Member Info for Daisan

Visitor, The ability to offset VAT against corporation tax was mentioned in the call. It is clear that they would rather have the cash though! The biggest irritation about this is that development of Singida adj other exploration has been halted whilst the situation clarifies.

Mystique, I agree with Visitor on this. There is no independent evidence to suggest the misreporting of exports and the level claimed against Acacia is frankly ludicrous. Deliberately so I believe so that a message was sent to them that they meant business. The one area where Acacia were at fault was the nature of their agreement. It was too one sided. I have no problem with equitable deals and would be keen to see Africa developed as a result of enlightened use of revenue generated from resources. Unfortunately in many cases the revenue is not used efficiently or effectively.

Dibs61, I certainly don't expect them to backtrack on their tax plans but this is not necessary to create a more benign share price environment. What is required is certainty. Currently there isn't any so I would suggest an investment currently is more a punt. Nothing wrong with that as long as people are fully aware of the situation. Whilst I find it difficult to believe that the Tanzanian government will put at risk investment, it wouldn't be the first time and the shortsightedness of governments should not be underestimated, whether they be African or anywhere else in the world. What would really stabilise the situation is repayment of the VAT. However, the briefing this morning did not shed any more light on that than we already know.

Visitor, Although true, it is going to be difficult to make much headway from a share price perspective until the Tanzanian situation is clarified. I don't expect the legislation to be back where it was but stability should let investors focus on the company rather than the geopolitical risk. Given that they are now incurring 3% more costs (based on $100m revenue this is an additional $3m) this inevitably affects the potential market cap. but if that is it then the market can adapt and move on. In the context of generating $13m cash per quarter, $3m per annum should not make a huge difference but the risk has knocked 40% off the capitalisation. An overreaction for sure and the valuation is now way under where it should be but the market hates uncertainty and in this case you can certainly understand that reaction. I was on the call this morning and they are clearly bullish about the operation but frustrated by the legislation,etc. So, the company is doing everything right but this is being undermined by the Tanzanian government's actions.

Stunning results. Way better than I would have expected (which was between 12 and 14k oz) and this was supposed to be the weakest quarter. Unfortunately, it is all overshadowed by the Tanzanian government's actions. The main figure that I tend to follow is cash generation as this is 'clean' (i.e. not subject to the vagaries of profit, etc.). $13m cash generated in the quarter despite moving underground. That rate would yield more cash per year than the current market capitalisation which is, quite frankly, ridiculous. However, until the uncertainty in Tanzania is clarified, this is not likely to alter that much.

Well, I don't know about not making money - they generated shed loads of cash last year. Unfortunately, they were spending even more on capital expenditure exploring and going underground. I am pretty sure they weren't expecting to not get their $12m VAT repayment back. They should have enough to go cash flow generative with the last raise (which was pretty easy) but none of this makes much difference if the country is going to behave in a manner that is not conducive to conducting business. In defence of Tanzania, their main grievance has been with the rather one-sided deal with ACA and it looks like that may have a path to resolution so fingers crossed that it might turn out OK in the end but at the moment it would be difficult to recommend investment. Azerbaijan is a different beast but dubious for different reasons. However, they certainly could not complain that the deal here is one-sided. In fact, I would say it was pretty equitable if not generous towards the country. The connections for the company are excellent so if they do have problems you suspect it would impact pretty much all investment in Azerbaijan.

Good information. They are certainly putting in decent financial performance given the poor production and you have got to hand it to them. If they can get the production onto a different level then they should be very well positioned. Given the fact that my favourite goldie is now suffering badly from geopolitical risk, AAZ is looking comparatively more attractive!

Looking at this update is a bit like a 'push me, pull you' if anyone can remember that. On the one hand the production numbers are poor and if they carry on at Q2's rate they will not make even the lower end of the annual target. All hopes of making this appear to lie with Ugur - a deposit that hasn't even properly been explored yet. On the other hand they have managed to cut net debt once again, a feat that must be applauded considering the production numbers and I confess that I am confused as to how such an underperforming operation manages to do this. Interesting.

Well, on the face of it that looks like one of the more stupid raises I have seen. Once again it is to the worst bucket shop broker so these are coming straight back on the market. Going to have to pull something stupendous out of the hat to justify this.

It's AIM. This is rather mild compared with the usual abuse. Feeling rather prescient today given my post yesterday. Disappointed but prescient.

Dekel's position is certainly a demotion. Company Secretary is hardly that prestigious and on its own is not a board position. It's an administration role but it is often the case that the FD is also the company secretary. I agree that an extension would be taking the mick but they are in a position to do so. It would seem that the usual AIM boredom has hit CGH recently and the price has drifted. Added to this is the fact that people are gradually moving away from the bid point of view towards the position of the asset being taken to production. I know I am. I thought a bid was a near certainty but now would appear less likely. This shifts potential gains from the sort to the long term.

Indeed. Not much doubt about who is pulling the strings here. Extension in the offing?

PJ is a PJ man. He does not consider anything else.

The alternative option is just to avoid the company completely. You can't help but feel that there are an awful lot of shares that are going to hit the market whichever way this goes, particularly if the incumbents survive.

Gosh. It actually appears to be happening! 12 rigs on site and some decent mine development people showing that these thing can progress. Let's hope it continues.

Sentimentalist, Perhaps 'unlucky' is the wrong word. 'Unfortunate'? 'Geographically challenged'? Whatever the nomenclature, I think that the situation is clear - things have turned pretty challenging in Tanzania pretty quickly. And surprisingly, at least for me. Whilst it has the usual issues associated with corruption, the current leadership has seemed to hold out some hope that this would be addressed to some extent. At the same time the environment has been relatively benign. It does appear that a lot of the challenges currently appear to be ACA related and a resolution of that situation may well ease the issues for other companies as well. At that point the risks associated with investment here will decrease significantly. Unfortunately, I cannot honestly say that this is a firm buy until the political situation clarifies. If, however, you subscribe to the view that 'when the bullets start flying, I start buying' then there is certainly significant value here at this level.

I don't think those are sales. Looks like a rollover to me.

Sadly Shanta is looking like an unlucky company, at least in the short term, and Tanzania is looking like a less favourable place to invest. That said, it should be remembered that they managed to raise $14m in a very short time frame so clearly there is support from the institutions. I was going to say 'who were fortunate enough to be invited to invest' but this is looking like misfortune currently.

Hi Nickel_Investor, Yes, I am aware of Serica, I think that it is an excellent company in its sector and I know an investor that I have some respect for is a big fan on Twitter. However, there are a couple of things I am cautious about. Firstly, a technical issue. The cash generation is well known by the market and the price has risen strongly as a result. If cash generation doesn't continue to increase then the likelihood is that this will just drift, albeit probably upwards as the cash builds. Any hit to the cash generation is likely to halt or reverse the rise. The strong rise is likely to be a drag until we get new news and this is playing out in terms of resistance to moving higher. Secondly, and more significantly, I am a short term and long term bear of oil. Apart from the fact that the shale oil companies in the US turn on production once oil goes above $40, thus significantly increasing supply and limiting price increases, I genuinely feel that renewables are reaching critical mass and are likely to eat into demand for oil over the next few years/decades. I also believe that this is going to happen more quickly than people think. It only takes a few percentage points cut off demand to impact significantly on price. As such, for me the sector is not very inviting, although I can see in the medium term, say 2-3 years, that there may be opportunities.

SLP is a slightly different beast but a consistent cash generator. Good company that deserves to be supported. I like HUM as well although they are at the riskiest stage for investing. It is as a company moves towards the last stages of production that I find the share price can get a knock. I believe that this is due to the fact that the exploration 'dreamers' have bowed out with their profits so the focus is purely on achieving production rather than future cash flows. This means any delay (and this is a very common occurrence) can hit the share price disproportionately. In the long run, however, provided the number of shares in issue remain constant, this should prove to be a good investment particularly as it has the additional Liberian asset which should attract takeover interest at some point. Comparing HUM with SHG is somewhat difficult. I think Shanta has the better short to medium term potential for improving production beyond the stated annual targets with the pilot in Singida and the additional potential around New Luika but HUM has the greater upside production potential currently with the two sites. From my perspective there is little to choose between New Luika and Yanfolila but Dugbe has more significant potential than Singida. Also when comparing the two, bear in mind that Enterprise Value is the best way of doing so (so include debt). But in terms of share price potential, a significant amount of (supportable) debt can actually be a good thing in a time of rising gold prices. A bit long winded I am afraid but in conclusion, I like all three companies - SHG (medium term appreciation), SLP (relatively low risk, stability) and HUM (long term appreciation).