Roundtable Discussion; The Future of Mineral Sands. Watch the video here.
After so many years invested I thought you would be better informed than your posts indicate today.
Dividend policy of min 20% net profit until 2021 was maintained. In this enivronment, why expect more. If they had maintained the absolute figure in USD terms, it would still be different in Euro / GBP terms, it would be a deviation from the expected policy creating uncertainty for little benefit and although only a small amount, it would all be from borrowed cash. Debt will be repaid over 63 months to early 2025 at 5.4% + Libor so any extra payment would accumulate ~30% in interest costs over the full lifetime of the loan. Some may consider it in shareholders interests to keep the cash in the company.
Net profit lower at 12.7M. Again what else were you expecting? Production for year was set to be lower than last year, then it was dropped by 100kt earlier this year as grades drop off ans WCP B is at the end of it's mine path with a pre C19 6 month contingency area now being partially used. The increase in ilmenite y-o-y of 28% kept them in profit which some may regard as a positive rather than considering it negative on a direct comparison it was lower than last time.
These items have been clearly flagged for months so not surprising the positive elements of the update generated a positive movement today.
Interesting they are increasing the jetty and vessel loading capacity. Something a few of us discussed a while back as being a potential bottle-neck. Obv a financial benefit to be had long term.
Main objective for 2020 for KMR was to get the WCP B move done. Everything else a sideshow this year. Move gets us to the other side of the capex, increased production, margin and profits. Being on track for Q4 1st production at Pilivili with no further C19 slippage is the real positive in this update.
Financials - profit after tax down to 12.7M. Think we should be happy it remained in the black after the grade drop off and guidance was previously reduced by 100kt for the year. Profit supported by 28% increase in ilmenite sales prices. As expected, Zircon weaker but will be more than offset by ilmentie increase. Great news for when higher Pilivili production kicks in.
My cup is half full with this update.
The options will have no effect on the SP so long as the SP remains below the exercise price. The options remain effectively worthless as no-one will take them up.
If the SP rises above the exercise price then any reasonable investor should assume that the options will be exercised and make their investment decision based on the total number of possible shares (existing + options) and offset the negative of having a larger share base by the positive of the cash raised from the options increasing the value of the company.
I very much doubt most PIs will take the time to make these type of calculations and will simply invest on where TLOU's got to by then and future prospects.
Yes - we are getting full amount requested - entitlement plus any excess shares requested. Already showing in my account but not tradeable until 8am BST on 21 July.
Company now seeking placees for the remaining amount - I guess for the keenest amongst us and if you are quick enough, you could contact the company Brokers and offer to buy a few more...! but they will all be placed.
My initial ‘not good’ comment appears to have caused some unintended angst. KMR are battling through and there is no criticism on my part. The basic fact is that Corvid 19 and it’s consequences are not good.
The update cannot be considered good. Expected production for the year has dropped by 100kt, so revenue will be down by 25-30M.
Power lines and HMC pipelines are delayed. Risk of further delays. Mitigation costs 10M.
Interim dividend is 20% of profits. This will be nominal at best this autumn.
Gross debt up. KMR refinanced at end of last year. Smart move not recognised by all at the time.
I remain cup half full. 6 months of muddling through will be forgotten in time. I am having fun investing elsewhere at present as have high hopes with a couple of crackers. As soon as I free up some cash I will accumulate more once again, at these levels or lower. Think I can afford to wait a bit longer to see how this all develops as my view is the risk is to the downside at present.
A few thoughts.
Q1 grade was a record low but Q2 dropped further. Need for WCP B's move clear to see. Only positives here - good production allowed them to run to stand still and through the rainy season unscathed.
WCP B move is delayed and yet the new power lines and HMC pipeline are delayed by longer. KMR appear to have been let down by their supply chain. Diesel generators and trucking of HMC will push up costs by USD 10M. A short term pain that will be forgotten in the mists of time but still a 10M hit.
Moz (like similar countries) has created a loophole to have closed borders but allow key people in. This is important. KMR contributes 5% of Moz exports so have a path to get their people in for the move. In my view this was the biggest risk they faced as other issues can be mitigated but entry to a country could not.
In short, not good, another 6 months of muddling through but light at the end of the WCP B move tunnel.
The price of the New Options is fixed at 8c, 4.4p and BWP 0.64 - (cover page of the booklet, pages 9, 12, 19, 23, 24 and 58)
The New Options are granted to eligible shareholders and expire after 2 years. If they are not taken up, they expire. The New Options are non-transferrable (page 12, 2nd para, also page 17, 4th para, page 19 items vii and ix, page 25 last para).
In pdf in the Edit menu, there is a search / find function for key words that makes finding this v quick.
Hi Brad, with my share dealing account, the funds are cleared and available for use straight away so no issues here, only making a cash withdrawal involves a delay. So I had a lucky flip but simply pure luck that allows me to put more in the OO. I have applied for several times my entitlement as an excess, so like you hoping it is a success for TLOU.
Brad, the OO is partially underwritten to 2M, with TLOU hoping to raise 3M in total so my paltry sum will make no difference either way and TLOU will still get a decent raise. If they don't get the full amount, it will be because they did not put forward a decent enough case but for a PI to gain 6% is a worthwhile exercise. I received similar criticism for buying cheaper in the open market 2 years ago at the time of 5.75p but that made no sense at it was fully underwritten !!!
If the SP rises, as it has partially done so already, I may yet sell and take up the OO, in which it will have been no more than a lucky flip. It is rare to have two bites of the cherry. Isn't that what these BBs are for, - to help PIs identify good opportunities, no matter how fleeting.
I hope this fund raising goes well but I have managed to buy 5k worth at 2.069 this morning which after allowing for buying and future selling costs is 6% below the OO price.
Others may prefer the right to the future options at 4.4p for 2 years which is abs fine. I prefer to have the discount now and then to see which way the wind blows in the future. GLA.
Agree and I hope the SP stays North of the OO and the share options at 8c are a sweetener. I do not think they are enough reason on their own to invest but they may tip the balance between buying in the open market and in the OO. If the SP falls enough (say 5% or more) below the OO, then I will go for the open market option as a bird in hand is worth more....
My share dealing account is late in posting the corporate notification for the OO but from the RNS I took it as being fixed already at 4c and 2.2p. If any different, please post any links available. GLA.