Member Info for carvegyber

I doubt it Tony. My hunch was that Fres has been taken down at any opportunity to allow traders to load up. With a supportive silver price 1800ish, this should hit 700p by mid Feb. Now that the switch from PM into equities is largely done, their prices should be free to gradually rise again based on demand.

I think we may well get a very good rise a week before the release of the results. It will be a very different tone to Half Year because of the PM prices.

Investors offloading their safe haven position to take advantage of the rise in equity. Feds, ECB, China central banks are continuing to print money so that moves to risky assets. Just traders going with the momentum. Meanwhile, we just have to keep an eye on the silver supply and demand equation. The first you hear of silver shortage is when you start buying big time. Meanwhile, Gold and silver is not going anywhere until inflation rears its ugly head. I am guessing not long now. If democrats get in, it may set it all off with a socialist populist wave sweeping the world and helicopter money.

if silver breaks $19, this would be sitting around 750p

Hi Photo, still got your photo shop? It has been a long long time.

Along the way, I hope some people took my advice and stay away from Chinese firms like these. Such a scam and I can't believe people continually pile more money into it. The numbers don't lie and they were never going to recover. This was a clear pump and dump play by first Landau then the Chinese. Had so many attacking me along the way....

Hope you are doing well these days.

Over the last week, it does look like Fres has been taken down savagely and it looks like it is free to rise into Feb. I have a hunch that if PM prices where to stay around here or even just increase mildly, we could be back up in to 700s. Last 2 day's price action seems to be very decoupled from PM prices. Very possible that FRES brokers are telling their mates to fill their boots and once all the profit taking is done, it should start moving big time. I think there will be good news coming in the next 10 days.

I normally like to post interpretations based on known facts but for this post, it is a little speculation on my part.

It feels like Fres has been depressed due to a spate of recent downgrades and also due to the clearing of ETF/tracker holdings. It also feels like silver is about to go on a surge relative to gold. Hopefully it will lift Fres out of the doldrums and start achieving some decent price levels soon.

Indy, that's right and he had the nerve to come on here accusing people of being clueless!

Rastuss, WRT to not casting aspersions, fair enough but there are times when enough is enough especially when NI starts accusing people of being clueless.

I really don't know how obvious I need to make my calculations. My 10yo daughter would have grasped it by now.

Nickel, you keep harping about H1 but have not looked forward to H2 at all. H1 had $200m lower revenue and paid $120m more in dividend! That combined is $320m more cash freed up in H2 compared to H1! If you do some investigative work and actually work it out for yourself, it is as obviously at daylight!

You are either clueless or set out to mislead by repeatedly beating your old news H1 drums.

Rastuss, to get to the cash positions, it is best not to use the balance sheet. Best to look at the cashflow statement. That gives you a full picture of where cash is spent and generated. I am not saying the $168m figure is yours. NI mentioned it and it is in the cashflow.

In 2020, there Is an expectation of improvement in ore grades and efficiencies do to the capex investment and new mine. These will bring the cost of sales down. Rastuss, as you rightly point out, if PM falls, then this will fall but if it increases, then this will fly. That is expected isn't it. It is afterall what this stock is all about.

Rastuss cash of $168m is based on ore grades and volume of H1. They have already updated the market that H2 is broadly similar to H1 if not slightly improved. Therefore, cost of sales could well be lower and therefore more cash generated. I am just using known FACTS. I haven't used any assumptions. The extra $200m from higher PM prices is also a fact because H2 is effectively over and PM has held and hasn't collapsed. All the sales would have been locked in. We just have to look forward to feb for the reports now. In mining, there always could be curve balls but at the moment, none has been reported for H2 apart from the $6m theft that was insured.

No it doesn't fall well short of capex because capex in H2 is $300m but cash will be $168m(take your figure)+$200m(additional revenue due to higher PM prices) = $368m. If I am not mistaken, $368m is higher than $300m.

I don't know how many ways do I need to write this before you can finally work it out for yourself. Metals have already surge from H1 to H2. H1 is old news! In finance terms, we are effectively already back to levels of 2018 because PM surged in July. Cash will not run out. If gold is $1350 and silver $15 again, then I would worry. From this level in, there is no danger.

Nickel, yes that is right but what bit of H2 revenue will be $200m higher do you not understand? You say to look into what is not in the statement and I have done that for you. Add $200m to your $168 and you get $368m in H2 (projected due to higher PM prices). You then need to pay $300m in capex and $20m in dividend. The $300m capex figure is in the capital market update recently. It is not $405m as Rastuss claimed.

LET ME SAY IT ONCE MORE. THERE WILL BE $200M MORE CASH IN H2 BECAUSE OF HIGHER PM PRICES IN H2!

Now look forward and get that into your calculations. Jeez

NI, your headline is wrong and misleading. The cash generated in H1 was $316m. You are using a lot of outdated and factually wrong information to mislead. Out of the $316m, they paid $140m in taxes and profit share which will be smaller in H2 because the profits are lower. The outstanding capex for H2 has already been stated to be $300m in capital day. After the capex, that is only dividend to factor in which IS $20m and that has been paid.

You also repeatedly failed to factor in the fact that revenue in H2 will be higher because the PM price difference from H1 to H2 is around 20%. The PM prices will mean that the revenue will go from $1b to $1.2b so an increase of around $200m which directly contributes to the cash generated from operation sum. There should be no increase on cost of sales because PM prices have no effect on that. So you have a cash generated in H2 of $500m, and out of that you need to pay taxes and profit share (less than $140m) and $20m dividend, and what is left of $340m goes towards the capex $300m which will leave the company with cash surplus of around $40m. I have assumed the max taxes and profit share, if this is lower, then there will be more surplus. This can be gleaned directly from the cashflow statement which you seem to constantly flap in our faces but repeatedly getting it wrong.

You are the one that preaches looking to the future into what is not in the published statements but seriously, you surely can't ignore the most fundamental mover of this stock which is the jump in PM prices from H1 to H2.

I would invite you to reply and pick holes in what I just posted directly please. I have told you what you got wrong. Now tell me where I am mistaken! Go on....

$200m more that what they made before capex. Basically, H1 cash generated was $300m but H2 will be $500m. It is not hard to work out because the revenue increased $200m simply because PM prices went up in H2 vs H1. Less than 30 days left in H2 so the revenue increased would already have been locked in.

Rastuss, it took you a while to finally get what I had been trying to show you in my calculations. The fact is the fall in cash is old news based on H1 PM prices. H2 is almost over and we can work out what those prices are now and then it is a simple matter to use these PM prices to work out how much cash FRES will generate in H2. I am telling you that H2, it will generate £200m more and there has only been a small dividend payout of $20m. It was slashed! Therefore, there should be a 50-$70m surplus.

Apologies, the dividend amount should read $20m NOT $120m as per my earlier post. If Silver prices keep climbing, this is going to be a big leveraged play.....

Rastuss, items like depreciation have no impact on cash so don't get these confused. These are profit and loss items, not cash items. It is just accounting treatment. You need to look at the cashflow statement. By my calculation, because of the H2 PM prices, the cash generated will be $500+m, from that you need to pay capex $300m, tax and profit share $140, plus dividend of $120m which will come out of the cash pile. At worst, they will eat $60m into that and with some luck, they will breakeven. What I cannot judge at this stage is how much lower their cost of sales can be. We have been told that it could be lower so we might even have a small positive cashflow. If that is the case, then you and Nickel can stop the bashing.

There has been a lot of play made on the negative of the gold production but that has been expected. If you were to use current PM prices to work out the revenue, they remain stable year on year because silver is increasing. The potential upsides not highlighted are:
1. The ratio of silver to gold price reverting to mean which mathematically always happens.
2. The lowering of cost of sales as ore grades improve and efficiencies are developed.

Then of course, there is the play of the PM prices which obviously have a big impact on FRES. The above 2 are however, very likely to take place with the capex being put into place which means that this will once again be spinning off cash even if PM prices don't go up. We will have to see how these play out in Feb but I am pretty certain that FRES will be cash neutral in H2 because of the big PM price hike from H1. EBIT will be around $500m with $300m to pay on Capex. Leaving $200m to pay for tax and sundries. 2020 will be a lot better, if PM stays the same.

To get ahead of the game in shares, you sometimes have to do some educated guesswork on what is not available from the company reports. FRES has been marked down because there had been extremely well publicised cash worries that keeps being highlighted by select few posters. That however is old news from the half yearly report because the picture changed with higher Gold and silver prices. The big jump in Gold and Silver prices fell squarely into H2. To use matrix such as PE ratio and historic cashburn to rate this company is the wrong way to go about it IMO.

Rastuss, you incorrect there. EBITDA is the best to estimate cash because net profits takes into account Depreciation and amortisation which is quite big for mining operations and have no impact whatsoever on cash.

Juxta is right. As for estimation of cash generated, I looked at the average prices achieved in H1 and compared to PM prices now and it is 20% higher. From a $1b H1 revenue, you will get close to $1.2b in H2 and we have been told there is no significant increase of cost of sales and a slight decrease of capex so you just add $200m to the EBITDA and you get pretty close to cash generated. From that pile of cash, you then pay for CAPEX and taxes. Gold and silver spookily started climbing very quickly and strongly in June/July and we are marching into Dec now so if no big changes to PM prices, then I would say I am pretty much on the money. Like the cliché say, this is a game of two halves. Results will be out in Feb so I suspect 3-4 weeks before, the analysts would have a glimpse and the prices will start climbing strongly.

I wonder why Nickel didn't bother to reply but you did. You are not clever at all because you are trying to mislead the board by saying I was "widely skewed off the mark" but you didn't point out why. I know Ebitda doesn't equate cash flow but the two are very much related. In a business such as FRES where all revenue is pretty much generated in cash, the EBITDA is pretty much the bulk of the cash genenerated. It doesn't take into account Depreciation which you seemed to have implied I did. From the pile of cash generated, you then have to pay for capex which I also factored in and again you implied I didn't. It is either you are not very clever or your are trying to mislead this board.

Only item I have not factored in which has cash implication is taxes. I would invite you to look at what I have put forward in my original post and point out why it is wide of the mark rather that copy and pasted definitions of operating cashflow.