The latest Investing Matters Podcast episode featuring Jeremy Skillington, CEO of Poolbeg Pharma has just been released. Listen here.
I have no inside track so pondering it just based on what we 'outside' punters are able to see I wonder whether it may be IRH.
If they believe in JLP which clearly it seems that they do, then they will presumably want some of the mother ship rather than just the SPV. That would also tie in with why the price was set at the 30 day average prior to the announcement that caused the SP to go north. If I had negotiated this for IRH then I would not have wanted to pay a premium on the SP due to my involvement with JLP. In this scenario however why would everything not have been announced in the same RNS?
An alternative scenario is the cash raise is linked to the terms that JLP is able to get. £10M is insignificant for IRH; the SVP RNS talked about JLP having at least 30%. I wonder whether what enables JLP to move above that 30% is injecting more cash up front. In this view of the world then the dilution is being done to gain a greater % of the SVP which could be very sensible.
All, of course, just speculation. I am sure that in due course we will be told.
Best wishes,
Prof
Spoonington,
Thanks for confirming.
Best wishes,
Prof
Hi Cowichan,
$34 millions could well be sales invoiced but not yet due as it does not even equate to a month of revenue and I would not be surprised in payment terms were 30 days. I make it 27 days worth of sales so not something that is likely to be a cause for concern. Clearly if there are overdue debtors in that then it is a different situation but it does not refer anywhere to overdue debtors/ bad debts.
I have looked back at the equivalent presentation for the year end but there is not a similar breakdown in any slide as far as I can see. The good news with that is they are now providing us with more transparency. If you think there is a problem it may be worth an email to Ross there CFO however I don't see anything that concerns me.
Spooning ton, Do you have a view?
Best wishes,
Prof
Hi Tibbs,
I agree that there is an issue of trust in CEY however with AISC reported in the interims at $1228, and trending downwards, CEY is clearing around $700 with the current POG so is nicely cash generative, even after payment of the EMRA share.
Regarding the debt, we have not heard back from Cowichan today however given the point I made about the amounts shown in para 4.1 (page 38) being the latest position (i.e you don't add them together to get the current net debt) and Spoonington's clarification that in any case the numbers were thousands not millions, then it seems that the concerns raised by Cowichan were erroneous (happy to be corrected Cowichan it you think I am wrong).
You have, quite rightly in my opinion, castigated the previous management for not investing (spare LHDR, strip ratios...) The current management are doing the very opposite both in Sukari and Doropo. I appreciate that the money it takes to do this has to come from somewhere and applaud them for investing for a better tomorrow for CEY and its shareholders.
Best wishes,
Prof
Hi Spoonington,
Thanks for confirming that.
Best wishes,
Prof
Morning Spoonington,
Thank you for the correction. Mea culpa - I was going through the numbers through the prism of Cowichan's concern and missed the key point that you make.
Do you agree however with the rest of my reading?
Best wishes,
Prof
Good Morning Cowichan,
Thanks for raising this potential issue. I have just looked at the July interim report and I read it differently to you.
To me it looks like each of the numbers that you quote is the snapshot at that point in time of the amount owed by CBE. So based on the sentence from page 38 (section 4.1) that you refer to:
'At 30 June 2023 the net receivable in EGP owing from the Central Bank of Egypt is approximately the equivalent of
US$16,062 (30 June 2022: US$42,922 net payable and 31 December 2022: US$23,681 receivable).'
my understanding, given that it says 'net receivables' is that $42.9M was owed on 30 Jun 22, that this had reduced to $23.6M by 31 Dec 22 and then further reduced to $16M by 30 Jun 22). In other words the amount owed by CBE is reducing not increasing and we should not be adding the numbers together to get $82.6M.
Para 4.1 also says :
'the parties may jointly elect, on a monthly basis, for the CBE to supply SGM with its local Egyptian currency requirements
for that month '
which also gives me confidence that my reading is correct as why would SGM continue to 'elect' if CBE were racking up increasing debt to SGM.
I would be grateful to hear if you think I am getting this wrong.
Best wishes,
Prof
Hi Seis,
Thank you for posting those comparison graphs of JLP/SLP. They are very illuminating.
I sold my SLP holdings a month or so ago at a substantial lost as they are a pure PGM play (although they have since RNSed action taken to diversify somewhat).
Still in both JLP and THS.
Best wishes,
Prof
From the 20th July operational update:
"Our Northern Strategy continues to progress on several fronts, including advanced talks to secure a significant operational refining footprint, from where we are able to establish a central refining footprint in the area. The Jubilee team is working to complete the on-going pilot trials to optimise the targeted process solution for the treatment of the range of northern copper and cobalt wastes. These results will be used to inform the capital requirements for the project which has been delayed to August 2023. Final test programs includes scaling up further the pilot work to a newly constructed large scale piloting facility expected to commence during September 2023."
Today's RNS is updating on this and, as far as I can, is doing so with very positive news.
Best wishes,
Prol
Hi RaxFactor,
I agree with you that something doesn't feel right with PGMs at current levels so far below analyst consensus. Wrt Rh I read somewhere about the release of stocks from certain producers who had substituted other materials. If that is the case then hopefully we should see a reasonable rise once that flushes through.
At what level would you be tempted to go back in given your calculations?
Thanks,
Prof
Bangrak,
Many thanks.
Best wishes,
Prof
Hi Manutdbo,
If you read my post from 0838 you will see why I was nervous and sold out and some of those concerns may be shared by others.
With regards to the specific drop today I don't know although interestingly there was no RNS from SLP this morning announcing that they had bought shares yesterday. Pure speculation on my part but if they decided that with the drop in Rh the share buy back was the only thing keeping the SP up and that it was not actually worth 78/79p with Rh at $4000 then the resulting drying up in demand for the shares could cause a sudden fall. It will be interesting to see in the next few days whether they RNS more share purchases or not.
Good luck whatever you decide to do.
Best wishes,
Prof
Thanks Ilja, always good to have definitive figures from the horse's mouth.
Best wishes,
Prof
Hi Dorfan,
Agreed ref the filter button. He is the only person I filter so whenever I see a green box I know that he has been posting again. Strangely I never miss not seeing what he has said.
Best wishes,
Prof
Hi Bangrak,
Apologies for the 'Bangkok' in the last message - autocorrect strikes again.
Best wishes,
Prof
Hi Bangkok,
Do I take it you are therefore out and watching as I now am?
If so are you still in THS?
Thanks,
Prof
Hi Loggy,
That is the million dollar question and I hope it has but then I was hoping that at 10,000, which was below where a lot of analysts said this would be in 2023, and therefore why I have stayed in SLP for so long.
If you are confident that it has bottomed then there is a case for adding however I worry that with a small rise in Rhodium we may still not see a rise in the share price as it is the share buy back that is creating artificial demand at this level. A significant rise in Rh however which is not at all impossible if the current price is indeed due to excess stocks being dumped, would I suspect drive a strong recovery in the SLP share price.
Ultimately, as so often, how you anticipate some key drivers playing out are what will dictate how you proceed.
Good Luck,
Prof
With a heavy heart that is me out of SLP having taken a hit of about a third. I like the cash pile and I suspect the fall in Rhodium is overdone as a result of dumping of surplus stocks however worry that it will not recover much and could even go lower.
SLP is a pure PGM play unlike THS which has some offset from other commodities and yet they are down majorly as Rhodium has dropped. I fear that at present SLP is only being held up by the share buy back.
As Bangrak says it may take a quarter or two for the impact of the PGM falls to become apparent however at these levels there is not a lot of profit being made. The cash pile can cushion a bit but the current high dividend, which is I suspect the main element keeping people invested, looks under threat to me.
In the more immediate term I worry that the July results will start to shed a light on all of this and even with the share buy backs we may see a further fall in the SP particularly given the adjustment on previous quarter sales that Artrader refers to in his 07:21 post.
So those are my reasons for getting out. I might be wrong and kick myself - not an unusual occurrence. If we see a reversal in PGM declines I might be tempted however it would have to be significant and I am more likely to increase my holding in THS or JLP that are more diversified.
Good luck to you all whether in or out .
Best wishes,
Prof
Hi Bangkok,
Thanks for that precis. Am I right that the p/e of 7.4 that you get is before taking the cash out of the market cap?
If so then with cash at about half of cap then the p/e shift to about half of your calculated p/e once cash balance is stripped out.
Is that right?
Thanks,
Prof
Just had a mail into my inbox at 1615 from Hargreaves Lansdown with ideas to benefit from rising gold. They recommend 2 shares: Barrick and Centamin. Text ref Centamin as follows:
Centamin is another gold miner, but with a much more concentrated portfolio than a global giant like Barrick, it offers something different.
Operations focus on the Sukari mine in Egypt, with another couple of sites at varying stages of development. A concentrated portfolio adds risk. We'd argue the added risk paves the way for greater upside potential. Nonetheless, if anything happens to the site in Egypt, there's little in the way of backup.
Production at the Sukari mine has been in decline for several years. But 2022 marked an end to that trend, production's expected to return to around 500,000 ounces from 2024, slightly ahead of some estimates. Reserves have been improving and an updated expansion plan is expected in the second half.
Diversification away from the Sukari mine is underway, with progress being made at the Doropo project in Côte d'Ivoire. The latest project study is due for completion in the first half of this year, which could act as a near-term catalyst. The business is on strong foundations, with cash on the balance sheet and zero debt. But as with all mining projects, risks are high.
Like Barrick, costs have been on the rise, putting pressure on margins. The effects are being reduced to some extent by a $150m cost-saving programme due to be delivered by the end of the year. Progress so far has been encouraging, with $116m in savings delivered as at the end of the last financial year.
Its concentrated portfolio makes Centamin a higher-risk option than some of its larger peers. That’s reflected in a less demanding valuation, which we see as offering upside. Though, there’s no guarantee.