time throw off more free cash flow, which is spent on developing more resources.......
Even if they manage to find just 1 extra year on the minelife that would warrant a 100% gain in the SP as its another 1x Mcap in free cashflow
Hopefully, the Q1 numbers will get us some liquidity. I am thinking about adding in this year's ISA.
SS
ARC's 2022 note projected 114000 oz in 2024. Can't copy here, sadly.
Either way, lots of cash this year....but don't forget capex coming up at douta and for Segilola extensions.
Despite that, with debt gone this year (if Segun so chooses) a very healthy position by 2024 YE
The ore mined in Q4 2023 was relatively low grade. That will be blended with higher grade material now being mined. I'd expect 2-3g/tonne this quarter. I'd expect this quarter will be the lowest number of ounces produced this year. Still, assuming they hit guidance then EBITDA should be around equal to the current MCAP.bdid someone say special dividend?
...oh and I forgot to add, that Thor obviously have some other potentially very valuable assets like a multi-million ounce gold prospect at Douta in Senegal, not to mention significant lithium interests in Nigeria; the sky's the limit.
Thor's profits for 2024 are likely to be spectacular.
In Q4 2023, a relatively difficult high-strip mining period, they produced 21,798 ounces of gold at 2.79g/t.
The company stated that they had just completed the push-back of the west wall of the mine as of the end of 2023, exposing the higher-grade ore to be mined going forwards.
Now, the average grade of the open-pit resource is about 4.70g/t. If they simply processed the same number of tonnes through the plant at 4.70g/t (1.68 times higher grade than the lower grade ore processed during the west wall push-back), that would imply production of 36,720 ounces per quarter - not to mention the expected drawdown of the high level of gold in-circuit at year end.
Thor has a stated AISC guidance of about $1,100 per ounce, so at the current gold price of around $2,300 an ounce, they are making FCF of about $1,200 per ounce. (It could be even more than that if they are benefitting from the significant devaluation of the Nigerian Naira.)
So, pulling it all together, 36,720 ounces at a profit of $1,200 per ounce = approx $44m per quarter, or £176m per year.
At an exchange rate of $1.26 to the pound, gives a profit of about £140 per year - vs the current market cap of £92m = a p/e of 0.65!
Rightfully Shanta Gold shareholders are currently up in arms about the attempt to sell off the business on the cheap to the founders, with the CEO Eric complicit. However I thought it interesting to look at the share price appreciation since that Dec 20th acquisition announcement and see how it compares to THX... surely SHG's share price has been suppressed because of it whilst THX's has been free to soar north with gold now at all time highs?
Dec 19th, day before acquisition was announced - SHG 12.65p, THX 14.25p
SHG has therefore seen ~15% gains since and THX has actually seen a small loss!
POG rising from $2050/oz to $2300/oz and even more importantly the highest average quarterly gold price ever and THX makes no gains.
It's difficult to see anything other than positives about today's RNS, unless you take anything other than a very short-term view.
Yes it's frustrating that the MRE and PFS have been pushed-back a bit, but nothing's changed other than Thor's Douta resource may, in the fullness-of-time, be considerably bigger than it is today - all of which bodes well for the economics.
Who knows, they may end up selling it to Endeavour for several times our current market cap.
So next news should be Q1 update which should be interesting reading given buoyent POG.
We are currently carrying out our preliminary feasibility study workstreams at the Douta Gold Project and look forward to now completing this during Q3 2024 following finalisation of the process flow sheet.
"The acquisition of the Douta-West permit, which has a number of geochemical targets, allows us to potentially add scale to the Douta Gold Project, in particular, extensions to Makosa Tail. We look forward to commencing exploration on this new permit with our existing exploration team and from our exploration camp at Douta.
Yes, Douta PFS has slipped again from Q4/23 to Q3/24 now. Issues:
There was to be a new MRE issued in Q1 as well that we have not seen. It seems drilling is continuing to increase oxide share of the resource to improve economics but now there is this new Douta-West licence that they want to drill and possibly add in some resource if drilling there is successful.
Development of the mining process has been done with the Chinese and finalisation of the process flow sheet is said to be under way.
Extra time has been required for detailed metallurgy work in Perth which feeds in to the process design. All this is extending the time for finalisation of the PFS.
Major issues are with the cost of development of this deposit. The initial resource of expected c.2 million oz gold is in oxide, transitional, sulphide and refractory form. A CIL processing facility for the oxide component would be suitable to start off but the majority of the ore will require much more expensive treatment facilities incl a $200 million? BIOX. Note. Endeavour has had to install a BIOX for the similar Massawa ore adjacent to Douta after initial processing of some of the oxide material.