RE: new investor? POG/ PAF...4 May 2016 10:19
Hi Yacht,
I am in both. I have a small amount invested here and plan to hold for the medium / long term. Banksman is more of the expert here. This article from Master Investor is a good read (dated Jan 2016)
http://masterinvestor.co.uk/commodities/yield-and-recovery-prospects-at-pan-african/
I have an even smaller amount invested in POG with the plan to hold short term. The debt is / was the problem there and so is a turn around story. Precious metal guru Amanda Van Dyke rates them though and this is what she recently said.
Petropavlovsk (POG) is up 19% YTD. It is a 500k oz per year producer from Russia. The market cap is ~£250m, the “all in” sustaining costs are ~$800 per oz, and they should have £360m in net debt by the end of 2016 according to Factset.Centamin, its closest peer, also produces ~500k oz per year from Egypt, at an “all in” sustaining cost of ~$900/oz and £283m in net debt. It’s up 62% YTD and has a market cap of £1.2bn. Across the pond B2 Gold a Canadian company, also producing 500k oz has an all in sustaining cost of $900/oz, $672m in net debt, and a C$2,250m market cap or around £1,200m. It is up 74% YTD.
Petropavlovsk has had its problems. Management had to do an emergency fund raise at the depths of the bear market and had to restructure their what used to be horrible debt. Up until recently there was also some uncertainty about whether or not they were going to be on the hook for IRC’s debt obligations based on a dispute with a Chinese bank. They also carry a discount due to all their operations being in Russia. All of these problems however have been mitigated, their debt is under control and well within acceptable limits, the issue with the Chinese has been sorted and while being in Russia is a risk according to the market, the reward is giving them a $100/ounce or extra $50m a year compared to their peers producing at $900/oz compared their $800/oz, largely based on the low ruble. I believe that POG is an undervalued gem that the market will soon recognise. Perhaps the market is waiting for them to re-establish a dividend in order to show that their restructuring has been successful and that POG is in good financial health.
http://www.*************.com/views/20372/my-top-three-gold-shares-to-buy
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