Cobus Loots, CEO of Pan African Resources, on delivering sector-leading returns for shareholders. Watch the video here.
Yes I’m sure you’re right, Meldrew. Otherwise the plan would risk falling apart at one stage or another at the EGM.
Much of the increases in revenue and cost base were due to the integration of DOCOMO, though. It’s impossible to split out the components of organic vs inorganic growth, but we do know the cost base pre-DOCOMO was always considered “flat-ish” - I’d expect that to continue from the new, rebased level. And current 2024 forecasts for revenue are only $57.5m vs almost $50m this year.
Hum might sell Dugbe later this year for £50m+, based on these figures and the fact that Dan has announced a positive decision will made during this period. Anyone not in when that is announced will be kicking themselves. This alone would be 8+p per share. And perhaps some of that cash would be used to pay off debt - the “aggressive deleveraging” Dan also referred to.
I see the consolidation, sub-division and issue of new shares all being part of the “single matter” (ie recapitalisation) to be agreed at the EGM. They are separate steps, each to be voted on I think but forming a coherent whole. I’m not sure it matters what order they come in, does it, as long as each step follows on consistently (ie using the right number of shares, nominal value and issue price) from the values determined in the previous step?
Three weeks on Monday since we were told of the plan. The cash ran out end-May, so I can only assume that salaries and bills haven’t been paid for June & July, awaiting bridging finance. So that’s £3-4m just to cover that period, and the same again through to end-September (ie EGM and implementation). I assume the potential lender there wants security that the company will be able to repay, so they’ll want to see either an offer for AVO or a well-developed book-build for the equity raise. So could be a little while yet.
I imagine AVO will only want to call one EGM on one matter - either the Recapitalisation Plan or an offer to buy them. So it’s possible that the Recapitalisation Plan is in reasonable order but potential buyers are still working things through. Just speculating whilst we wait……
I don’t think BGO has the ability to grow that much, you’ve caught it too far along in its development. Some simple maths - assume cost base is relatively flat (which it is) - 5% pa increases. And revenue growth is 15%pa - which is current consensus for 2024 over 2023. Then by 2030 revenue is $133m, costs $40.2m, EBITDA $92.8m. If EV/EBITDA remains unchanged compared to forecast 2024 (c9.1, at an sp of 200p) then the sp in 2030 would be c675p. For comparison, 25% pa growth in revenue would see an sp of 1303p. So that’d be 6.5x growth. You’d need 65% pa growth over this period to increase the sp by 40x, which seems highly unrealistic.
Oh J*sus wept, DW, give it a rest. People move on for all sorts of reasons. Maybe he wanted to stay closer to you…sucked in by your incredible negative energy.
Lots of people questioning the amount of debt and saying it’s a lot. Really? For a producer with 200k ozs from Q4 that could repay the debt in 18m, at least nominally? Plus a third asset that could reduce that debt to very low levels if it were sold? I think some people are getting carried away. Remember, $75-90m debt for one mine alone (Yan) was not considered an issue when it started production. Yes we all recognize Q3 is tight, but beyond that, there are no major concerns as far as I’m concerned.
Indeed. Current Enterprise Value is about $192m. Next year’s forecast EBITDA $27.5m. That’s a ratio of 7. Far, far too low for a still-fast growing tech company.
Been thinking about Dugbe. DB is convinced it has tremendous value - he’s repeated a $1bn figure several times. Well it’s not worth that yet - it’d need a lot more exploration to find resources to convert to reserves. So what’s his plan? To sell now would mean missing out on this hidden value, unless there’s a way of getting credit - either now or many years hence - for these expected ounces. So is it possible we’ll see a commitment to much more exploration over several years to maximise potential before seeking a sale? Or would the cost of this exploration not be worth the extra sale value it could generate?
Well done AFC! Another step along the road, which was always going to be a long one. Further evidence that Bond is going about things in the right way, not just selling any old sh*t to claim he’s sold something, as some bashers would prefer.
Kenj, thanks for your thoughts. On the $10m loan, the RNS states that this is subject to the Recapitalisation Plan being agreed and implemented in full. I suspect the prospective lender would need more security than just some of the existing debt being swapped. Therefore, I think all elements - debt-to-equity swap, loan and equity fund-raise - would need be approved at the EGM as a package. Given that, I’d be surprised if the loan is arranged first such that shares can begin trading - I’d have thought the D2E and equity raise would happen swiftly before that. So it’d be a “big bang” resumption.
And that then challenges the notion of some existing lenders accepting a haircut on their loans. I don’t think this would be expected or necessary in a scenario where “everything is approved as a package at the EGM”, because the equity raise pretty much guarantees the company’s survival. So I’m not sure we’ll see any haircut.
In line with expectations on EBITDA, cash and integration synergies. Some exciting large partners. What’s not to like?
H2 at Yan will undoubtedly look a little sticky. It’s all built into the forecasts and guidance but in more detail:
The current 80-90k guidance indicates 15-20 ozs for each of Q3 and Q4. It was back in Q3 2022 when as little as 16,827 ozs were produced. The resulting AISC was $2161. In Q3 2022 production was 20,013 ozs at $1859.
If you assume that the production achieved in both Q3 and Q4 will be the higher of those - 20k each - at the same Q3 AISC then you arrive at c91kozs for the full year at a weighted average AISC of $1472 - in line with guidance of
Not project AISC. $1500 is just the AISC for 2023 due to KE being mined out and having to develop KEUG etc.
Solid RNS. Had been hoping for a faster ramp up at KOR but it’s fine. Just need to deliver at an operational level in H2 ready for FY24, lots to do. Pleased to see a positive decision re Dugbe will be reached in H2 - that’s been hanging over us, we need to get its value recognised. I wonder if the amount of debt the company is carrying will mean developing Dugbe itself would be difficult at this time?
Fair points. However we are told the company has increased its market share in both main divisions, so that speaks to your resiliency point - clearly the market is tough right now. It would be good to get a better handle on industry and company dynamics when results are announced. Still, one cannot really complain about ongoing levels of cash generation.
Indeed, Kenj, but what I’m now confused about is that raising equity at a *low* share price (which “optically” might be more palatable) doesn’t make sense either, if existing shares are split pro-rata. It seems hard to demonstrate to new investors that they are investing at a price that might not immediately go down (though it may not).
“We believe that gold can deal with current economic headwinds of higher-for-longer rates and see the potential for prices to rise to USD 2,100 per ounce by early 2024. Prices may be driven by a peak in US real rates, a weakening US dollar, and robust demand for the metal from investors, central banks and consumers. In the short term, we expect Fed decisions to drive gold prices. “
Lombardodier.com
Actually I’ve realised what I set out is rubbish. There’d be no need for all those steps. A new nominal price of 50p could be created, existing shares would halve in number, then the £100m could be raised at 50p. Exactly the same outcome. Indeed the £100m could just be raised at 25p with exactly the same outcome. It would make more sense if existing shares were written down in some way or not altered as the nominal price changes, but I believe that does happen.
Curious, I totally agree that the mcap will be restored to a sensible place after the recapitalisation, if it happens. When you think the mcap was north of £100m a year ago, and now the debt would have been repaid with £60m in the bank. But the markets are weird at the moment.