Member Info for Daisan

Wasn't there a similar pattern mid-March? I am slightly surprised that there has been buying just ahead of the quarterlies. I suspect that these are going to be the most challenging this year and the headline figures are not going to be as high as recently. Despite the fact that this has been flagged on multiple occasions, the reality usually causes a bit of a jolt. That said, AAZ reported poor figures today but the market seems to have reacted quite benignly.

Korg, I sold out a few weeks ago and gave the reasons why on this board. I like the company but the grade issues were too much of a concern and this has been confirmed today. Once the company stabilises production at a reasonable level I would look to buy in but currently this is too unpredictable to buy from my perspective. Of particular interest and import now is Ugur. When a resource/reserve is defined we should have a better understanding as to where the production profile is going.

Korg, A couple of things. A move to $1400 would be good for revenue but it won't more than compensate for the production shortfall. I also suspect that the management do not know that the gold price will go to $1400 as nobody does. In the longer term I expect gold to head a lot higher but short to medium term I would not be surprised if it dropped back as $1300 is a pivotal point, especially with gold looking a bit overbought technically at this point. I confess that I read this RNS somewhat differently. Whereas you seem to believe that they have been proactive, it looks to me like they are reacting to the falling grade. Several aspects of the RNS point to this and they would appear to be behind the curve currently. That said, there is one piece of evidence that suggests an alternative explanation, namely the stockpiles. I find it difficult to reconcile reactivity with such a large stockpile! Either way, the next few quarters are going to rely on the gold price for progress rather than production, the latter of which will be heavily weighted to the fourth quarter when the new pit is supposed to start contributing. In the meantime it is unlikely that production will surprise on the upside.

Korg, Whilst in principle there is reason to believe that production may increase as a result of having two operating pits next year (the main one is not due to start mining again until Q1 2018), we have no knowledge currently of the ore reserve at Ugur so can make no real assessment as to how much of a contribution his is going to make. I note that they include 8-10k oz from Ugur this year (indicating an annualised run rate of at least 32k oz) when it is only due to produce from Q4 and despite having no defined reserve. This production has to be risk factored currently. Even a short delay will remove this production in its entirety. The company has done well to reduce debt over the last 12 months and debt is no longer the factor that it was. But this was during a period of supportive gold prices and full production. However, given the level of exploration and development they will have to do this year combined with a reduced production level, any environment where gold is less supportive will impact significantly. I would be surprised if debt was lower than current at the end of the year. In fact, if they manage that the management team should really be applauded One more thing, I note that Gadir stopped production in February. Did this not merit a RNS as it was material to production levels?

Ok. I can see that my stupid tablet has replaced 'Ugur' with 'Night' so please substitute!

Ok. I have had a look at the RNS and have the following observations: 1. Clearly they have acknowledged the grade issue. Unfortunately they do not have a clear understanding of the ore body geometry, hence the ceasing of mining and the drilling campaign 2. I had not realised the size of the stockpiles which are huge in comparison to processing facilities and should ensure that they at least produce whilst mining at the main pit stops. Clearly this is lower grade ore, hence the forecast drop 3. An extensive drilling campaign seems appropriate considering the situation 4. The pit at Night, whilst not completely an unknown, is a bit of a punt as there is no current resource let alone a reserve at the deposit. As far as I can see they have drilled less than 2000m for the whole deposit. Their knowledge of the geography will clearly help them in understanding this but it is currently impossible to assess economic viability of this body without a reserve. I assume that they are working hard on this currently 5. The stated target for the year in gold equivalent looks wrong to me based on their own assumptions. I believe that they are at least a couple of thousand ounces too high. 6. I haven't even mentioned the 11k oz for the quarter which was the lowest since 2013 7. They have clearly stopped an awful lot of costs this quarter for them to reduce net debt. Not sure how they managed it to be honest but I suspect that it is not sustainable. In facts it can't be if they are carrying out extensive drilling and development for the year unless the price of gold assists the process. All in all, the Q1 production is terrible, as expected, but they have moved it off the main topic for discussion by introducing the strategic review which was clearly necessary. The risk profile has both risen long term and reduced short term. Long term because they are constructing a new pit which is always a risky process. But short term they are using stockpiles which have already been mined. A watching brief for me at this point as the production profile is too unpredictable. Whilst the company is comparatively cheap when given known resources and potential production in a benign gold price environment, any weakness in the gold price could result in some very poor financials for the year.

That is a very rose tinted view of the RNS! For a start, they produced 1947 tonnes in 2016 so the projected copper production for this year is not much higher and the projected production for the year is lower than last year (and the only reason it does not appear worse is that the copper price has risen). I need to look in more detail at the RNS but at the moment there are some question marks here.

Well at least there wasn't a report after hours just before a long weekend! So hopefully there will be something more positive for them to say next week.

A typical Beaufort bucket shop operation then.

I think drilling results are of secondary importance to resolving the production (grade) issue they are experiencing so positive news on this will be welcomed by the market. I am disappointed that we haven't seen the Q1 report today. Looking at previous reports, they have always been published at 7am and the latest date for Q1 was 17th April. As the market is closed for the next couple of work days, this will now be published on the 18th. I am assuming here that they would not put it out after hours tonight. If they do then it won't be happy reading.

Strange isn't it? Positive news and a concert party consistently buying seems to be a signal for some to sell. Not the conclusion I would come to but there you go. The whole gold miners sector is behaving rather strangely with pressure on a number I follow despite a supportive gold price.

Summerdays1, Do you really think so? I think he is hopeless. Zak 'prices only go up' Mir.

It should also be noted that gold shares are a bit all over the place at the moment. CEY looks like the rare exception in terms of share price.

I would be amazed if they produced less than 10k oz in Q1. I believe that the stockpiles ​alone should give at least 6k oz. And if they were expecting less than 10k then you are right, they would be mad to turn down the debt available. On the basis of what we know (i.e. via RNS and presentations), production should be sufficient to enable them to get through to full production without the need to increase facilities. I suspect that the share price is really related to people getting nervous about the numbers now that we are coming up to the quarterly report rather than the fact that they know something. This morning there was clearly a large sell which dampened the price. One other factor is that, whilst gold has been strong lately, there is a lot of talk amongst analysts that it is likely to sell off as it approaches $1300/oz so that also may attract some selling. You can only go by what you know and currently what we know is that, as of 23rd March, production was as expected and this expectation meant that they were comfortable with financing the power facilities out of cash and terminate the credit line arranged. If this proves not to be the case then there is something distinctly wrong with the actions taken.

The grades are fine. It is open pit. The location and finances though are less fine!

The guidance for 2017 was 80-85k oz and it was indicated that this would be weighted towards H2. This is a bit too granular to determine with any accuracy the quarterly numbers but I think that it would be reasonable to expect a rising profile during the year to reach a plateau in Q4. Unfortunately the mine plan is even less granular if not somewhat obfuscated to some extent due to the differences between mined ore and production (there is inevitably a difference owing to the lag between mining and production as well as the need to mix the relative grades mined). I was going to suggest a profile of 14, 18, 23 and 25k oz for each quarter but I am not sure the H1/H2 difference (40:60) is going to be quite so dramatic. Certainly a Q1 production > 16k oz would make me reassess. The big unknowns here are: - the H1 numbers and the relative levels for Q1/Q2 (the Q1 report should give us a lot of guidance on this and the last release on 23rd March said that production was in line with expectations whatever those were!) - pilot production from Singida (due to commence in Q2 which would suggest a contribution of 4.5k oz or so in the current year) - it is unclear whether this is included in the guidance as the presentation associated with the mine plan suggests production from NL at 80k oz. I suspect that this is a 'get out of jail card' should production from NL hit any issues in moving underground. One thing I would say is that Shanta have a recent history of overachieving against target which suggests that the guidance is conservative. However, moving underground has obvious risks and nothing is certain.

$1300 will be very strong resistance though. Round numbers always are. But the commodity price being so strong shows how strange the share price reaction is here.

loskins, I didn't see this post before I posted mine. There is always the possibility of a capital raising when there is short term uncertainty about the production. However, I would be disappointed if this were the case as it would suggest that the confidence expressed in the last quarters financial arrangements was misplaced and you would have to questions the actions. My best guess currently is that the market is just anticipating lower production numbers for Q1. As it is uncertain what they will be (no guidance was given other than to say production for the year would be skewed to H2), the market has got nervous. We shall know soon enough as Q1 report is due next week (Wednesday?).

Presumably this is weakness in the run up to expected lower production for Q1, as flagged by the management. Well, it is difficult to argue that this is not going to be the case as the company has stated it but this ignores the picture for the rest of the year as underground mining increasingly delivers. Given the price of gold, this could create a very good buying opportunity. For balance, the next couple of quarters will not be cash generative. Severe cash drain would result in a need to seek additional sources of funding. It may be speculated that this could be in the form of equity. Should this be the case, you would have to question their financial manoeuvrings in the last quarter. I think the latter is unlikely given the fact that they retired $9m of credit line in the last quarter, a sign of confidence in their cash position. They had $15m cash at the end of that quarter and a reasonable amount of stockpiled ore - enough to keep the mill occupied in conjunction with the development material from going underground (the latter will obviously be lower grade, hence the production shortfall).

Shanta is a gold miner. It produces gold. Gold is quite strong at the moment.