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Copper's crashed significantly over the weekend. Still around $2 / lb, about 30% gross margin on CAMLs $1.44 / lb all-in production costs (see p.8 of most recent annual report). Resting near the 2015/16 lows. However, virus situation is still only in early days and there is risk of further downtrend. No concern about CAML at these levels, but would worry if copper dropped to likes of 2008 down to nearer the $1 mark, as that would certainly create problems.

@Nickel-Investor. Folks are often fine with contrary views, but don't state highly generic things and then claim credit for predicting a single stocks decline within context of a massive stock sell-off. Why not give an objective reasoning? For example, where specifically do you see copper / lead/ zinc getting to? How do you see risk of production disruption for X/Y reason? You're obviously not in (or shouldn't be based on your statements) but are following this, so what's your target SP entry?

e.g. I'd initially thought that anything sub-120p would be well worth buying, but will continue to hold off further purchases until see further clarity on how virus will impact wider economy. Too little info atm. Also wanting the 1st April update and the accompanying statement Re: Virus impact on the company. I've got cash to add, but want to add to an SP which is rising, not dropping.

Morning Beevorma, certainly a reasonable concern to have. Much uncertainty over the impact that low oil prices will have on energy prices. Equally, I wonder how much of that will be passed on? OFGEM has price capped energy prices for a while (hence why shares like Centrica are in perpetual decline). I would suspect that there may be more competition at the supply chain level, but don't expect to see this to find it's way down to the consumer...'much'

According to the RNS provided yesterday, I suspect this to be safe for at least the next 12 months. Wind generation is up significantly, to the point where that should off-set any uncertainty in the energy price - which are also forecasted to be somewhat stable for rest of this year despite the decline in oil prices... I think I read somewhere it can take 6+ months for pricing to filter through, cause it takes as long to travel along the supply chain, or something like that.

I'm not sure about to what degree, but if you take a look at TRIGs RNS yesterday, they comment that - yes, prices are down slightly but looking to recover for rest of the year - they however have 75% hedged, including value of subsidy. UKW will also have certain measures in place to safeguard against any sudden price decline.

Main risks to me at the moment are sourcing of components necessary for maintenance which could potentially result in lower production efficiency or some turbines being taken offline. For example, VESTAS is shut down, and they account for around 28% of the turbines used by UKW... equally, I envisage all of that as temporary

Yesterdays jump up shows how quickly things can move once this virus situation settles. I'm expecting us to drop back down again (although nice Director buy at 108p could slow that decline) and will be adding at anything close to or under a pound

Thanks Colonel for the reply.

Understand the challenges. Have been researching gold behaviour during 2008 crash, possibly suggesting a surge there once these stimulus packages have filtered through the system.

We have quite a bounce today. Hard to rationalise and think a lot of people will be caught out

Now is certainly the time for observing and being picky. All the best with your investments

Indeed, was just reading something similar this morning: https://www.goldrepublic.com/news/why-gold-prices-fell-in-2008

Re: discussion on hedging. First off, the sales price of gold was via put options. So this is better than standard hedge and allows sales at current price (less a premium). It's great news.
Haven't looked into it, but from memory of reading past annual presentations, HUM generally do hedge their fuel costs. Perhaps things have changed, because they were in dire straights a couple of years back and needed to provide as much clarity on costs as possible, but I'd expect them to have maintained this principle. Either way, fuel costs are marginal compared to the gains being made on the high gold price

Highly reassuring update today. Whole market does seem to be up, so positive across the board. Anticipate that this may be a short lived spike up, but could be nearing the end of the steep declines

As you say @Lurka, whole sector is down. In a sense, it is promising, as it's obviously not a problem unique to UKW - such as a couple of fields having gone offline without news breaking out. Hopefully it's nothing major - like slashing of pricing.

Considering slightly more, perhaps most likely funds deleveraging broader sectors. 'Energy' as a whole has been crippled, and renewables comes under the broader bracket of energy. There will certainly be some funds selling us off due to portfolio rebalancing. For example, 10% of portfolio in energy stocks must be ESG type. As broader energy sector got hammered, our percentage of the portfolio rises and then fund is forced to sell off some to rebalance. Not only this, many funds may just be selling off energy full stop.

Again, only conjecture... maybe we shall never know. Just hopeful that it's all temporary and that this will be back to 1.20+ by year end

Made the decision to start dipping back in this afternoon...

I expect March figures worldwide to be bleak, and Q1 figures across globe to be poor also. However, anticipating that the market outlook has already baked in negativity and that the major sell-off has now (mostly) happened. Given the stimulus packages going out these days and the fact that most investors will/should of retreated and restructured their portfolios, I think / hope that we may start to see a period of consolidation over the next couple of weeks and those who have pulled out cash start take some time and selectively buy back in to objectively sound investments... Imagine that these will be combination of traditionally more defensive stocks & commodities (like gold), as well as a re-rating of some companies with strong online presence that may have actually performed better than normal during this crisis (I know that many firms in China experienced 500%+ returns due to increases in online demand)

Who knows....may be waaay too hopeful on that front.

Anyway, per previous posts, anticipating a very positive Q1 update from HUM in April, and am trusting that 1450 has become the floor for gold for now. Given the recent sell off, it would be nice to see that at least start to take into consideration the global pandemic in its pricing

May gradually add more, but will be a drip feed approach. I'm around 75% cash atm and not anticipating crossing the 50% threshold (at least in equities) until able to see a bit more clearly where this is going a few months from now

All the best to those who are around reading posts on here

Firstly, apologies for a non-PDL specific post. I don't have LSE premium account so can't PM on here.

Hi Colonel, I appreciate that you have a fairly candid approach to posting on here. Am interested on your viewpoints on the environment right now and mid-term plays.

I've played some right, and some wrong. e.g. PDL was one wrong. Also shorted FTSE and DOW in January when I found out that 500,000 million people were quarantined in China. But then couldn't believe it when markets ignored this and kept going up. Closed my short at a loss just 3 days before the big crash came (would of been life changing!...but played it wrong)

I unfortunately see PDL having no positive news in the short term. GEMD tender (thanks Bigsmoke) was 18% down, and given PDL has delayed theirs, I'm expecting worse.

Whole market has been broadly decimated, but this is also going to leave good plays out their who've simply been sacked due to the larger selling trend. Interested to hear your thoughts on all this

PS: I recognise not directly a PDL post, but it indirectly is too. Diamonds are a luxury and with the data that's going to be coming out in coming months (e.g. like the staggeringly high unemployment figures released this morning), luxury items are - for me - a red flag at the moment

And the drop continues...

Have been doing some searching online to see possible reasons why (beyond selling off to cover losses elsewhere).

1) Both VESTAS and SGRE in Spain have shut down. Whether out of protest or response to the virus, it is possible that UKW IIs are fearing something similar happening in the UK.

2) Somewhat informative article here (https://www.windpowermonthly.com/article/1677028/coronavirus-creating-considerable-downside-risk). You can register freely to read. It's connecting to a Bloomberg piece of research into global wind farms, noting (A) supply chain disruptions that will impact both development and maintenance, as well as (B) potential personnel challenges caused by the virus, meaning staff to service the farms might be negatively impacted.
Combined, there is probability of existing farms not being able to achieve stable production, as well as potential for new developments to fall behind schedule.

I've not seen anything directly relating to competition for electricity. For example, whether or not drop in oil price will make traditional electricity channels cheaper and either reduce demand for wind farm energy or impact pricing out of a price war type battle.

Some informative insights, but still doesn't match up to me... Guess that there is also the fact that once selling has started, there is a general environment of fear and cash seems to be king at the moment. A 7% dividend doesn't fair well when faced in context of large capital loss.

Equally, assuming virus situation is sorted out this year, then assets and supply chains should quickly bounce back and this should be back up to where it was at the beginning of the year... Arguably, SP should be higher as dividend yield will be even more competitive with other high payers (oilies, financiers etc) being decimated

Hmmm.... let's see

Likely people selling off this to cover losses / margins elsewhere. Perhaps also people speculating on higher growth opportunities elsewhere with this recent crash... Can only speculate as to what others are doing and their reasons for it.

SP is now below the last stated NAV (although noting that NAV is down 1.5% this past year). This should limit further drops

"low cost put options at a strike price of US$1,350 per ounce over 60,000 ounces of gold in H1 2020"

That's essentially all of production for H1. Most important thing is that it's a put option, so HUM will still receive spot price (less premium), which is significantly more than the hedged price.

As such, performance for 2020 Re: debt repayment etc will be significant better than forecast

Bailed HUM a year or so back with significant loss...but things are beginning to look interesting now.

Q1 2020 vs. Q1 2019 numbers released next month will be headline worthy. Production up 40%. Received gold price likely up about 15%. AISC down 35%... Very nice!

Current SP was last achieved when gold was around 1450, so lagging a significantly lower earnings period, and when the company was just recovering from all of the problems which occurred from the flooding the other year. No value given to any gains / debt repayments / improvements made during the past 6 months

Current market is highly irrational, so who knows if it will notice. Shame as otherwise think Q1 update would be prime time for re-rate

Interesting that copper found support at Jan 2015 low. Should that break, might get a pause around 2.39, but then looks down to around 2.25 otherwise.
China's going to take a bit to ramp up. Offices are opening across the country, but inter-city travel still invokes a forced 14 day quarantine for most of the country. Then it always takes time for sales figures to be reported. Would like to think that we're near the bottom, but I'm not seeking to add personally. Much rather invest and gain a smaller increase when the trend is up rather than try to figure out where the bottom is.
Agreed though Highlandmatt, assuming this is all resolved within the next 6 moves, investing at these levels may be a v good decision in the long run (am thinking of putting some of my daughters funds in here. She can't access for 15 years anyway, so a lot will change between now and then. Just a matter of timing the buys)

Morning Zebbo. 7p quite likely, just trying to play out worst case scenario for the 6p....which is still pretty excellent at current.

Traditionally, CAML is a cyclical stock. It almost always rises into the April dividend anywhere from 10-20%, and then drops back to around where it started immediately afterwards. As such, I would expect that there will be a bit of that here this spring also.

Unfortunately CAML is just one of those boring / high dividend stocks that (with exception of a global crisis) is a LTHs dream. Too boring and little news flow to attract any traders, with exception of the high dividends

When copper prices dropped to 2.5 (essentially same as today) last summer, CAML experienced a very brief bottoming at 175p. Difference here is that it's not clear how long the drop of commodities may last for, but at CAMLs profit margins, it will continue to pay out handsome dividends even at these rates.
With results out in a few weeks and a conservative dividend of 6p (assuming that they keep aside maximum amount), that'll likely maintain the SP for the next 6 weeks. Unless things materially go down from here, we may even see a rise in the run up to going Ex-div, followed by a more alarming drop afterwards

@Colonol,

Quote from interims: "The impact of the recent weakness in the diamond market on the Group’s operating results and cash flow position has been discussed with the Lender Group, including possible breaches in its EBITDA-related covenants for the December 2019 (measured in March 2020), e June 2020 and December 2020 reporting periods. The Lender Group has re-affirmed their ongoing support of the Group and has waived the EBITDA related covenant ratios associated with its banking facilities for the December 2019 measurement period (measured in March 2020)."

Given that the March tender is also postponed until May due to the virus, also agree that it makes sense to waive the March check and then base decisions on the June check

Not anticipating any positive news here until then... I've scaled back across the bored and mostly in cash until see virus situation improving. And I personally think it's going to get much worse for stocks as US market barely seems to even notice it's existence!

Isn't it interesting how berenburg was downgrading this throughout the past 9 months or so - with minimal cause other than being in league with the shorters. Then in the few months since the shorters have gone below declaration rate, Berenburg have exponentially increased their target - right at the time when the financials and broader market condition seem to be going to pot.
Ah well, not the end yet. But need this virus to disappear as diamond demand will be v negatively effected by China's lock-down

Haven't seen the post. But, allowing ARCM could be a measure of "settlement". Allow them to offset some losses from the short and get out makes everybody a winner. Legal challenges may disappear. SP will be less volatile. ARCM can get lost...then give it another 12 months and PMO mcap should be significantly higher
Only looser would be PI sentiment. Just another frustrating situation where patently illegal activity barely gets a slap on the wrist

tbh, seems to be holding reasonably well considering larger market sell-off. As the good Colonel says, technicals indicated a retracement as they were clearly over-bought. SP at time of writing is sitting on a few key supports (some egs being: historical floor from July 2019; sma25 on 4hr chart, and sma 5o on day chart). In lieu of recent rise, would be quite happy if we can consolidate around here for the week...but wouldn't be surprised to see this return to mid-8s in absence of any immediately foreseeable +ive news.
Still, rise into this H1 trading update was v positive and I'll definitely be looking to increase around a month prior to H2 trading update (assuming this virus doesn't wipe out diamond sales in China & HK)

Figure that a couple of our shorter "friends" are repositioning themselves before the update. (1) Yes, we still have the shorters. Last indication was that they've been hovering around 0.49% each. (2) Not expecting anything amazing from this update. However, revs from the large diamond sell will make numbers achieve all minimum expectations and there should hopefully be an encouraging statement with regards to most recent tender showing tick up in pricing. Combined, we should hopefully put ourselves firmly in the 10.5-13p price range. Much happier sights than the 6s we had not too long back

Managed to bring down my average to around 13p, so looking forward to getting back into positive territory. At least no longer in 5 digit paper loss!