focusIR May 2024 Investor Webinar: Blue Whale, Kavango, Taseko Mines & CQS Natural Resources. Catch up with the webinar here.
If the price of any commodity falls significantly for a prolonged period the natural market reaction is for the higher cost producers to stop producing as they're making a loss, and for producers as a whole to cease investing in new projects as the metrics are no longer attractive.
Then eventually a shortage of the commodity, driven by lower availability will force up prices, and those who weathered the storm and are still in the game do very well out of it.
So my thoughts are where does THS rank compared with its peers in its costs? Certainly it ranks well in terms of debt, or lack of it. I've always thought of it as a low cost producer?
Tom, I use Avast secure browser which is based on Google browser nut has adblockers. I now see no popups here.
The bug I was taking about mysteriously causes whole blocks of text in the final part of some posts to dematerialise.
Earlier I was attempting to post, before this boards software removed the words, that Nigeria's central bank's interest rate was just under 12 percent when this deal was announced early in 2022 but now stands at just under 19 percent. What effect does this have on the deal and its financing? I'd be damned if I'd choose to borrow money at 19 percent!
Not all message loaded....second try
"Funding structure committed by a syndicate of Nigerian and African regional banks, and energy and commodity traders"
I do wonder what effect Nigeria's central bank's interest rate increase, from
I've re-read Seplat's original presentation on the acquisition. There is no doubt it would (hopefully will) be transformational. https://www.seplatenergy.com/media/wojc2c5e/seplat-acquisition-of-mpnu-presentation.pdf
"Funding structure committed by a syndicate of Nigerian and African regional banks, and energy and commodity traders"
I do wonder what effect Nigeria's central bank's interest rate increase, from
Been doing some sums based on Stocko numbers which should still be relevant up to delisting date, but will not have been updated.
Book value $85m
Book value PS $0.714 (or about 57p)
Wouldn't be unreasonable to expect a divi of 3 to 4% of current book value eventually so about 2p/share. Of course if they grow to become a major shale producer you'd expect to have to wait longer for it, but could be a lot more when it does arrive. Keep fingers crossed...
"SHG is already paying a dividend, demonstrating delivery.
HUM needs to convince the market
One has about 120m net debt, the other has zero.
Debt matters when it comes to risk premia"
All very true. HUM is cheap because it's considered high risk (which it is) has high debts and needs to convince the markets.
SHGs divi is so small it's not really part of the equation IMO. For a lower risk approach and higher divi I favour CMCL. Their relatively high P/E is due to them diverting revenue towards development of a second mine, but at 5% the divi is still worth having.
I may have been a bit out on my dates Baz. I remember my father telling me several decades ago that typical pay on the coal face was around £20K and I assumed that was 80's, but could equally have been 90's.
Looks like the going rate on coal face was £40K in 2012 https://www.bbc.co.uk/news/uk-england-15445418
"I think SHG is an absolute steal at current prices"
Interestingly stocko shows a 2024E PE of 6.2 for SHG compared with a 2024E PE of 0.87 for HUM
That's based on SHG's 2024 revenue being $189m and EPS of 1.9 cents (US).
Compared with HUM's 2024 revenue at $412m and EPS of 10.2 cents (US).
On those numbers HUM is a far better buy. This of course relies on both companies achieving forecasts!
That's interesting. I remember coal miners in the north of England earning £20K back in the 80's. That would surely be equivalent to £40-50K nowadays. I guess that's why so many of the pits were uneconomical so were closed by Ian MacGregor with Mrs Thatcher's blessing.
I wouldn't do mining for £30K either. I've no idea what they actually earn drilling underground in Scotland, probably a fair bit more than that, maybe it's £40-50K?. I was just trying to make a point that Scotgold must be paying 10X the renumeration of even a fairly renumerated (not exploited) African miner.
Scotgold boasted grades of 17g/ton if I recall....problem is this year they couldn't find the vein and exhausted their working cap... so 0g/ton at times....with no reserve in bank.
African miners have lower grades, 3 to 5 g/ton, but veins are wide and wages low, hence they have a viable business with AISC of $1000 or so. Scotgold's "super high grade" (as big Phil would say) should have made us all wealthy (or whatever)...but instead has made our shares practically worthless....
Or will a knight in shining armor appear, willing to invest the £10-20M Scotgold needs to give it a chance? If they do I'd guess it's most likely to be a post administration deal cutting out existing shareholders. However I live in hope. You never know a positive RNS could be round the corner...haha?
This is already my largest holding so I'm significantly overweight. I was quite heavily invested in Burford Capital when it was shorted by Carson Block a few years ago. Its SP halved overnight so I was petrified that the same might happen here. Thankfully no such rubbish. Looking forward to
@Rockhead
"As for labour and costs, yes, much cheaper when paying peanuts to exploited migrant labour."
I've watched numerous podcasts from Mark Learmonth of Caledonia who operate the Blanket mine in Zimbabwe and ironically sold the Conoinish project to Scotgold.
Their AISC is about $1000/oz. Their drillers are not paid £30K+ overtime + expenses like those in Cononish, but the company does provide accommodation, schooling and healthcare for the miners and their families, along with a competitive wage. So I wouldn't describe them as "exploited migrant labour".
I think Scotgold's stated AISC of £650 was based on them reaching their full target annual production rate of circa 23,000 oz
At current sterling POG of circa £1500/oz that would have given them an annual revenue of £34.5m with on-mine costs of only £15m.
Easy to see why people invested on those sorts of numbers. If they could have even maintained 50% of their target production they wouldn't be in the state they're in now, but they couldn't even manage that.
"Building firm boss ups Scotgold stake"
"A SCOTTISH building company boss and his wife have cemented their position as the biggest backers of Scotgold Resources, the mining company pursuing an ambitious project in Argyll, by upping their stake to 4.01%.
Graham Donaldson, described previously by Scotgold as a "real enthusiast" for the project at Cononish, now has nearly 15.8 million shares with a paper value of £83,600.
The pair had declared a holding of 3.43% last month.
Mr Donaldson has been building his holding in the company, which is listed on the Australian Stock Exchange and the junior Alternative Investment Market in the UK, over the last couple of years.
The Donaldsons are Scotgold's largest investors ahead of chief executive Chris Sangster with a 2.91% holding, according to Reuters data.
In November Scotgold announced it is scaling back its planned Cononish gold mine to focus initially on extracting higher grade deposits after a fall in the price of the precious metal made it more difficult to raise development finance.
Scotgold has indicated it is now likely to seek £10 million in capital to start production at the mine near Tyndrum. This is down from the £25m originally proposed"
I do wonder if an established, competent and well financed mining company, like Caledonia, who sold the Cononish project to Scotgold in the first place had built a mine there themselves, would they have been able to make a success of it?
Good point regarding institutional investors. According to simplywallstreet it's 88% owned by institutions. Clearly there is some confidence there. If this divi can be held for a further 3 1/2 years I will have received payments equal to my original investment.
No I missed it Troy, although from reading the transcript I doubt we missed much.