Member Info for Mhaines06

20-30% free cash flow they mentioned.

For previous year at $2400/Oz post tax profit was $28million.

Extra $600/Oz profit ($3000 average) and production forecast from 37koz to 45koz, you'd be looking at $50million -$90million.

20-30% of that probably $12-$18mil

/80mil shares is $0.15-0.2 per share or £0.12.

At £1.50 a share that's 8% yield.

Please excuse my hand calcs on the fly and I've attempted to be conservative in all figures.

Yes, although my understanding is that Starboard was primarily involved in Petrobas during the restructure period, buying up sold off Petrobas assets after the corruption scandal.

I don't think Starboard was used in anyway to facilitate the corruption, instead, they revitalised assets that were a victim of corruption and scandal by buying up stuff sold off from Petrobas.

Starboard are probably attempting something similar here, buying up influence in a company that may be the victim of corruption/bureaucracy around it's licenses and hoping through it's influence, connections and experience to resolve these positvely.

Their vision: "We're not into broken business models or melting cash flows—we target good businesses temporarily under pressure." seems to me to be a good fit, as Serabi is cash generative, but clearly under temporary pressures with investors wanting to pull out and license issues.

I completely get what you're saying though, until the license is resolved it is a big risk. TBH even if it is, South America and Africa are always a risk.

The current share structure includes a significant position from a Brazilian based investment fund.

In places like Brazil I tend to view that as a positive, as there is likely a nationalist sentiment. If Brazilian's can benefit as well as investors, then it would be a win-win. I doubt Brazil's interest would be to make it worse for a Brazilian fund.

There has been significant turmoil at the BOD level, which can be an issue.

I think the risk of a hostile takeover is definetly elevated. I guess the theory would be to withhold the license grant, to drive share prices down and allow local institutions to buy at a bargain, before granting the license. Brazil has meddled before, for example with Petrobas, although that was a resource on a much larger scale to here. I question if the National government really cares about a sub £1bn company - maybe regional government does, or certianly individuals may do.

Petrobas was also strategic, in that the government could use it to drive energy prices down for ordinary people. Gold is not useful in that sense, you wouldn't force sell gold at a lower price to help local people. (You could just slap a big tax on it, but that's a risk everywhere these days).

All in all, I think it's a bit too difficult to really tell how this will play out. It's the nature of being a Brazilian mining company, there's always risks. An investment team more aligned to Brazilian interests and with better connections could actually be a positive for the company. If there is any funny business here, it will be at the individual level rather than national and regional and if individuals are involved through a brazilian owned investment fund, the funny business is likely to end more favourably.

Not suggesting there is any indication of any of this kind of stuff though, and there's certainly no public suggestion of it. Can only speculate as to the motives behind the sale.

I find it interesting they resigned with immediate effect from BOD then immediately dumped a large portion of their holding.

I suspect they'll dump the rest in short order.

I guess there are any number of possible reasons for this, ranging from fallout to direction, to hostile takeover and government or cartel pressure.

I think it's impossible really to speculate. My thoughts are that there are probably just better investments out there that they need the cash for. I watched the CEO present and he basically said, other than planned growth areas, they don't have anything lined up so will have to return cash to shareholders. I imagine for some companies that signals the end of the explosive growth era and they would rather allocate investments to more early stage stuff. They're probably looking at bigger fish and/or lower risk areas. They may have fallen out with the CEO on this topic, who knows, but I think that's probably the most likely reason at this stage simply because it's the most boring reason.

Reading RNS it says they may issue up to 2.5% new shares to help with liquidity on the ASX.

I respect your enthusiasm GoldGeezer, I'm wondering why you're bothering to post on a stock you don't believe in? There's infinite stocks to pick from, why are you so interested in trash talking this one?

Okay, so I get there is a Coringa risk.

Is that the only unknown at this point?

The Coringa upside seems strong and also it does seem like they are finally moving on this. I've never established a gold mine in Brazil, but from the reports I've read they are progressing.

My main concern with gold so high is cash strapped governments will come after them. But I don't know if Brazil is more susceptible than anywhere else. I also don't know if this would benefit Coringa (Get started I want money) or hinder (Actually I want huge margins because you're rich). I mean UK slapped huge taxes on O&G.

Some unknowns but also some strong upside. I think the potential growth rate is worth the risk. There's always an elevated level of risk in these much smaller companies. At least this has a small foundational production so we have the cash flow.

Can someone explain what's going on here. What I could be missing?

By my back of the napkin stuff, they had $9 mil net cash increase in 9 months at gold price $2.3k. At $3k and 12 months that's what $30-$40 mil. Plus we're looking at product growth. Plus $20 mil cash now. In like 2-3 years we're looking at net cash position of the entire market cap?

If they achieve their growth targets then the figures become more ridiculous.

I know there's risks with one of the licenses, probably Brazil politics, theft etc. But with everything going on in the world, is this really a fair value?

What's the likelihood they could change tax from PPT to PIA?

If they could change, what impact would it have?

85% tax is oppressive, no wonder investment in Nigeria was so low.

I agree, I think there is a likelihood that it's down to a 30% stake, otherwise it wouldn't take as long. I assume there are some negotiation points.

Given a 30% not 40%, what impact do you think it will have on the acquisition for Seplat?

My Opinion, but interested in thoughts:

It's Net cash 500k, as in Cash at bank - liabilities.

Granted it's not much of a buffer in this climate, but it does mean the cash at the bank covers all liabilities and it does look like they are actively paying down debt.

What's concerning is the decreasing margin and increasing administrative costs which effectively destroyed all profit.

Coupled (and probably caused by) the increasing headwinds.

You've got to say the long-term demand for this companies products and services will be high, just whether it can survive the storm and can capitalise whilst ahead. I'm excited by expansions to warmer, developing climates (India) on the water front, which have challenges above simply trying to be "green", they really do need to manage water effectively.

Currently the board are indicating they can survive this downturn and continue to expect to be in a net cash position at end of year which is promising. It's impossible to say how long the downturn will last though, although UK elections in 2025 will no doubt see "green" proposals slammed everywhere with funding for votes.

I'm overall bullish on this share, it's hard to say relative to a generally downbeat stock market, particularly riskier AIM's, if it's "oversold", there may be better investments. I find the boards reports refreshingly honest and direct compared to some I read and I'll put a little more in at this lower price - (primarily to offset my "guilt profits" from oil+gas).