Member Info for Daisan

Silverfox333, As a statement of principle, never invest on a spike. If a share is up massively on the day/last few days let it cool off before investing. Remember that there are always other opportunities.

Banksman, They have indicated that, at year end, there were stockpiles of 90k tonnes with a grade of 4.6g/t for contained gold of about 13.3k oz.That grade would give 80k oz per year production at full mill capacity and 90% recovery which confirms that it is decent ore. If we work on 12k oz recovered gold from this that is probably about right. The stockpile amounts to about 30% of the mill capacity over the course of the first 6 months of the year so the key point is what is the input grade of the surface mining and development ore that is being recovered during movement to underground mining and how much high grade underground ore will be recovered in Q2 (it has been indicated that this is when ore will be delivered in this time scale)? As is always the case, devil is in the detail and 'Q2' is quite broad when you are trying to work out quarterly production figures in H1. April vs June would create an entirely different story for Q2 production. If we spread the processing of the stockpiled ore evenly across the months of H1 then this contributes 6k oz production to Q1 and Q2. Leaving 105k tonnes per quarter to be processed. To deliver 16k oz production on average across both quarters would require a grade of about 3.3g/t with 90% recovery. That seems a little high so you may be right Banksman that we could produce somewhat less than 16k oz, at least in Q1. Looking at the mine plan the grade for the mined ore may be more like 2.4g/t. At that rate we would produce closer to 13k oz in Q1 which I suspect would cause a drop in the share price. If it does then I will be looking to add here as the impact is likely to be short term.

Visitor, Thanks for taking the time and effort to do this. It is good to confirm how cash generative Shanta will be once underground development is complete but I also agree that the net debt position will increase (in the form of falling cash position). I concur that Shanta will relatively quickly become a 100k oz per annum operation. I believe that gold has the potential to go MUCH higher than current prices over the next few years and this will lift all gold miners and explorers greatly. Add this to Shanta's development at Singida (which will incur more capital expenditure) to lift them to 150-200k oz production and they become a takeover target. This is my ultimate view here and the reason why I would like Shanta to invest heavily over the next 2-3 years developing Singida and significantly increasing resources. I have a target of at least 4-5m oz across New Luika and Singida. At that level of resources and production they will attract the attentions of more mature mid-tier producers or even majors and a buy out price could be ten times plus the current market cap. I know that sounds ambitious but a little research into gold bull markets will confirm how possible this is. When we had our exchange about AISC, I thought some more about whether this should be considered as part of sustaining costs and my conclusion is that it should not. My reasoning is that underground mining was envisaged from day one so the development of the mine at the time was a total capex of £x being composed of £y for open pit development and £z for underground development. Now, if these costs were incurred at the beginning of mining there would be no argument. It is just that they have been phased as open pit mines are exhausted that the debate occurs. Looking around other miners that have done similar (it is not that uncommon to open pit and then underground), I believe that typically these costs are non-sustaining. (N.B. I have used 'x, y and z' as it isn't material what the actual costs are - I haven't just forgotten to substitute the real numbers!)

Whilst we are on moving underground, I thought that it was worthwhile just making it obvious about the production profile for 2017 so that quarterly production figures don't come as a surprise to anyone on these boards. The BoDs has clearly stated that the production profile for this year will be weighted towards the second half, despite the fact that ore has been stockpiled. On that basis we should assume the worst case scenario that conforms to plan. So, taking 80k oz as the total production, it would not seem unreasonable to suggest that there could be as much as a 40:60 H1:H2 split. This would mean that Q1 and Q2 could average out at 16k oz per quarter. I would not be surprised at such a result and the reduced amount of hedging is indicative of a reduction in the production profile. I believe that there is some reason for optimism. They recently reduced their cash position to retire some debt. Whilst more debt is still available, it is a sign of confidence for them to do this and they appear to be saying that the cash position is sufficient to see them through to cash generation in Q3. Of course, things can go off plan but Shanta have shown themselves to be reasonably cautious over the last couple of years (for example, they have tended to beat production targets; they have maintained a strong cash position even to the extent of raising as a precaution) so I would be surprised if their current position was not also cautious. To conclude, whilst H1 production is likely to be weak as they move underground, I expect Shanta to navigate this period in reasonable financial health before moving back to cash flow positive in H2. If there are choppy waters, they have access to debt facilities to ensure that there is a safety net. Let's hope they don't have to utilise them.

Shanta is not the only gold miner that hasn't responded to gold's increase. It seems to be relatively common. If you look at the GDX, the reaction has been muted and we are far from the exuberance of last year. Whilst Shanta look like they are doing well in their underground development efforts, anyone who follows miners will know that moving underground is a risky process so I think​ caution is a reasonable response. That said, if gold started going mental then I would expect goldies to respond. Equally, if Q3 this year sees a significant uplift from Q2 as underground ore starts to be delivered consistently, then this should respond as the execution risk decreases.

MARL owns part of a fantastic asset - probably one of the best in the world. But it is quite fully valued at this stage so news such as drilling is unlikely to cause much of a stir and the subsequent disappointment that it hasn't brings out the impatient. I confess to selling MARL when the gold price weakened recently (and was abused for doing so despite the fact that I was up 4-500%!). There needs to be visibility of advancing the project for it to move up I believe (or gold move strongly up although MARL benefits least from that as it is one of the lowest cost deposits). VAST is decent but GWMO is the odd man out. A bit like betting on the 3:15 at Newmarket. Possibly worth a scatter gun punt but not with a large stake!

It's been another bizarre story on AIM. I actually think most AIM investors are allergic to making money. They just seem to flit from one fax to another, constantly buying at or near the top with the result that they get to keep a poor asset or sell at a punitive loss. Meanwhile a bunch of unscrupulous players (we all know the ones - they constantly ramp lies or half truths, all the while selling in the background) run off with their money. It has been blindingly obvious here for months that there is a serious buyer but instead of buying into this and forcing the price higher, people have been only too willing to give them their shares cheaply. Oh, well. We are coming to the end game now but you do get the sense that if nothing happens on the first trading day of April, people will start selling.

Some significant sells today. I confess I find this somewhat perplexing. I was listening to the conference call and I honestly can't see what the problem is here. Pretty much everything is in favour of the company going forwards with one caveat - execution risk. Moving from open pit to underground obviously has risks but it is not as if this hasn't been in the public domain for a very long time!

Visitor, AISC is a bit of a minefield and the interpretation varies from company to company. In this case I am pretty sure that the underground development is NOT included in the AISC. Whilst I am sure that this can be argued as simply maintaining production levels (i.e. they would drop to nothing if the u/g development didn't take place) I think actually that it is reasonable to argue as it is certainly a major development. This is actually reflected in the quarterly reports and you will notice its impact in the discrepancy between the cash position and gold sales*gold price - gold production* AISC. For example, in Q3 last year the calculation suggested that cash generation should be $17m before a pre-payment of $6m i.e. $11m (which is stated in the report) but the cash position fell which presumably was a direct result of the capital expenditure. This was always going to be a capital intensive period of time. As I said, I believe this to be understandable and you should see the cash position improve as a result of the capex reducing. You will note in the capital expenditure table that there is a line "Stay in business/Other" which I suspect is the capex line included in the AISC.

It would appear that the good news this morning and subsequent brief increase was met with a wave of selling. Given the current assets of the company, the extension of mine life to industry expected standards, the relatively strong gold price, the upside of Singida and the recent very strong exploration results within the New Luika sphere of operations this seems counter intuitive. Today's news has not only increased the predictability of the business and decreased the risk associated but has also pointed to the significant potential upside when you consider the resources outside of the mine plan. I rate Shanta Gold as currently one of the highest potential gold miners on the UK stock market. One of my other favourites (AAZ) is currently going through production issues so I would see this as the more attractive option currently.

It was promised by the end of Q1 and now we have it - confirmation of a 7 year mine life with, significantly, an increase in the annual production in the early part of that period which will contribute it's further to derisking the desired goal of 100k is per year production as Singida begins to contribute. Great to see the processing plant fully utilised but even better that they are in a position to control the mix thus ensuring that the production profile is even more predictable. The most significant thing is what is NOT included in this. Naturally this mine plan is for New Luika so does not include any developments at Singida which will be contributing significantly to this production during the period (rather than replacing), thus moving closer towards establishing a mid-tier producer. But look at what is NOT included in resource terms around New Luika - an already defined 683k oz and this doesn't include any recent exploration work such as Nkuluwisi which is due to have a resource announcement in Q2 this year. To add to the derisking here they rightly point out that the move to underground mining at New Luika has largely been paid for. Execution risk still exists of course but the company has been doing all the right things and I would expect the market to gradually reward this as the move to underground is completed. Further adding to the mix is the recent strength in the gold price. This hasn't yet translated into strength for gold miners but if it continues or further strengthens you can bet your life that it will. In those circumstances there would be multiple factors driving the price here. Until that time, it remains considerably undervalued and I would think that the price should close to the stated NPV in this RNS (which, to be honest, was a little underwhelming!).

Well, it's a bit more complex than just 1.9p. That is essentially for the royalty. The rest of the assets are being cleared out and a bunch of shares in Dalradian passed to the alternate vehicle which is looking to have a quote in Canada. So MIO shareholders would get Dalradian shares amounting to 1.9p per MIO share and a stake in the new demerged company. That company would have the rest of the company assets plus liquid assets (Dalradian shares) amounting to approximately C$5m. I haven't worked out what that is worth (depends on the value placed on the rest of the assets) but it is more than 1.9p per share.

No thanks required Moljen. These boards are for sharing and I certainly get as good as I receive if not more. I would keep an eye on both gold and AAZ. Positive news from either will start putting upwards pressure on the share price, from both and it will soar. Equally, if neither is supportive then it stands to correct further. The Q1 report is going to be disappointing but informative. If grade and production recovers in March with a good story to support it then I will consider investing again but I suspect that Q2 will likely be the earliest time frame even if I potentially miss some of the upside.

When I looked at your posting history zanthrus I wondered whether you meant CHA (which appears to be valued at a huge premium to net assets given the lowered valuation for VE) or PROX (which as I recall had done a deal with the dev.... errm Darwin). I presume it is the latter. Have Darwin gone as I wouldn't touch a company with a barge pole if they were still involved with Darwin.

Hat safe.

Very optimistic of you Visitor but I feel you have to put it into context of the falling production profile of the last year and the lower grade achieved. Given your information (I hadn't known that winter conditions were particularly harsh this year compared with last) perhaps some allowance can be given for the conditions. I find it hard to believe that it was responsible for a 42% drop in February.

adamsmithfreethi, These are Troy ounces rather than ounces. You are right that this is 2684 ozs but it comes out as 2447 troy oz which is what gold is traditionally measured in and in which AAZ report their figures. Apologies if I have caused any confusion with my abbreviation. I would stress that this is not an official release by AAZ but rather a back door method of finding out using Government monthly releases owing to the fact that they are the only producers in Azerbaijan currently. Hence, my comment about this access to information becoming unclear owing to Chovdar, as this is due to produce gold in 2017 according to reports.

It looks like they are in: http://interfax.az/view/698506 I believe that I am reading this correctly when I say that they produced 76.1kg gold. This amounts to 2447 oz during February, making a total of 5826 oz total this quarter so far. This is a massive 32% down on the same period (Jan/Feb) of last year so we can't blame the winter. To put it into further context, they produced 131.4kg last February, so February's figure is down 42% yoy. At this rate they are going to struggle to make 10k oz for the quarter although it has to be said that March is by far the strongest production month for the first quarter. If it drops 30% on last year they will produce almost exactly 10k oz. We need to understand what is causing such a severe drop (beyond just the weather)?

I tend to find with gold miners that falling short on grade is somewhat concerning but let's hope that it is quickly corrected. This is a link for news items tagged 'gold' which has shown up previous monthly production numbers. However, developments at Chovdar may make things a little more difficult to untangle going forwards. http://interfax.az/tag/ЗОЛОТО

Should be tomorrow I believe if it is consistent. I am not expecting a significant uplift as it is for February and the winter months tend to hit production numbers anyway. Still, if the figures come in as poor as January then the quarterlies will make for difficult reading. I would like to see an update as to the reason for the lower output (grade numbers were low but insufficient information as to why) and what moves are being made to correct it.