Roundtable Discussion; The Future of Mineral Sands. Watch the video here.
Factoring everything in we discovered today: Higher opex/t, insurance costs (recurring of cUSD12m /year), higher discount to spot than than at H1:
Here are my calculations of Freecashflow (FCF) in 2023, assuming non recurrence of strikes, derailing etc (their FCF impact was $120m fyi). All below assume realised p at 15% discount to spot.
*At 195/t realised price: $850m FCF/year. FCF yield ex cash 71%.
*At 150/t realised price: $540m FCF. 45% FCF Yield.
* At 85/t realised price: $75m FCF. 6% FCF Yield.
Valuation remains highly attractive!
BUY
Factoring everything in we discovered today. Higher opex/t, insurance costs (recurring of cUSD12m /year), higher discount to spot than than at H1:
Here are my calculations of Freecashflow (FCF) in 2023, assuming non recurrence of strikes, derailing etc (their FCF impact was $120m fyi). All below assume realised p at 15% discount to spot.
*At 195/t realised price: $850m FCF/year. FCF yield ex cash 71%.
*At 150/t realised price: $540m FCF. 45% FCF Yield.
* At 85/t realised price: $75m FCF. 6% FCF Yield.
Valuation remains highly attractive!
BUY
Sorry lots of typos, I rewrite:
No you should: 1) adjust for the one off non cash charge they are taking as I discuss above. Then you should calculate PE on market cap EX cash. Since the enormous amounts of cash artificially inflates your headline PE.
It’s on 1x adjusted PE
No you should: 1) adjust for the one off non cash charge they are talknf as I discuss below. Then you should calculate PE on macroer cap EX cash. Since the enormous amounts of cash artificially inflated your headline PE.
It’s on 1x adjusted PE!
Plenty of info on here.
Net net the KEY TAKE is as follows:
* GUIDANCE for 22: EPS 131Ran/sh (No shares of 133.7m) => this figure includes one off hit from closure of Kwezela complex one off NON cash charge of USD63m. Excluding this: net income 2022 guided at USD1080m. This number is the fire CONSISTENT WITH H1 performance, annualised. This means we trade on BOMBED 1.2x PE ex cash!!!
If there is one take from the results it is this…
This factors 236/t average raised price with 15% discount to spot.
* Whole costs guidance are higher, BUT the volume impact from strikes, rail performance and derailing is much less than people had expected. In fact relative to volumes, -0.6Mt from these in 2022 (-5% on group volumes). The new target of saleable volumes of 12.8Mt is indeed 0.1Mt better than prior mid range guidnace! In sum, the volumes hit from the strikes etc is probably less than HALF what’s priced. As such, the hit to the shares are more than factoring in the net effect of these two.
*Massive cash pile as at Nov: USD 1150m vs 909 in H1. This is BETTER than I had expected.
Thanks for the selling. I was sitting on the other side of the trade buying, and buying more.
Stock in free fall.
Nonsense reaction to release which posted a loss.. none sense because that’s had already been reflected in NAV of company.
They are simply marking to market the U price in the financials.
Stock now at 13% discount to nav.
Bear in mind they GBP/USD is likely to weaken so you are staring at lookthrough 15-16% discount to nav - so very close to pricing in $40/lb U.
What’s the downside? … With 2x+ upside potential.
MOST OVERSOLD SINCE COVID CRASH with RSI very close to then.
NO BRAINER BUY. BUY. BUY.
(Impeachment would require 2/3 of Parliament voting in favour… But we know the ruling party which itself has already said it would vote against impeachment itself has a majority in parliament. That impeachment is going to be voted down).
And then fasten your seatbelts on the shares.
Higher coal prices and maths have been totally ignored in favour of noise.
Time to reload.
In the meantime…
Company currently printing >USD3m of free cash flow per day currently… that’s 1.2bn of freecash generation per year at $245/t spot coal.
That compares with market cap ex cash of 1.4bn => nearly 85% freecashflow yield.
DIRT CHEAP
SA Articles today writing that senior figures of ruling party backing the president. Also says therefore unlikely to be impeached. Ruling party has by far majority.
Transnet indicating that things are returning to normal.
This is again a BUYING opportunity.
So focus on the numbers rather than on narrative about politics.
The president said he won’t resign and refutes any wrongdoing.
My reading is in any case, were he ever to be replaced it would be by someone from his same party - and were this to happen it would be a lengthy process.
Trading at these levels when coal is at $260/t and when we have cold spell is an utterly nonsensical.
Again this is a BUYING opportunity.