Roundtable Discussion; The Future of Mineral Sands. Watch the video here.
so, the mine at Yanfolila still has at least 500,000 ounces of gold left in it. At current gold prices and assuming AISC of $1,100, they should be making $750/oz. So if we evenassume gold prices will fall by 20%, they will still make $600/oz. That equates to $300m profit over the next 4 years (£220m). Current market cap = £108m and EV <£118m. So ignoring Koroussa and Dugbe, should this not double in value? What's holding it back? Political risk? Is the market assuming that the 500,000 ounces are not there to be mined?
So we haven't had any notification of holdings since the last update on the 27th of November. So that means Jupiter and the other IIs haven't sold any of their shares? Great, so what caused this share to fall >60%? Who sold all their shares? Were they all private investors? I just don't believe this.
A lot of people talk about Koroussa and Dugbe but don't forget that this is undervalued based on its existing production and mine life. Its going to produce >c100,000 ounces of gold for c5 years(possibly more) with no debt to pay. That itself is a 50% upside from here at least.
Thank you so much TBTT. I think you have answered most of my questions there and this is a very good summary. Certainly looks really undervalued. I have bought some today and will look to add. I agree with your assertion that the market cap of THS:SLP should be atleast 2:1 based on production targets, mine life etc. I really like their dividend policy too which is an improvement over SLP's (the management their appear to be more prudent in this aspect).
Hi guys,
I am a long time investor in SLP but I haven't looked into THS into that much detail until now. It looks like an exciting prospect based on an annual production of 160,000 PGM ounces for the current year and with a £337m market cap. I have some questions which I was hoping some long time investors here could help answer?
- What is the estimated mine life for THS?
- What does the PGM basket composition looks like? How much of that is Platinum, Palladium and Rhodium?
- How much debt does the company have and when is it likely to be repaid?
- What is the dividend policy?
- What are the opportunities for the business in the next 2-3 years?
- What is the Gross margin ratio on PGM?
TIA for your help.
Thanks Ian.B and eye22, yes that makes sense. Lets see which way it moves tomorrow. No change on the short positions.
Two large sells appeared right after close. Is this on the move up tomorrow?
Hi crl123, i totally agree with you. I have an initial target price of 16p too. To be honest, any positive newsflow on the bid with Cairn can push it there really quickly. The existing fundamentals at this price are strong enough but as you rightly said, the market in the short term moves on sentiment rather than fundamentals and we really need some positive news.
Thanks! I think that sounds about right. In H1 2019 the average realised oil price was $59 and royalties averaged $18.5 so the only thing i am unsure of is that did Cenkos deduct the SPT as well when they said TRIN would receive $32.17 on oil price of $51. As there is no SPT applied between $50 to $75 for 2 years, i believe the gross profit could be slightly above the c$14.1m you have stated. Regardless even $14.1m cash profit is a very healthy number for a company with a market cap of £35m. This should re-rate next year if oil prices average $50. GLA
Thanks ab76. The opex + G&A in H1 2020 was $18 and breakeven was around c$24 so i believe the Opex+G&A are part of the breakeven costs which include royalties as well. If that wasn't the case then Trinity wouldn't have been able to make the profit they did this year. I remember Jeremy explaining what is included in the breakeven in a presentation on their website. I will try and find it and share the link.
In H1 2020 opex + G&A was $18 and operating breakeven was c$24. So i am not sure how a $26 opex+GA will take the total breakeven to $44.83 per your example. The operating breakeven should still be around $32 per barrell given non opex+GA costs in H1 2020 were c$6 per barrell?
Hi crl123, are the royalties not included in the breakeven price? I thought they were. Even if not, I don't see how the net cash in 12 months will not be more than current market cap (unless they win a project and decide to invest heavily which should be value generating). WTI is now touching $49. Goldman Sachs are forecasting Brent to reach $65 next year which I won't be surprised with given significantly low levels of drilling this year across the industry and demand is already picking up nicely in Asia with Western countries to follow specially as demand for Aviation gets back to normal.
Overall, this is a massive bargain in the current climate. I don't see the oil price crashing again like in 2020 as that was a massive one-off.
so expected year end cash position is c$19.5m.
Current WTI price = $48, lets assume it will stay at this level in 2021 (which is a conservative assumption)
Operating b/e for 2021 = $25 per boepd (assuming slightly higher than 2020 due to limited hedging etc)
Average production for 2021 = 3,300 boepd
Simple math, the company should generate cash of ($48-$25)*3300*360 = $27.3m
Add that to the Q4 2020 cash position, we should have c$48m in cash by the end of 2021. Equivalent to £35.5m which is the total current market cap.
Isn't the current valuation a joke? The company will have all off its market cap in cash by end of next year, so the market is attributing £nil value to all its reserves, forget any M&A activity which is likely in 2021. Crazy!
stoodio, i totally agree with you that it is way undervalued. If markets were efficient then this should have been much closer to Liberum's 140p target. The one risk factor that I am concerned about is that it's profits are now heavily dependent on the price of Rhodium (c60% of the margin comes from it despite making only 12.5% of the basket). I am optimistic that the prices will hold in to 2021 as well, but I have applied a 25% discount to current Rhodium prices to come to a conservative target of 110p. The positive aspect is that Platinum and Palladium prices are on an upward trend as well, so it all makes it very exciting for 2021.
A lot will depend on their dividend payout as well. Anything above or equal to 6p would help the sp tremendously.