The latest Investing Matters Podcast with Jean Roche, Co-Manager of Schroder UK Mid Cap Investment Trust has just been released. Listen here.
Andrew, I've no idea why they're not digging up much gold ATM but the mountain has been drilled out to establish the resource. That is a question I'd really would like an answer to.
In terms of the burn rate is it not a simple £15 odd million as my previous f.a.g. packet calc based on 2022 numbers, less any capex like the tailings thickener that may have been paid for in 22? https://www.lse.co.uk/rns/SGZ/final-results-bssini24i5br11w.html
Andrew, thanks for your clarification. In my mind there is little doubt that there is plenty of gold in the mountain and someone must capable of extracting it profitably, either Scotgold or another. As my cigarette packet calculation showed they need less than half their 23,000 oz target production rate to break even based on current costs/POG, so assuming NLR and others can find the funds to keep it going, either until a buyer is found or it's profitable under Scotgold, that's got to be their best option?
Maybe I'm naive but I don't see a scenario whereby administration would benefit the BOD (majority shareholders). Mcap is now only £8.3m of which BOD own circa 60%. If this was put into administration the administrator would look for offers to buy the mine as an ongoing concern. I think it's inconceivable that nobody would offer well over the current Mcap for it.
BOD would potentially be bidding against half a dozen interested parties.
This reinforces my view that they are likely to continue to support the mine financially or sell it as an ongoing concern. I don't understand how administration would help them?
I think if it were a UK based company I might snap up a few more to average down, but given that they are half way around the globe and will be subject to less regulation once delisted I think I'll just keep my present holding, moved to a dealing account.
The shares are currently at about 8% of book value. Moving forward I don't think it would be unreasonable to expect an annual divi of 4% of today's book value in the not too distant future, which is currently half the Mcap!
I just wish I was starting from a clean sheet.
I cannot believe that the slang word for cigarette has been edited out by this board's software!
Results published 21 December 2022 showed they had revenue of $18.8m AUD and a loss of $10.8m AUD, so to break even they would have needed to increase revenue to $28.6m AUD or £15.4m GBP. At today's POG that's only 10,000 oz but that's not guaranteed long term.
So moving forward, in the short term they only need to produce 10,000 oz in 2023 to break even based on 2022 costs?
Caledonia mining previously had the mining rights but moved on in 1999 with the collapse of the gold price. https://www.theguardian.com/uk/2001/sep/09/stephenkhan.theobserver
Watching a webinar of their latest results makes me wonder. Apart from, "why the hell did I not back them instead", Is their success due to them passing on the Cononish project for something more fruitful, or would such a competent miner have been successful at Cononish too? https://www.youtube.com/watch?v=q69mVuWKvo0
I subscribed to L2 and past few days whenever I've looked there have been buying opportunities at around 5 and selling opportunities at 4.5. I would have expected some people to be cutting their losses and selling and others to be buying/selling to move out of SIPPs and into dealing accounts. I cannot imagine much is going to happen to move the SP much between now and D Day, unless people expect a flurry of buying by the BOD to snap up cheap shares at the last minute?
I do think that after 13 odd years and an 8 figure sum invested, mainly by BOD, unless they have a plan to exclude PI's and keep all for themselves there is no way they will cut their losses and let this die..... unless they've given up all hope.....
I guess the value of what's in the ground is largely irrelevant if the company are incapable of mining and processing it competently. I keep seeing these AISC figures of £500 odd being thrown about by SG, but it's clear they're not operating at anything remotely close to that.
George,
If they simply delisted there is no obligation for existing shareholders to sell, although many would sell, probably at a further reduced price. Obviously there are limitations in holding delisted shares, eg cannot hold them in ISAs, complicated/expensive to keep in SIPP, difficult/expensive to re-sell through OTC trade etc.
I assume you're thinking they could let the company become insolvent, which it's clearly quite close to now, call in the administrators then make a low offer to buy the assets as a private company before re-starting production under a different name?
BlakeneyP, I agree it does appear suspicious, especially knowing what we now know. The couldn't have thought in January that there was no gold in 430 west though?
woodcot it's occured to me that they might decide to delist and become private, irrespective of whether any of this is planned, which I personally don't think it is. When the SP is so disconnected from the NAV of the company, announcing intention to delist would make financial sense as it would knock another big chunk off the SP, allowing many of the remaining shares to be bought up by the BOD at knock down prices. Of course that would not work with all investors, some would just continue to hold long term for the eventual divi's.
However I don't believe any of this is pre-planned, I just think they've f***** *p
Andrew,
You might well be right. I'm no mining expert but I'm struggling to understand how they keep tunnelling in the wrong direction despite the mountain having previously been drilled out and a mine plan produced on those drill core samples.
If there is ore at sufficient grade in sufficient quantity for a viable mine, someone competent can mine it!
Whether that ore exists in that grade/quantity or whether that someone is Scotgold...well I don't know anymore
Baz I'm not sure mansood is gloating. It's true he's only only just arrived here but he is pointing out that there may still be light at the end of the tunnel (or mine shaft).
You may have more up to date numbers than me but I thought NLR only had 37% not 41%, LOL
Either way, he's invested many millions, multiples of present mcap I think, so I cannot see him throwing in the towel now unless he really thinks it's a lost cause....
BOD hold about 60% of the shares so I find it hard to see it being allowed to run out of money IF it's still seen by them as being a viable business.
Certainly the next few weeks are going to be key. Either they can extract enough ore at a sufficient grade to pay the bills or ....well, drastic measures.
Thanks Fr Jack
Yes the raise was not completely out of the blue. Mark has suggested that a phased approach to developing Bilboes would minimise shareholder dilution in that much of it could be funded organically from the revenue from Blanket and from processing oxide at Bilboes. However he also indicated that even with a phased approach some additional source of funding may still be appropriate.
Re-watching the first two videos (which I did watch when first released) has reminded me that end of Q1 23 (ie now) is when he expected the Bilboes feasibility study to be completed, so I think the timing of the raise is no coincidence!
I'm also very encouraged that they acquired Motapa,