Roundtable Discussion; The Future of Mineral Sands. Watch the video here.
Looks like going home empty net today. Cast net early dawn for 10.5p all the way to 9p in incremental small bites. Sp seems boring, range bound, shorters/bots not working hard. Let see at 1pm to 3pm.
Needs something positive from Duffy, broker rating on buy May help a bit for now.
Agree with CD points. Duffy is an acknowledge old bird with some reputation. Renegotiated debt governance with BEE banks effectively. He still have untarnished reputation. Let see in a year time how 2022 project fair.
20p takeover, as shareholder I will revolt....hahaha. prefer 30+p at least.
Tomorrow another day to wait for another plunge opportunity. Did badly today with only 10k shares bought. Judging from today, so held up pretty well about 11p. May be a breather for the next drop.
Shorters/bots working hard in the last hour after 3 pm.
Heading back to 11p. Opportunity.
Takeover can occur if debts goes down another 150 Mln, 350 mln debts may look interesting. Provided sp remains in the teens. 150 Mon is doable in 2 to 3 years if fcf is strong despite low rough diamond prices.
Getting boring with this range bound tug of war between buyers and shorters/bots. Well tomorrow morning then for 10 to 11p wait to pounce again. Enjoy the heat waves.
Hopefully some broker radiate tomorrow. They all must be out in the sun today crafting they recommendations.- how many pence to slice.
Hoping for a bit more, may retrace to below 11p later, depends on buy momentum. Line up for 11 and 10.5p since yesterday, got only 10k at 11p.
I reckon Duffy in catch 22. What the 8p analyst Berenberg says has some degree of likelihood. With the fcf 150 to 200 Mln, meeting the May 2022 650 mln bond maturity payment is tough. Duffy in the conference call fail to answer Berenberg queries on this effectively. He diverted to answer like we have many options being considered. I reckon the options are refinancing with borrowing at slightly higher coupon near maturity, may be 8% instead of 7.25%, debt to equity swap, which we really do not want as it will obliterate PI like us, or we except another large right issue which I hope this may not happen in the next 6 months. Other outside option is takeover acquisition.
As such in one year, I do not see Duffy will rush for cash before demonstrating at least project 2022 works. If project 2022 does not deliver in a year on target fcf, then call for cash will be a necessary route.
Duffy can not rely on large carat in his sofa, as it takes a decade to eliminate the current debt. Only dream hope is finding 3000 carat like once Culinan was famous for. Will not bet on this.
This stock is mid term punt, from 2019 to 2021. At some point near coupon maturity 2022, must bail out at least 18 months early.
I suspect tomorrow; shorters and bots will again come in force attempting to push it down quickly at the start, may just gap down below 11p. May be a short time frame to be quick at the trigger to get 11p or sub 11p. Hopefully get the opportunity. Will be very please if could make the first load up at 10p to 11p. Agree that there are many big buyers circling; just like today with big buys 1mln, 400k, 250K. I expect the lower the sp, the more volatile the buy and sell.
This will go up in the short term, but may take sometime to get back to even 18p. 20p will be a strong resistance to break.
Some pdl fans on this forum hoping to get back to above 30s; but i reckon this may take at least 6 to 12 months. 16 Sept full years results may be lacklustre unless some large carats found in Duffy sofa. Pray for no major strikes or major production issue at all the mines for 2019/2020. Duffy seems to be confident with good high free cash flow for the next 3 years.
Good luck to all. And may the shorters/bots be caught out at this low sp price....hahaha
Indeed good to see how many p Goldman will slice.
Timing announcement important, not to soon as it is not effective to stem this panic fall. Let it stabilised naturally. Seeing some big buys today, 25+ Mon shares transacted, busy day.
Broker call, say prepare for tomorrow opportunity at 9 to 10 p. Difficult to fall lower. Told him, I am there waiting already to load up. He says you know the risk and rewards gamble.
Pdl already nego payments timing, BEE banks are accomodative. They get paid. It is the coupon interest rate that pdl must honour. Default means fcf problem. Near term as in one year should be absolutely fine. Duffy will not refinance or do debt equity swap in this year. He needs to prove his credibility for project 2022.
At this rate of depressed price, take over can occur. Less than 750 Mln, can buy out pdl. Hahaha...
Probable for today 12.5p bottom. Some good buying occurring while small selling still prevail. May touch slightly above 13p if late buying by 330pm.
Tomorrow nerves will be tested again.
Ready for 11p and 10p just in case. Golden opportunity.
I think 10p is likely. Many panic sellers. It will calm down in a day or two. Wait for Duffy to make some positive announcements.
Sound very much like my past favourite dire Lonmin.
Much dire cash flow, low platinum price, right issues at 1p, bought out eventually. Super roller coaster ride from 2 to 4p to 200p and down to 35p and finally bought out at 80p.
I think pdl is much better situation. Optimistic pdl will survive better.
Looks like sp on tight thin rope, going to plunge again today below 13p. 8p is overdone.
Fundamental pdl looks ok with some risk. Give it a 6 to 12 mths, back to 40p.
Produce 3.8 mln carats per year.
Average price US$ 124 per carat.
Cost production $70 to 75 per carat
So, there is gross profit.
Capex next 3 years low, US$43 mln per year.
Debt at US$537 (deduct debtors $23) with interest coupon 7.25%...ouch high. Only needs to pay off $5mln and next 3 years $24.6 mln each year after renegotiate.
Assume pdl can still pay the whooping interest approx $39 mln each year.
Net cash flow 150 to 200 mln for next 3 years seems ok.
Paying down debts further looks possible.
Contribution from Tanz seize parcel and VAT assume nil.
The only few cavests, impact fcf and debts repayment
1. Rand must not fall to 13 to US$1...possible to stay in 13 to 14 due to SA weak economy.
2. Production must be at least 3.8 mln carrots or higher. Each 0.5 mln carats means a lot of contribution to fcf. So, no strike at any mines in next 3 years...risky
3. Rough Diamond price must not weakened further, currently range around US$120 to 130 per carat. Below 116 would be a problem to achieve 150 mln fcf. Culinan at some quarters previously only did 96 per carat. Need big finds behind Duffy sofa, 100+ will improve average price higher than 120 per carat. Culinan is key to find big carat, a few large one's will send sp to moon. Hope full for one thousand carat, like for Alrosa or Lucada....dreaming for the best.
Debts can be reduce below 450 mln in 3 years.
Good luck, hang in tight, at this low prices, too good an opportunity. Just sunk in another 40k shares.
Looking this goes to 30 or 40p within 6 to 12 months.
mystic888; you may be interested in the overhead cost of each mines.
https://www.petradiamonds.com/wp-content/uploads/Copy-of-CoS-recon-H1-FY-2019-3.pdf
Mine operating cost, numbers many looking for. However Duffy promise only available in Oct update. Mine like Finsch on ramp up. Thus, clearer numbers in oct. Seems like Duffy tactic pitching low on carat production FY2020. All this will get 40p in a year time, starting with improve financial numbers in Oct. Finger x.
Duffy was queries on this in the conference call. His response was they are doing all they can with regularly discussion with Tanz govt. He mentioned it is a difficult discussion on VAT and seize parcel. In project 2022, the net for project 150 to 200 Mln, he has budgeted recovery of on 7 to 10 Mln only, i.e. 25% of the total VAT and parcel worth 40 Mln. Time frame 2020 or 2021.
Fully recovery will definite help to cut debts.
Anyway project 2022 target is net fcf, ie already deduct debts payments to all parties.
Well you point are valid on timing. The question how far will sp fall.
Duffy free cash flow project seems not online with expectation. From results FCF was 17mln, with approx 44 mln debts payment. So fcf is around 61 mln. Duffy project only quote 200 mln highest level over 3 year, 65+ mln per year. This is reflecting existing performance. So, nothing special with the 200 mln. 150 mln means it fall short. Debts can only be reduced by more 100+ carrot finding and capex reduction. Although capex in 2020 is about 35 mln in total, they should have much more cash flow. Something not write as some hidden cost resulting in debts just not really moving down below 500 mln.
I hope the sp stabilised, but 12 to 15 p looks likely now.
Good luck all. Wait for price rerate., long risky wait.