Member Info for Bismarck

It's only dropped slightly because an inevitable divi cut was already priced in. The cut was a little more than I had expected, I'd guessed a 50% cut likely, but I guess they decided to get it over with rather than have to cut it again later if there's still not enough cash. Sensible move IMO.

As a point of law there is no such thing a penalty clause, assuming Betts has used English contract law in Hum's contract with Corica. They cannot inflict a "punishment" charge for poor performance.

I'm sure the contract they have agreed will however allow them to claim liquidated and ascertained damages. That means if the contractor fails to achieve what he's agreed in a given timeframe, without issues such as inclement weather or others beyond his control, then the company, HUM can claim damages for delays based on ascertained losses.

Yeah damofarl, some years ago I was chatting to an African who was working for one of my customers and he explained the concept of "African time" to me!

I generally open this board just after 7AM each weekday to look to see if there's an RNS confirming the deal has been done. One day surely I'll be rewarded with a pleasant surprise!

The SP has only fallen back to where it was end of Feb. It's always been volatile. There have been no large sells. II's are not dumping. £25K is the largest I've seen which is peanuts.

This is an inconvenience and it may cost HUM a few million or maybe $10m or whatever in additional interest payments because of the additional delays, or they may need to employ a slightly more expensive mining contractor. Ultimately this will not be the thing that makes or breaks the company.

I'm not going to let it worry me. If the SP drops further on no new bad news I may sell something elsewhere and buy a few more.

In my experience as a contractor (not mining BTW) most disputes are about payment, whether that be late payment, disagreement over payment for variations to contract (extras or omissions) or "damages" as a result of delays.

Many of those could require HUM to produce further cash to resolve, hence why they may need to talk to the bank BEFORE they can be resolved?

for the avoidance of doubt i mean that at current levels, payments of interest, debt and divi will likely exceed fy24 fcf. cash reserves to pay the divi may run out in about a year from now.

i do hate it when people with zero understanding of a company's finances try to ramp up a share. novices read these boards and make investment decisions on this ****e.

"At this stage diversified has done nearly everything it can to resist the decline in stock price. All that remains is to finish the tender and increase the dividend."

Increase the dividend? In FY24 at current level it's almost certainly >100% FCF. DEC's dividend policy is 40% FCF. >100& is not 40%, comprehend? Do you think DEC should sell assets or increase debt just to pay the divi after the cash runs out? Do you have the faintest idea what you're talking about?

The SP is low because there are those who doubt that "commercial production" or the promised 150-200k Oz will ever be achieved, at least at a favorable AISC.

I've got not far short of 1,000,000 shares in this so I'll be gutted if it fails. That's the reason for the low share price though.

I dread Dan's RNS's, they usually result in another knock back to the SP

Attempting re-post with words omitted by LSE software changed -

I wish you well damofarl

I'm not a believer of the 50 year stuff either (I'll not be here then for sure). For me this is an investment for the next 5 to 10 years.

For sure the time to exit DEC was when the SP was >£1 (old money). Missed that boat and now, even with the divi looking very shaky for the next 12 - 24 months or until the gas price recovers to $4 this is not the time to exit. I made that mistake in autumn 2020 exiting Shell at less than £10. I took a big hit on Shell when I should have rode out the storm for a couple of years, took the reduced divi then sold out at a good profit on the increased oil price. I'll not make that error again. A long term gas price of ~$4 will make DEC holders very happy again and I can certainly see that happening so this is a hold for me.

I wish you well damofarl

I'm not a believer of the 50 year stuff either (I'll not be here then for sure). For me this is an investment for the next 5 to 10 years.

For sure the time to exit DEC was when the SP was >£1 (old money). Missed that boat and now, even with the divi looking very shaky for the next 12 - 24 months or until the gas price recovers to $4 this is not the time to exit. I made that mistake in autumn 2020 exiting Shell @

Damofarl,

"Always happy for anyone getting a multibagger! Albeit, I do think a reduction/temporary hiatus on the dividend front may extend your timeline!"

I'm under no illusion that this divi will be maintained for the next 5 consecutive years, and I'm starting from a position somewhat underwater. I do share your optimism that gas will rise in the long term.

Damofarl,

I forgot to say thanks for your kind words. Thanks!

On a separate note you said

"Further to my post below, whilst DEC hark on about 50 years of production, I see more like 15 years of profitable production,"

I would happily take 5 years of divis at this level which would make this a multibagger from here!

If this current low gas price environment continues for any significant length of time, and there are no signs that anything will change soon, I would favour avoiding any unnecessary delay to cutting the divi once it becomes greater than available FCF, after debt/interest payments.

IMO a divi cut has already been priced into the SP. We are in a period of depressed gas price/reduced profit and it is testament to DEC's excellent business model that there is almost zero chance of them defaulting on debt during these testing times. A policy of paying out ~100% FCF (after debt/interest) in divis is not usual or sensible, except maybe in the very short term when it is obvious that a recovery to higher profit is imminent. Right now I don't see that.

I think it's looking a bit shaky.

1H23 free cash flow was $80m after all debt/interest paid. We don't know 2H23 FCF yet but let's say it increases to $88m then that's $168m for the year, which is roughly equal to the dividend, so dividend = 100% FCF

I don't think the average realised FY24 gas price will be better than FY23. I expect it to be less. DEC have sold producing assets in FY23 and there will be a production decline, so on that basis I think the current divi, if continued through FY24 may well exceed FCF.

I think DEC will need to make some significant acquisitions pretty sharpish to increase FCF and fund the shortfall, otherwise it's hard to see where the cash will come from to pay the divi at this level.

I'm not sure how % divi yield is relevant to DEC's ability to sustain the divi. It matters not whether the yield is 1% or 50% of the SP. Total cost of paying the divi + debt/interest repayments measured against FCF are the numbers that matter.

Of course, didn't twig

Reading this from UK govt site I'd assume it would not because it says "while supporting UK companies" ?

"At Spring Budget 2024, the government announced the introduction of the UK ISA. The new £5,000 allowance, in addition to the existing ISA allowance, will provide a new tax-free savings opportunity for people to invest in the UK, while supporting UK companies."

You can have UK or foreign shares in UK ISAs so long as your platform allows it. I used to have Amazon in mine. You cannot hold foreign currency in UK ISAs so the divis just get converted from $ to £ on receipt.

"All very interesting I’m sure but completely irrelevant to this board"

Are you aware that DEC have both a US and a UK listing? Do you understand that the UK listing might be holding back the SP and it might increase if they delisted from London?

Difference in valuations between London and NY

https://www.standard.co.uk/business/britain-s-biggest-companies-would-be-worth-ps460-billion-more-if-they-listed-in-new-york-ftse-100-nasdaq-s-p-500-dow-jones-b1074084.html

"How much does it cost companies to be quoted in the UK?

Alan Miller, CIO of SCM Direct.com

For our analysis, we looked at the FTSE 100 and compared most stocks in the various sectors against comparable stocks in the US and Europe. For example, in the UK the largest sector is ‘integrated oil & gas’ made up by BP and Shell. These titans account for more than 13% of the FTSE 100 and their average Price to Earnings Ratio (P/E) is a lowly 6.5x. This compares to a multiple 28% higher in the US with Exxon Mobil and Chevron standing on 11.5x and 11.6x of their earnings, respectively.

Similarly, UK banks which account for 10% of the FTSE 100 are valued on 5.8x earnings but in the US (even after the demise of SVB and Signature) their banks are typically valued 23% higher. Many of the sectors which the US rated much more highly than the UK were found to be the ‘bad’ poor ESG sectors e.g., Metals & Mining (58% more in the US), Tobacco (44% more in the US), Construction materials (40% more in the US), oil & gas (28% more in the US).

It could be that part of these differences is down to ESG investing being more prevalent in Europe than the US. According to a report by the United Nations Environment Programme Finance Initiative, Europe accounts for 60% of global ESG assets, while the US accounts for 26%."