Member Info for HarChris

‘On 19 Oct, the co said it had " initiated engagements to obtain institutional debt finance2, which in layman's language is "we're trying to borrow money". no word since. mb they're on top of it. mb it will arrive tomorrow, but so far this co's promises have not been fulfilled.’

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We’re talking a big debt financing package to fund the company into possibly 2025, do you think this sort of thing takes a matter of days? Shishir only brought it up so early to stress that a non dilutive package is what is coming next, not a dilutive one. If you read the comments on here over the past few months the majority expected this to land in early 2024 rather than back end of this year.

The lack of urgency is highly suggestive that production has improved and cash is being generated, albeit modest, that allows the ramp up in Mad to continue prior to any debt deal and hopefully cash positive enough to cover the upcoming CLN payments through self funding.

My point about cash is more nuanced but you missed it.

Tomorrow TGR could raise £5m at a discount and therefore be fine cash-wise. Would the share price therefore soar north? No it would fall. So for shareholders at this stage it’s not all about cash, it’s whether they can navigate this situation skilfully and if so buying or holding here at 15p will turn out to be a very good decision.

Now if the share price was 50p with the same cash position and risk your points would all be far more valid.

Incentivised yes. Does that guarantee success? Quite clearly not as we’ve seen. Will buying a few shares on the open market just to try to shut up your incessant moaning turn the company around or incentivise them any further ? No.

They are already incentivised is my point, they just haven’t delivered. Buying a few shares won’t make any difference. I’m pleased that finally there seems to be a material improvement in operations and am focusing on that rather than moaning day in day out whatever the results.

The Argo share price won't rise consistently and it won't rise exponentially (stretching the meaning of the word) because the market is so damn aware of the need to raise to stay in business.

As I've pointed out numerous times the initial spikes are where the money is to be made, the moves from 9p to 13p like we saw last week, 50% climbs to a level that doesn't threaten being caught out by a deeply discounted placing.

Beyond that traders will get tetchy and pull the trigger on their exits much sooner. Could we see 20p in the coming weeks if BTC were to really go on a tear? Sure but it will take a particularly big tear to allow those traders to turn a blind eye for a few sessions to the financial and economic reality that Argo finds themselves in.

They own more than enough shares to be fully incentivised to see this turn around and from this update that appears to be what's happening. More of the same combined with film and strengthening CPO prices through 2024 and we'll be looking at least 5p.

Production in Q3, mom, is looking like it will be more than 50% higher than it was through H1. Having made it through H1 with such minimal resources odds are that TGR will comfortably generate the £165k in cash to cover the next lot of debt repayments.

And if not Shishir would certainly choose to forego salary rather than cause dilution as the fall in share price hurts him more than anyone, as such a major shareholder.

Close to an inflection point now, just need confirmation of the step change in production and things will be looking up.

Record monthly production at 3875t CPO - now we’re talking. Material improvement being seen.

This will filter through to the sp once the healthier accounts are released.

I thought you were saying only a handful of gold producers were turning a profit currently but evidently not as everyone you just mentioned will certainly be profitable.

If you mean they all command a higher PER then yeah i'm sure that's true but there are genuine reasons for that. Size brings with it less risk - those billion dollar miners will generally have strong balance sheets, considerable economic and political mite in their jurisdictions, often multi jurisdictional (which Shanta should be with WK) etc

But with every extra dollar that hits Shanta's bank the risk reduces and the risk/reward in comparison to more established gold giants gets ever better.

By your logic it doesn't matter whether it's FAR with its 250t v205 output or Largo with multiples of that that is forced to down tools next, halting is halting and it has an identical effect no matter the amount of supply that is forced offline.

Obviously it matters.

You're ignoring the institutional holding here VH, it's highly significant for a small cap. Over 50% is owned by Greenstone and Fratelli Investments and another 15%+ by Miton and others.

There's been no placing or issuing of shares for nearly three years now, instis aren't going to be selling with gold market hotting up and so that leaves a very small float - under those conditions the sort of pullback you're suggesting is rather unlikely.

It certainly does make a difference how much they are producing when it comes to a possible halting.

Yeah true and nice post, I was referring to gold miners that have developed production but if 1755 was also including explorers then obviously those won't be turning a profit. Good point re hedging, something to always keep in mind with gold where it is, will turn out to be a blessing (most likely) or a curse.

Of that list SRB also hedge some of their gold, they took out a 12 month hedging contract in Feb at $1800/oz.

I gave you the actual figures and that seems to have riled you?

In 2020 Largo was producing close to 12000t v205 a year which would have been around 7% that year, but not now.

Amazing that you're offended by a simple correction, shows how insecure you are.

Slight correction for you as i've seen you use 7% a few times now.

Largo about to deliver ~9500t v205 production this year, that's about 5200mtV equiv. Call global production 120kt giving them a share of ~ 4.3%. Call it 5% as a rounding error.

Largo breaks even at an operational level around $7.5/lb v205. Right now the average price they'll be seeing is at least 10% below that and possibly closer to 20% so the continuation of operations is merely a bet on prices recovering in the coming months.

Whilst that's likely true redwineday it may be only a very small amount needed to get through to early 2025 at which point large milestone payments should kick in. That could easily be funded via debt and then there's no looking back.

Here's the thread from BBN on twitter that goes into detail, see if you agree: https://twitter.com/BigBiteNow/status/1732707472823971960

$420k cash as of June 30th with a $2.3m cash outflow during H1. The market is clearly sensing news on financing soon and I would imagine it could be ugly, what with such a low mcap now. Would have expected it already but lots of commentary of reducing costs in the half yea report including this:

' In order to reduce the Company's cash burn rate, the Directors agreed to temporarily pause drawing their remuneration due from the Company during Q2 2023 until such point as the Company is in a better position to pay.'

At just 70000t of orders targeted for 2023 compared with 200000t guidance at the start of the year it's no surprise that times are so tough. One i'm watching though.

Price earning ratios? As I said virtually all gold miners will post a profit in 2023 with how POG has behaved and so any negative earnings ratios you are seeing (with perhaps the odd exception) will become positive once full year results are in.

Heavily indebted companies like HUM in the list below will turn a much smaller profit in 2023 but the interest and debt repayments are not large enough to take them from $1450 aisc to a group loss with POG averaging $1950 for the year.

This is an unloved sector with arguably every miner in it undervalued relative to the cash they are generating but as I said Shanta is my top pick for the combination of growing and stable production, great margins, low and manageable debt that will now be below cash position, low capex doubling of Singida output and then the crowning glory of WK. Oh and an excellent ceo in Eric that will hopefully pass on his wisdom to whoever takes the reins.

This isn't exactly true. I would imagine that nearly all gold miners are turning a profit at $2000/oz. From the ones I follow:

THX - AISC $1300/oz

SRB - AISC $1500/oz

HUM - AISC $1450/oz

CEY - AISC $1300/oz

CMCL - AISC $1250/oz

So as you can see all have pretty wide margins and all are comfortably turning a profit with POG at $2000/oz (no matter the debt repayments or financing costs etc). Shanta's AISC is up there with the best, especially with Singida performing so well up until now and also has fairly low debt, low capex growth opportunities with Singida, enormous growth potential with WK and is still relatively cheap compared with peers, so remains my number one gold pick.

Well Munger (rip) invested in multi billion dollar companies in which ebitda generally does not have the same significance. None of his wisdom is much use when applied to higher risk £15m small cap miners with explosive growth potential.

With TGR what needs to be seen is cash generation from the established operations in Madagascar, from the 30k capacity. TGR will not be able to fund future growth internally, that's obviously not realistic but it will bolster the investment case and increase the amount they can raise for growth going forward.

Cash isn't the most important factor but it's true that you want to be refinancing with a healthy balance sheet. Running low of cash unexpectedly creates working capital constraints like we've seen this year and weakens your hand for future refinancing negotiations. The current share price reflects the fear that that still occurs (running out of cash forcing through an emergency discounted equity raise) before the debt deal lands and hence we just have to wait til (fingers crossed) that risk is eliminated through successfully ramping up production with stronger q3 figures and seeing the debt deal signed sealed and delivered.

Now with YG part of the group the like-for-like comparison is an even more useful one.

Interims showed revs of £26.9m, just under 40% gross margin, positive EBITDA of £4.4m but a small group loss posted.

Revenue for full year expected to be £53m. 6.8% yoy revenue growth. Cash healthy at £9.2m although a good chunk of that tied up in Russian subsidiary so not immediately accessible, a downturn in 2024 could bring working capital constraints.

For that you get a £125m market cap.

With YG and Ncyt already likely generating close to £35m revs combined, growth much greater than EKFs 6.8% and with £50m cash at its disposal is it hard to see ncyt at least reach EKFs market cap of £125m / £1.80 a share? I really don't think so.

And that's down from a high in 2021 of £380m mcap when they were profitable with the value still as high as £235m at the start of 2023... all valuations that are eminently achievable over the next twelve to twenty four months.