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Looks like some seriously large director buying. Over £1m ?!
https://www.investegate.co.uk/bank-of-georgia-grp--bgeo-/rns/director-pdmr-shareholding/202209021656211703Y/
Last year they borrowed 3m and, despite effectively having 2 high seasons in the one calendar year, ended the year with 1.5m cash. A lot was spend on the cashew project. This year they have borrowed no more and had no placings. We won't know the current cash outflow on the cashew project until we see the H1 numbers but I suspect conserving cash is why they strongly prefer to issue the shares.
The June figure was 1200 rugs? I haven't worked it out myself but the average June for the last 3 years was 2691 so its not great.
The RNS was light on Cashew project detail. Thank goodness for the high CPO prices, that has really bailed out the Cashew delays and saved DKL raising more cash. Why has it been so bad given that the CPO plant was installed on time and to budget on a green field site, and they apparently used the same team to install the Cashew plant? Cashew production looks a lot more complicated than extracting palm oil. Oltremare have clearly not performed but DKL have been guilty of bad project management. Communication to the market has been poor, they have used optimistic language with a lot of wriggle room like 'imminent', 'final calibration' - more Gok Wan! So I wonder now what defines shipped? Hopefully it means the shelling machines are on the boat, probably ex China. Actually I really liked it when Lincoln told us it was likely to be a bad High Season, appreciated the open communication. But communication on the Cashews has been bad.
Well we are where we are, and if they do finally get the Cashew going into production and all goes well then the current share price will look cheap, and us long suffering shareholders should finally get a return on our money. Of course 'if' is doing a bit of work there!
Keith, thanks very helpful on the geology. Re 'soft rock' and 'hard rock' guys and gals I read this in a geology article:
I once met a retired sedimentary geologist who argued that “soft rock men” are always the more thoughtful. It came, he mused, from thinking about the formation of sedimentary rocks. One rock unit formed from the quiet accretion of layers of sediment over many millions of years. The slow, slow formation of worlds. And what about hard rock geologists? I asked him. “Hard rock men are all bastards,” he said.
Interesting article on the strategic position miners and producers are in.
https://www.theguardian.com/environment/2021/apr/17/the-race-for-rare-earth-minerals-can-australia-fuel-the-electric-vehicle-revolution
The fall in the market this morning on the Burundi news alone seems about right. This is AIM and confidence is a big part of the pricing and this has shown some RBW vulnerability and so dented confidence somewhat. However the real game changer for RBW is Phalaborwa. All efforts should be on getting this immensely profitable project into production as early as possible. The potential gains dwarf the current market cap and hence the share price. George inherited the Burundi pilot project and paradoxically this news may have done him a big favour. Burundi needs expenditure on exploration and big capital investment to ramp up. By putting Burundi on the back burner all management focus and capital allocation can be on Phalaborwa. If they were starting from scratch which project would get the attention?
Totally agree Falling, the government as I recall influenced cocoa prices just before the election. The producers may like to keep the CPO price at 800 euros, and the farmers keep the high price too, but if world prices fell below 800 it would be hard. That said, I'm OK with them pegging the price now at 800, its important the local population is protected and it is still a very good price. As you say RSPO will give us premium prices for exports. The big thing is the volume increases which have continued from last year, hopefully a sign that they are at last cracking the glass ceiling on volumes and all the maturing planting from the last few years, together with more recent fertilising, is coming good.
Sorry rugs, there's always one! I think the market is very heavily discounting the cashew start-up, whether this goes well and they can make a success of this new business. All the recent RNSs re-iterate the Q2 timing so this is still the case, if it had changed subsequently they would have had to tell us. At kick off of production the big discount should start to unwind and the brakes come off the price. Until then it is the Alex Ferguson squeaky time. Come on guys, Avanti, sbrigati!
Unfortunately fk1 I think that was a late reported trade from the 8th when the spread was 5.10/5.20. The trade was at 4.95 so it must have been a sale. Would explain the recent weakness but still, as long as the cashews start up on time and the cash keeps rolling in from the CPO then the fundamentals will re-assert themselves on the price.
Haha yes that dog must be getting desperate! They say why the PKO volume is down, they are holding a large stock of nuts to process later (as they can store these), smoothing usage of the plant and perhaps forecasting future price movements.
Buying the extra stake in the Cashew project was a good piece of business. I think the share price has been under a cloud due to the violence around the presidential elections, but things seem to be quietening down in Cote D'Ivoire and we should hopefully see a good uplift here, CPO price is roaring away and the cashew mill is getting ever nearer to production.
https://www.lemonde.fr/afrique/article/2020/11/06/cote-d-ivoire-le-centre-c-ur-de-toutes-les-tensions_6058760_3212.html?xtor=EPR-33280896-[afrique]-20201107-[zone_edito_1_titre_1]
Phil/Rugs, Looking back to the 2013 launch documents I see the company owned land at Ayanouan was 1900 ha. So that has not changed at all! At launch they declared a plan to boost company owned estates to 26,000. However they had (still have?) 24,000 ha at Guitry which is labeled 'Expansion Land' . That 24,000 plus 1,900 at Ayanouan would meet the 26,000 target. So I've changed my mind and think they never planned more company land at Ayanouan, only at Guitry. That of course has dropped down the pecking order of projects.
On a different subject, prices, some optimism looking ahead to next year from India's Business Standard 11 July:
India’s demand for vegetable oils, including palm, is seen recovering to pre-Covid-19 levels in the second quarter of 2021, according to veteran analyst Dorab Mistry, a director at Godrej International.
“I am looking forward to high commodity prices from the second quarter of 2021” helped by a recovery in the global economy next year, Mistry said. Until then “we have to live with low prices.”
“If we push up prices unnecessarily we are going to destroy demand,” he said.