Roundtable Discussion; The Future of Mineral Sands. Watch the video here.
When the seller is finished. We had relatively high volumes since the beginning of March. What was suppressed will overshoot.
I believe the USDMXN rate has a secondary impact on Fres profitability compared to, say, the silver price (+$2 to silver AISC or less?), and it will mean-revert anyway. The JPY/MXN carry trade started in 2020 will collapse spectacularly at some point, as all carry trades did in the past. BOJ already raised its rate, and BOM already cut. That is not enough to break the inertia and start the repatriation of money just yet. However, the carry trade becomes more fragile as the new direction is set. Any exogenous shock could blow it now.
People are wired to look for reasons and causes. If the share price dropped, it must be because of this or that. Most likely it was forced selling in the illiquid market. Once selling is finished and absorbed, the share price will mean-revert back to the fundamentals. With the current market cap, only silver reserves and resources are priced at around $1.6/Oz. If silver goes up, this share will get ballistic.
With group silver AISC in the $16-18 range, and gold AISC around $1600, Fresnillo is a highly leveraged play against the metal prices. Just a few dollars move higher in silver, and a few hundreds of dollars move higher in gold would double the gross profit.
Recently, many PMs in the mining sector have been fired. When PM is fired, her holdings are first actioned inside the firm, and if no one wants them, liquidated into the market. I think this has been happening to Fresnillo recently. If we look at the last week only, the silver price moved by around $1.2, gold by around $100. These would add around 128M gross profit per year with the current rate of production, if the price changes are sustainable. FRES price declined during the week. To me, it muses as an attractive entry or adding point.
Price target depends on trading horizon and what gold/silver will do next. I think 800-1000p is quite probable in the next few months. Price will act like a coiled spring at some point.
I don't see how supporting Ukraine could be bullish for gold. It is on the border of irrelevance at this point. I could even argue that if Putin took all the territories left of the Dnipro river, it would rise geopolitical tension in Europe.
I entered the full limit at around 473. The price action has been irrational for the last few days. Gold is making all time highs daily, silver is at 24.5. Moreover, the stickiness of the gold price demonstrates it is forming a new base above 2100 and likely to break higher. This should eventually be reflected in the share price.
The stock has not been reacting to the silver/gold price for the last few days. Quite unusual for the company of Fresnillo size. Perhaps, an idiosyncratic selling pressure. Once the seller is out, it may go up faster than peers.
This could play some role too. Egypt secures $8bn IMF deal after removing currency controls - https://on.ft.com/432uV3Z via @FT
Anyone knows who took new 750,000,000 shares? Is this information publicly available?
They are paying for these shares from their pockets, @0.6.
Harry and John plan to spend 300k of their own money to keep their KEFI's share undiluted. They would not do that if they did not believe that TK finance will be closed soon. The share dilution is around 15%. If the share price drops to 0.6 tomorrow, everyone can follow Harry's example and buy 15% more shares. I don't think we'll be that lucky, though.
There is a lot of discussion on this board about the second bank approval. Chances are it has already happened. If you look at the last few KEFI interviews, Harry said that the lead bank approved in December. The RNS confirmation of conditional final credit committee approval from the lead lender happened only on 10th of Jan. It takes time to move the already finalised decision through the bottlenecked pipeline of a cautious beauracratic organisation. That crossing of t-s and dotting the i-s. Then Harry states that second bank approved in February, and the ball goes to the equity parties and lead contractors.
Of course, the deal is not the deal until it is official. Do your own thinking and probability analysis :)
Harrogate4, I don't like "advertising" on other boards. If you are interested, look into my recent posts. Just a bit of warning, this stock is quite illiquid, it took me many weeks to accumulate a decent exposure. Maybe it is already too late to enter with size. Only today did it move by more than 10% without me doing anything. DYOR and good luck!
I sold my holding in SHG. I could write about the difficulty in predicting the outcome when corruption of governments and institutions is involved. But the main reason is that I found a stock with a much better asymmetric reward-to-risk and share price depressed by the recent selling by a distressed institution (like SHG was by liquidation of Odey Asset Management). I wish good luck to all. Vote No and fight!
Sorry, @0.75, fast typing.
During last week, I tried to test if there are any big sellers left, by placing 2-5m bids in the 0.69-0.75 range. Almost nothing has been taken, and only @0.57 some small profit-taking punters became interested. The road upwards seems finally clear to me.
When KEFI price made a re-rate attempt last time (on 5th Oct 2023, after the National Bank of Ethiopia waived KEFI from foreign exchange and capital controls), the move was aborted by RAB (former distressed KEFI institutional shareholder) liquidating 3.5% of its holding into the rise. It took a few months for the market to absorb that. I guess we would be much higher otherwise, probably, north of 1p. I watched a similar situation in Shanta Gold, where the liquidation of the Odey Asset Management (sexual scandal related) depressed the price for a few months. That's why we are still where we are.
It is highly probable that KEFI will reach the 4-5p range this year, provided things go well in Saudi. Edison group overview is understandably conservative. Almost any feasibility study you see now is still based on the assumption of 1600-1800$ gold price in the next few years. However, the previous 2011 high in gold adjusted for inflation is $3390, and we are at the beginning of another loosening monetary cycle that led to the aforementioned high.
It is encouraging that the Federal Government of Ethiopia has already invested in the TK project. That makes it extremely unlikely for the syndicate members to backtrack on their promises at this stage. My subjective estimation of TK finance going through is around 95%. Why is it not in the share price? I think it is a psychological bias that does not let people think straight and see the facts objectively. Our thinking is inert and past-based. People may think, ‘15 years of waiting has been too long, so why would it happen now?’ Also, those who knew KEFI fundamentals are already fully invested up to their risk limits (and some are deep underwater). New investors are not yet attracted. So there is no new money to move the price according to the new probabilities and realities. This is clearly a unique situation, with 4-8x bugger in the waiting and quite low risk.
I remember I wanted to invest in HE1 when it was at 0.19 or so. However, I decided not to, because I did not have the expertise in the project, and I also did not have time to dig into the details. KEFI situation is similar.
Forgot to say, @0.69.
As an experiment, I put a 3m bid this morning, and decided not to move it. Only 815,207 shares have been filled during the day. There are no serious sellers around.