Chris Heminway, Exec-Chair at Time To ACT, explains why now is the right time for the Group to IPO. Watch the video here.
I disagree, they will keep hedging and this means that this rise in gold price only affects us with some delay.
So sorry to hear that mate. I hope everything else in your live is good. I certainly enjoy having you around here expressing some of your opinions. Cheers and good luck and all the best to you and your loved ones
hey guys, do you know where these bonds can be purchased? I mean do you know their ISIN/WKN? Thanks
500Mio at 8.25% is not something I would call a success. Honestly, I would have expected slightly better terms. I also don't see why we need that much. The big question here is who will buy those bonds. I will certainly take a look at them if they trade at a decent price. It's a good sign that the board issued a timely release about this and what explained what the bonds are for. It's also a positive that they see enough demand for such a large sum, I think that confirms the positive turnaround that we have been discussing on this board. All in all, we need to remember though that with these bonds, our reality won't change much, we will be left with a lot of debt for a very long time. Hopefully when the POX hub is up and gold creeps higher, we should see much improving conditions and maybe a dividend soon.
Well said Rusty. I also have no issue with them taking up that bond issue if it's being used to take out the old convertible bonds. Them having a larger stake would also be beneficiary and if they attach a small coupon without the conversion option, then by all means, have them buy all of those bonds. One thought though, it seems like they are pushing a new rating, which means that they are indeed interested in lowering the coupon. If they were into this just for their own interest, they would not get the company rerated, since like this, if they were to loan money to the company, they would be able to justify a higher coupon. I hope that's a solid inidcation that this is indeed simply to improve the balance sheet, which I assume at this point!
Who knows, but maybe they will issue another convertible bond which Renova picks up. They certainly have some money and if they believe in POG, they might just issue these bonds to themselves in order to acquire more shares and cause more dilution. Let's hope not, but who knows. I guess, with this bond issue, we will see whether we can trust them or not ;)
Thanks Kenj. Obviously you have taken a closer look at the prospectus. I was going by what I was reading here mainly. Anyhow, I guess I need to take a closer look at the conditions of those bonds, but thank you for your obviously better researched comments - isn't that what a board is for :) Cheers
you guys are forgetting the future value of money. So the further out the expected cash flow, the more you have to discount (interest & risk). Anyhow, from a financial perspective it makes little sense to pay these bonds now. Especially, since on the new bonds we would also pay some 5-6% yearly, so it's much more expensive than what people calculate. Indeed a true valuation would be more like: $1000 + 5*90(yearly coupon) = 1450 but that's future cash flow, so you would need to discount that outgoing cash so in fact it would be somewhere close to 1300 or so if done properly. In order to pay them off now, this would mean: $1500 + Cost of those new bonds for 5 years) - Discount future cash outflows. I would suggest, we would end up somewhere around 1650 by that method. Clearly it makes no sense to pay them off from a purely mathematical point of view. However, there are two important IFs involved: a) we may not have the money to pay off those bonds in 2022 and maybe, we will not be able to get another loan with good terms then, so this would give us more financial flexibility (at a high price I must admit) b) and now it gets interesting: Renova wants to make money from this. If they believe that the share price of POG will grow will increase substantially, they may want to block bond holders from converting by buying up those bonds. In other words, I think it would be a very very clear message to the markets if they bought up those Convertible bonds at a high premium as it's like a huge vote of confidence by these guys to get into a deal that seems very disadvantageuos on the surface. So that's my take. My take is also, that we don't hear about this until it's decided and all bond holders have been offered say 1300 per 1000 which I think would be a good deal for them.
This was a healthy wash. Now we are able to move up again. I hope management will tell us what the funds will be for. Buying the convertible bonds on the open market will be hard. I don't even know where they are traded. Also, the option to buy them at 1500 for 1000 face value is a bad deal, that basically would mean that they get more than the expected interest payment plus face value. I suspect that they will have to contact the bond holders and make an offer at some market premium, but not the 1500 suggested. Let's just hope that they will simply convert those current bond holders to new bond holders which hold longer maturity bonds at say 5% interest. Anyhow, it will be hard to make bond holders sell as they have such a sweet deal.
re 4: I am long, so that answers your question :)
does anyone know what the convertibles are trading at? I mean, if the intention is to refinance those bonds, I am sure that those current bonds should be spiking on these news.
looks like the original buyer was happy with results and will probably continue to add to his position. I don't expect this to be fast, but we'll see a bunch of these days and then they let it drop again. If some fund is building a position, they will be doing so over a period of weeks and months. Not sure why they add this much on a single day, but then again, we are talking a million in traded value, so this is not all that much when we consider a fund is buying. Once they have enough shares maybe sometime in January or so, they would start pumping.
hey guys, I am not sure if I am reading this correctly, but are they now saying that the POX hub will be up and running in Q2 2018? "to be followed by the commissioning of the POX Hub oxygen plant in Q2 2018." Wasn't this planned for Q4 2018 originally?
and one more thing for clarification. futures market (i.e. COMEX) are made for that. I can always short i.e. June 2019 gold. If I was a trader that would be called speculation. If I am a gold producer, I would be called a hedger because I know I can deliver. The nice thing is, I do not have to worry about gold costing $1000 or $5000 in June 2019. I know my selling price today and can plan ahead :)
one more thing. the only issue with hedging arrives if you cannot produce the gold that you hedged. So this means, if for 2018 we have 1000K ounces hedged at say $1400 and you produce only 500K, then you cannot deliver on that contract. Now this is not a problem if gold drops, because you simple cover the hedge at the current price and profit on the difference. In case gold trades at $1500 at that time it would mean that you need to buy the nearby future at $100 more than you sold it for. This essentially means that you just lost 500,000 * 100 or 5Mio. Since POG or any other company will always hedge less than what they produce, this will rarely happen. Hedging more, would essentially be speculation. In fact any company that does not hedge is essentially in constant speculation. If you do, you will know your cost, you know your selling price and you will know how to change your operations accordingly (hire/fire people, invest in other assets, etc...). Hedging is good, it will always be good and you will always have a discussion about it if prices rise...
very simple, Lawrence ... you can simply go long the futures to cover your hedge ;) But then what's the point to do so. The hedge is good and at any price we are currently trading, we headge more gold, so future hedges are higher if the price is going up and lower if the price is going down. It just means that you know the selling price of the future gold sale today. There is a little cost involved in this, but generally, since it only riquires minisqule margins, you can ignore them.
lol :) it sure sounds like an oxymoron :) Anyhow, gold moving up and so will POG, let's hope Russia makes the right decisions when it comes to South Korea and we'll be just fine. Politics can mess up our fundamentals quite good
we'll be over 8 in no time and if gold is moving higher, we should be going towards 8.30-8.50 range by the end of the week... cheers
Surely would have been too nice to see the gold price also go up on our big spike. I guess that’s too much to ask for. Looks like excitement is already fading. I wonder when they’ll buy their next chunk of shares. Let’s hope not when we’re back to 7p again :)
Absolutely agree. Seems to me that if this was an institution buying, they wouldn’t buy all on the same day. I expect the buying to continue soon when this settles a little.