Member Info for Caposoka

Yes - my view may well be wrong but my point was the alternative reasons I put forward are much less likely to be wrong than all this T/O discussion which I think is well off the mark. Also, over the past 6 months the USD has risen against GBP but fallen against AUD (10% since Feb). This will impact earnings in respective currencies. Also Zircon prices are roaring away, Ilmenite much less so, ILU has large stocks, rising in value. I don't really see that a ILU / KMR comparison as being particularly straightforward.

Because of the accumulated losses, one of the steps on the path to dividends is getting some special resolutions approved by shareholders at an AGM (or an EGM). At time of results, FD indicated this would all take at least a year ahead but still, the AGM later this month would have been a good opportunity to show intent by passing something (even if conditional on future steps). Nothing doing.

I prefer your reason to mine! More chance of a rebound!

Hi Delano, happy to agree to disagree - interesting to see who will be right..? :) Only to add, KMR's dip from 280 to 210 goes back to Feb. At this time fears became widespread of resurgent inflation (rising oil and metal prices), people thought the US would have to accelerate interest rate rises, bonds rose, stocks slid and the US 10 Year has since risen above 3%. Some even now believe interest rates may reverse due to mounting evidence of a slow down as the economic expansion comes to an end. Either way not too good for stocks in general. I believe this is more likely to have an effect than believing in any T/O conspiracies.. we shall see!

Delano, I don't buy this hostile T/O talk or another T/O talk being banded around. The two major IIs would have to be part of any agreement and the SP is transitory for them - they have their own long term valuation. Only last October M/C was circa GBP 350m and they gave no indication of selling then. The bigger concern is Jager's earlier post - if they ever got together with a few others and brought out the rest at these basement prices. Still, an inherent risk with many shares in the hands of a few but unlikely. My view, SP weakness is concern re: global growth and profitability if WASP was to fall. Yet still, production at 1Mt, costs under control, zircon set to roar away for a we while yet, net debt approaching nil, if/when the next downturn hits, KMR will be able to survive on their cash cost per ton (more still if depreciation allowance is stripped out). Think you will be disappointed if you are only investing on T/O potential. Rest of us just need patience and a steady nerve. GL.

They were getting 150/t FOB in H2/17 so unlikely they have increased it by 33% . Would be reflected in the SP if they had. Somewhere in between. Bluejay - had similar thoughts earlier today.

An item I cannot square between Hannam's Oct and Apr papers is a difference in estimated WASP. Oct had estimates of USD/t shipped of: 244 (Y18), 251 (Y19), 269 (Y20). (page 6 of 41). Apr has estimates of USD/t shipped of: 223 (Y18), 249 (Y19), 269 (Y20). (page 4 of 8). Why the drop in Y18? As a footnote, Oct was based off a Zircon reference price of USD 1,200/t for the foreseeable future. This was rapidly seen to be behind the curve (and probably the item Supaman was referring to, as it was flagged on this BB at the time). Notwithstanding, agree the papers are some of the better ones.

Indeed - old and new by the look of it - but happy to hear from all.

H2/17 production of 534.3kt, shipments of 504.6kt but stocks of 202kt remained same as H1/17 of 202.5kt. Appears to be some confusion in their past reporting that has now ironed itself out in Q1/18. Lack of clarity could have been due to the stock held for the customer (49.3kt at H1/17, 9.2kt at H2/17 and now nil) or drawdown of intermediate magnetic concentrate of 61.5kt at H1/17, now not mentioned.

This link was posted on one of the other boards.... https://africacenter.org/spotlight/the-emergence-of-violent-extremism-in-northern-mozambique/ The place is over 800km further North from Moma and given all the other things that go on in Moz and the strength of force used by the government in return, it is not really relevant. Still, it may be the type of news to put off a few and explain a drop in the SP. The timing is similar, coincidentally or otherwise.

This link was posted on one of the other boards.... https://africacenter.org/spotlight/the-emergence-of-violent-extremism-in-northern-mozambique/ The place is over 800km further North from Moma and given all the other things that go on in Moz and the strength of force used by the government in return, it is not really relevant. Still, it may be the type of news to put off a few and explain a drop in the SP. The timing is similar, coincidentally or otherwise.

It certainly appears to be unfashionable and as some say probably a little unwise, but I've been accumulating more in recent days. A profitable business, generating cash and investing in easy-win upgrades, makes it difficult to see / understand the SP dropping much more, esp if you are a long termer. Even rainy season seems to have passed off without a mention (here's hoping the recent drop doesn't reflect a leaky ship and disappointing production) but lets wait a couple of weeks to see Q1 figures....

meant to say a couple of hundred (approx. 150) less minor shareholders, not more... (albeit their aggregate holding has actually increased a nominal amount).

Interesting how static the shareholder distribution is compared with last year. An extra couple of hundred minor shareholders now on the books, 5.5M shares have cascaded down from the top shareholders to a dozen extra in the 25-500k shareholder bracket so some minor increase in liquidity but not much.

Not sure how much they really lost..... they fleeced KMR in the past few years, earning 10-11% (40M+) a year and then having over cooked it, wrote off a bit rather than lose the lot. They will get the bit back through their shareholding - had several opportunities in past 18 months to do so but chose not to. Lenders out / SP up. SP up / lenders out. What comes first? KMR have been using powers of persuasion for some time. To date not succeeding. SP spiked a couple of times in past 18 months to allow large tranches to go through. Would presume something similar needed again.

25 May.

At start of 2018 weighted Z price probably nearer 800/t. KMR produces 2:1 ratio of primary : secondary (slide 21) and primary was at FOB 1,000/t (slide 10). Secondary say at 25-30% of primary. Basic point correct though. KMR reported that rate of increase in Z experienced in H2/17 had continued in Q1/18 so throughout 2018, weighted price of 1,000/t should be easily achievable.

Nosir, Saga, I can happily go along with both your arguments as KMR has a long history of promising and not delivering and a confidence issue to overcome. Agreed. For some it will never return, for others it has, for others it will if there is recognition of performance and the company being undervalued but the flip question is what would a replacement BOD do which is different to the current lot? Operational performance now being demonstrated, guidance given / met, low capital schemes developed to increase rates of return - ore grades wouldn't change with a new BOD - sales prices is a harder one and of course there are the subtle issues such as experience in dealing with the Moz authorities that is difficult to replace. The restructuring was the time to effect change of the BOD. Equally they could have written down the assets. Are the assets really worth 700M? In default, they are worth only a fraction of this. In performance they are only producing a few % return but 25 odd years of depreciation at 30M is a millstone reflecting past investment decisions not future performance. If they had written off large amounts then, the metrics would be quite different today.. Finally, one thing I only picked up this time around - page 35 of the presentation - adj cash operating costs table - 'Other' = 14.7m. This if approx 10% of the total cash cost. I think this was stated to be mostly royalty payments to the Moz government. Seems hefty to me but a cost that can't be avoided. Worth noting when comparison are made with other miners....

I'm not sure I get all this sack the BOD stuff. Think it is more needing to understand the business. KMR has a relatively low grade ore body so has a higher unit cost to others and lower margin. Maximising production to achieve economies of scale is not a bad strategy. Flip side, they are not having new mine start up costs every few years that higher grade, shorter life mines incur. Also, net profit was 20M for 2017. Various costs (arbitration, dry docking, interest, building up spare parts stock) will drop out in 2018. Selling prices start 2018 where 2017 ended so without any other considerations, net profit will more than double to 40-50M in 2018. Zircon rising strongly, ilmenite too but leaving that to one side, the net profit would put next year's EPS in the 40-50p range vs current 240-250p range. Seems good value to me based on direction of travel.

The Q&A centered on the lack of liquidity in the stock and not discussion of the transitory SP (all as you would expect). The company stated they recognised liquidity as an issue and are trying to encourage the lenders to sell, using the assistance of the company's brokers. The aim is for the shares to spread around and not ending up as a large holding held by a.n.other. To date they have been unsuccessful. As Supaman states, the way forward appears to be a hard slog to get buyers to chase the SP up, to reach a level where one or more of the larger holders is happy to sell. This will rely on company performance or at least perception of performance. Saga correctly posted yesterday that 20M profit on a NAV of circa 800M is paltry. The late Mr K previously put forward ideas that larger write-downs could clear the deck to reduce the annual depreciation charge, to improve profitability and improve this metric. Whether these larger accumulated losses would have affected ability to pay dividends is anybody's guess but today's NAV is what it is. In simple terms I prefer to look at EPS of 18p (and clearly rising in 2018) vs SP of 250p. Not bad at all. Patience required methinks.