Member Info for Chatmandu

Hi Quiggers,

Yes. You're absolutely correct. The calculated price was higher and I then asked about assigning in country risk and that brought the price down to 140p. It wasn't my intention to misquote you.

This article details the user of PGM metals in the glass industry. They are used to protect components from erosion by molten glass.

https://www.technology.matthey.com/article/54/3/186-191/

Whereas Rhodium is used as a catalyst in car and industrial exhaust systems to prevent NOx emissions.

Rhodium is, therefore, used for two completely separate purposesand the glass industry's movement to a different protective metal isn't relevant to the car industry. That's not to say a better, cheaper, catalyst won't be developed, but it certainly isn't the case that the glass industry's lessons can be transposed onto the car industry.

"The glass industry has already reduced the amount of rhodium it uses and any changes to autocatalyst formulations would require a couple of years for the R&D, testing and certification before being used on vehicles".

The estimated cost of R&D, testing and recertification would also need to be below the cost of continuing with Rhodium for it to make sense. Given all the rules and regulations surrounding car emissions and how slowly government bodies move, I doubt it would be easy, cheap or quick to move to another technology - especially after the VW emissions scandal.

I think that increased car production, post chip shortages, should see a decent spike in PGM prices.

I'm nicely in profit and am willing to wait another six months to see what happens.

I will continue to hold and will probably top-up if the price descends below 100p.

@toptiger

I presume the sales adjustment is based upon the change in price between the initial sale and the sale actually being completed. Q3 results suggest that the price received upon completion was higher than when submitted. The Q4 results suggest that the completion price was almost exactly the same as the initial sale price.

So, for example (numbers plucked out of thin air), going into Q3 the sales price was ~$20k and SLP actually received an extra $15 million when the sales completed due to the rising price ($27,400 by March).

Going into Q4, the sales price would have been adjusted upwards (e.g. now at $25k), but the price was falling and everything evened itself out ($28,700 falling to $21,700), which resulted in barely any adjustment being required.

At a guess, I would expect the initial sales price to be the average over the trailing x months.
-- If it is the previous six months, then the initial sales price in July would be $24,500 (based upon your numbers).
-- If the price is averaged over the previous 3 months, then the initial sales price would be $25,800

If the spot price is now under the initial sales price, then we may see the completion price adjusted downwards during the next quarter - i.e. the cash adjustment may go negative, with SLP having to 'pay back' money to the buyer. There may, however, be a safety buffer built into the initial sales price to avoid that situation - e.g. average of the previous six months minus 15%.

I expect the actual figures are considered to be commercially sensitive, so I doubt we'll ever know exactly how it works. Do you have any PGM data that can be used to correlate with the previous sales adjustments?

If you're using filters, why do you care what other people post? Stop posting drivel like this.

I think you may have twisted Quiggers' argument there. Would you be happy to sell him your shares for 1p, which is the implication of a 1p share price.

I was surprised by the drop in profits and I think it is fair to say they were unexpected. The consensus on this board was that Q4 was going to return record results and the vast majority of posts were of that nature. Somebody the other day posted something like this (I can't remember the exact quote):

'It is always tempting to worry that somebody else knows something you don't about a share, but with SLP they simply don't.'

I think that has, perhaps, been shown to be untrue.

I originally bought the share based upon ST's 'strong buy' recommendation. The pricing seemed to be an anomaly and, even now, I am safely within profit.

I think it is still going to be a great year, but they appear to have failed to capitalise on what, we thought at least, were Rhodium prices to dream of. Costs have increased as their basket price has fallen - perhaps, as somebody else suggested, this is because they're processing more to get less. I'm not from a mining background, so I don't know enough about the business model to offer any insights.

Chin up, best foot forward and all that, but I think it is fair to say that these weren't the results we were expecting / hoping for.

They opened the share at 110p vs yesterday's close of 116p.

Please do try to keep up.

The thing was, his speech made perfect sense ;-)

"i do love the viagra that is ST"

I guess it puts the market makers in a bit of a quandary. They normally mark up the prices of any shares that he tips, but they're currently trying to short this one. The bid/offer spread is currently 3p, so perhaps they're still trying to play both sides to some extent.

@toptiger

I was referring to my calculation being 'obviously very rough'. The two data points I was referring to were the net profit in Q3 and Q4.

USD Profit Q3 41,316 > USD Profit Q4 14,739 > USD Loss Q1 -11,838

41,316 - 14,739 = 26,577
14,739 - 26,577 = -11,838

It wasn't supposed to be an entirely serious comment to be taken at face value - more of an indication of a trend that, if continued, could have serious implications. Anybody with any level of statistical knowledge would know that projecting from two data points is essentially meaningless and I assumed that my 'projection' would be received on that basis, but the underlying point understood.

Sorry for any confusion. I'll try to be more specific in future.

It's obviously a very rough calculation, based upon only two data points, so I'm not suggesting it is an accurate forecast - but a 67% reduction in profit is pretty dramatic given the current PGM prices. It doesn't look as though the company has much wriggle room to deal with external shocks.

I'm looking at the Q4 results and they are a bit of a bloodbath.

There is an item that I don't understand:

-98% Sales adjustments.
What does that mean? -98% of anything seems bad.

It looks as though costs have shot up at the same time that total production and the basket price have reduced. This has resulted in a 64% USD profit reduction.

If those trends continue, how long until we're into loss making territory?

USD Profit Q3 41,316 > USD Profit Q4 14,739 > USD Loss Q1 -11,838 ?

Given the recent share price weakness, it does make me wonder if 'the market' knew something we didn't.

Well, I'm certainly glad I didn't sell my FTSE trackers to increase my SLP position last week!

I've not had a chance to read the results yet, but I'm currently holding with the intention of buying more.

@artrader

I did question that last week, when the share prices as under 100p. Debt free companies are vulnerable to leveraged buy outs, with the incurred debt transferred to the company. If I knew the right people, I'd be attempting to raise financing myself!

Thanks for the link. It is an interesting read and seems to be a very sensible way to run the business and manage money - e.g. a reserve to cover six months operating expenses.

Do you have a link? I looked on their website and download a couple of pdfs, but neither were 'glossies'.

Thanks for taking the time to reply.

It seems fairly flat with reasonable volumes (200k shares traded as of now). I'll keep an eye on the situation with the intention of buying.

Stoodio - I think he's referring to comments on the ADVFN board.

Phew, the total ***** has finally gone.