Member Info for Mike1959

….the death spiral continues,BHSI down again today, now 747.
To make matters worse, I had not seen the Q3 results for GRIN when I wrote my post below, sadly the NAV at the end of September was lower than I imaged at $ 20.19/share and paying the $5 special divi to non-TMI shareholders will reduce this to around $16.5/share ,if the BHSI does not recover by the end of December the NAV /share could be even lower so bidding $21/share , TMI will be paying a premium to NAV for the 14 million+ GRIN shares it does not already own.

...yes the Baltic Handysize Index (BHSI)is down to 763 today, that is a fall of 47.95% YTD.
As a very rough calculation TMI/TMIP can live with this. As at 30th September the unaudited NAV was $1.70/share (down about 5% from Q2) and based on current levels I think this will drop 10-15% at the end of the year to $1.44 - 1.53 which at the current 1.18 £/$ equals about £1.22 -1.30 which is equivalent to a discount of about 25-30% on the current 91p share price.
But the problem is now with the $21+5 offer for the remaining Grindrod shares as the Baltic indexes have plummeted since the offer was originally made in August. At the end of June the Grindrod NAV was around $30/share but falling charter rates/ship values could reduce this by say 20% at the end of Dec which would be $24/share and as they are committed to paying the $5 special dividend to non-TMI/TMIP shareholders (about $70m) this could reduce the NAV to about $20/share.TMI/TMIP is committed to buying the remaining shares at $21 so could have to buy them at a slight premium to their NAV.
If the deal goes through then the bigger Company will still be trading at a discount to the NAV but the deal will not be as successful as originally thought and the lower the BHSI goes the less successful the deal will be and the bigger the cost savings will have to be to justify the deal. DYOR.

Oufc, these are the percentages in the Reef .
So for PGM's the ROM throughput is 2.46 million tonnes/ year( 205k/month )x 3.06 grams/tonne x 81 76% recovery =6.034 tonnes or 6034 kg of PGM's.1kg = 32.1507 troz oz of PGM so 6034 kg =194,000 troz oz of PGM's/ year.
Assuming the recovery is the same for copper the calculation is 2.46 million tonnes x 0.10% x 81.76%= 2011 tonnes of copper/ year.
The same calculation works out as 2414 tonnes of nickel/year and 80 tonnes cobalt / year.
Of course Karo will not convert this to refined copper/nickel/ cobalt but even if they get say 70% payable then these are worth roughly about $52 million/ year based on current London Metal Exchange prices.

Sam/Krusty-yes it is a great sign that directors are buying but what is making me nervous is that the Baltic Handysize index dropped to 855 yesterday, 17 consecutive daily drops and down 15% since the end of the September NAV update and the lowest level since the TMIP was admitted to the stock market in May last year.
I know that the board is doing everything they can to lock in longer charters and reposition vessels to the most profitable routes but eventually the cyclical nature of the index will catch up to them.

Sam/Krusty-yes it is a great sign that directors are buying but what is making me nervous is that the Baltic Handysize index dropped to 855 yesterday, 17 consecutive daily drops and down 15% since the end of the September NAV update and the lowest level since the TMIP was admitted to the stock market in May last year.
I know that the board is doing everything they can to lock in longer charters and reposition vessels to the most profitable routes but eventually the cyclical nature of the index will catch up to them.

Hi RetiredBanker, I remember we had a similar conversation in September when I mentioned your net profit idea of £150m @ 1.15= $172.5m looked too optimistic.
I am expecting $142 m which would give a PE of about 2.3 and a dividend yield of about 6.5%.
Either way these are great numbers and as you say we will find our in early December.

Chrome stocks at Chinese ports were 2.524 million tonnes on 28/10 ,down 139,000 on the week before after delays in shipments from S Africa (probably a result of the Transnet strike which finished 10 days ago) and stronger Chinese demand.
Last week the S African 40-42% chrome concentrate price increased to $235-245 CIF Chinese ports.

Visitor, I totally agree.
This really does put life's problems into some sort of perspective.
My thoughts and wishes to the grieving family and friends.

Krusty/AdamS, thanks for your replies. For April-September 2022 I am expecting an operating profit of about $50m and a fair value reduction of the overall vessel portfolio of up to 10% (much less than the 17% loss on this Supramax sale,as the smaller Handysize niche is generally performing better) or a reduction of up to $50m so in total roughly breakeven. So I expect the previous 33% discount to book value to shrink a little but to remain above 25%. This is the vagaries of this sector! Anyhow, in the RNS today TMIP have advised we will know the figures next Thursday 27th Oct.
I agree that operating in southern Africa is not easy as we know on the THS site. In fact I think that Grindrod have done a good job working with the Mozambique Authorities to run the port of Maputo which is reflected in the vessel numbers over the last few years. We have all had bad share experiences, so you are doing the right thing by sitting watching from the side lines until you have more confidence in the business.
Like Krusty I will consider topping up before next Thursday if the price drops below £1.

AdamSmith, your facts are correct, the vessel was sold at a loss of $4.15m or 17% of fair value but you are basing the valuation on the last FY ending 31st March 2022. To be fair to the Company the same RNS of 12th Oct says the sales value of $20.1m is "broadly in line with the current carrying value based on 30 Sept 2022 Fair Market Value" . In other words, the value assessed independent value of the vessel has dropped from $24.25m as at 31st March to around $20.1m when the next valuation was done for the interim accounts as at 30th September.
This just highlights the earlier point you have made about the market being sceptical about the 33% discount to book value at the March valuation. The latest valuation looks like the total value of all vessels will have fallen between March to Set 2022 so the discount will probably reduce when the interims are out. This is nothing underhand or sinister, it just shows the reality that the value of vessels can quickly increase or decrease depending on demand/supply, this is generally reflected in the Baltic Index. Generally TMIP have shown that most recent vessel sales have been at a premium to the book value, if you go back over the last 12 months then I believe you will see this . Also with the expected takeover of Grindrod expected to proceed, remember in cash, then TMIP will be keen to raise some cash and possibly have not argued too much on the price of this particular sale.
When TMIP said this sale generated an IRR of 25% they did NOT say this was relative to the current book value, rather it will be in relation to the original seed purchase price.
Overall this is an experienced, professional and forward looking management team operating in a market that can trend from positive to negative relatively quickly. The Company has recently said that after a softening of the market earlier this year their specialist Handysize niche sector is picking up again and they are bullish for the sector for the next few years and this is reflected in the Grindrod deal.

AdamSmith, your facts are correct, the vessel was sold at a loss of $4.15m or 17% of fair value but you are basing the valuation on the last FY ending 31st March 2022. To be fair to the Company the same RNS of 12th Oct says the sales value of $20.1m is "broadly in line with the current carrying value based on 30 Sept 2022 Fair Market Value" . In other words, the value assessed independent value of the vessel has dropped from $24.25m as at 31st March to around $20.1m when the next valuation was done for the interim accounts as at 30th September.
This just highlights the earlier point you have made about the market being sceptical about the 33% discount to book value at the March valuation. The latest valuation looks like the total value of all vessels will have fallen between March to Set 2022 so the discount will probably reduce when the interims are out. This is nothing underhand or sinister, it just shows the reality that the value of vessels can quickly increase or decrease depending on demand/supply, this is generally reflected in the Baltic Index. Generally TMIP have shown that most recent vessel sales have been at a premium to the book value, if you go back over the last 12 months then I believe you will see this . Also with the expected takeover of Grindrod expected to proceed, remember in cash, then TMIP will be keen to raise some cash and possibly have not argued too much on the price of this particular sale.
When TMIP said this sale generated an IRR of 25% they did NOT say this was relative to the current book value, rather it will be in relation to the original seed purchase price.
Overall this is an experienced, professional and forward looking management team operating in a market that can trend from positive to negative relatively quickly. The Company has recently said that after a softening of the market earlier this year their specialist Handysize niche sector is picking up again and they are bullish for the sector for the next few years and this is reflected in the Grindrod deal.

Thanks Ilja. I am personally glad to hear that Maputo port is half run by Grindrod as I have shares in Taylor Maritime Investments Ltd (TMIP) which already owns 26% of Grindrod and is currently trying to buy the rest by the end of October. I suppose the dredging is needed to get the bigger vessels in and out.

Hi Ilja, thanks for the explaining that, it is always good to learn!
I know that you have previously commented that around two-thirds of the chrome concentrate now goes to port by truck rather than train but can you comment how the Transnet strike is affecting Tharisa?

Chrome production a little lower than I estimated, looks like no real improvement in the quarterly improvement in the Vulcan efficiency at 69.6% compared to the target of around 80%. But this is more than made up by the excellent PGM production of 45.3k ozs which continues to benefit from the quarterly rougher feed grade of 1.67grams/tonne compared to the expected proven/probable figure of 1.43/1.45.
These actual chrome/PGM production figures add $2.5 million to my expected FY PAT. Likewise it is great to read that the cash balance at the end of September increased to $143.4m and that ground breaking at Karo is planned for December, just hope this does not slip back.
Overall a solid performance which further reinforces the credibility of the management team.

ic152/Sotolo, I agree with both of your sentiment, the share does appear unloved and the excellent news of the strong USD has not been reflected in the current share price.
If the PAT is actually as suggested I think the price could have a minor increase of say 5-10% as more people become aware of the good numbers but the current market conditions are just too negative to have a bigger improvement.
I think it would take some considerably higher than expected numbers and positive news to move the share price higher. My numbers are based on Q4 PGM production of 41,100 ozs or 175,000 FY and Q4 chrome production of 434,600 tonnes at Tharisa/5,000 tonnes at Salene and a total FY of 1.606 million tonnes. With continuing improvement in Vulcan I have assumed a Q4 chrome recovery of 72.5% so still short of the eventual ~ 80%. Reef milled 5.639 million FY.
We shall find out on the production numbers on 11th Oct.
Hopefully sales have gone well and with improving beneficiation the free cash flow number is surprisingly good. lIKEWISE

Hi Visitor - I agree with your comments particularly on the exchange rates and I expect the next chrome price to be above$210/tonne. I am sure we will get an basic update on Karo with the Q4 numbers on 11th Oct and considerably more detail in the FY results on 5th Dec.
Although the Johnson Matthey rhodium price is still at $14,000 today (and Sibanye Stillwater $14,100 today) on their twitter page on 23rd Sept, Tharisa had their rhodium price at only $12,660 which was a 9.6% discount to the Johnson Matthey price when it is normally trading at about a 5% discount (not sure if this is to do with the phasing out of the Impala contract).
Somewhat of a bloodbath on the LSE today for some blue chip companies so Tharisa has done well to be only 2p down today. Despite the PGM fair value reduction this week knocking about $2 million off the profit after tax, with 2 days to go I am now expecting FY 2022 profit after tax to be $135-140 million, with a PE of about 2.5 and a dividend yield of just over 6% (the interim dividend was 2.39p and I am expecting a final dividend of 4.4 cents @ 1.08= 4.07p).
Looks good!

….at least the 4 were all buys, and ended 8 trades for the day but only 2 so far today!

Hi Visitor, I agree with the points you have made below particularly on understanding how Leto fund their proportion of the costs (possibly it will work like the BEE interests used to?).
On the Special Enterprise Zone in Zim with only 15% corporate tax this will be very small this FY with Salene probably producing less than 50,000 tonnes (expected to increase to 80,000 tonnes in CY 2023) although it will be a sizeable number once Karo is full operational in 2025.

Going back to the 2022 net profit the other two things that I should have mentioned were that in H1 there was a change in inventories of finished products and ore stockpile that reduced the Cost of Sales by $12.862m and I am assuming, rightly or wrongly, that will not happen in H2. Then in H2, while most of the major investment in equipment for Karo will be capexed and show on the balance sheet, I am assuming there will be some operational expenses for Karo which will come through as extra costs on the profit and loss statement.

Hi Visitor, yes net profit in H1 2022 was $101.6m but don't forget this included some big one off numbers that will not be repeated in H2. In HI there was a $48.597m gain on acquisition of subsidiary (Karo) and the corporation tax paid on the pre-tax profit of $124.296m was only $22.67m or equivalent to only 18.24% due to some unusually high tax exemptions so in H2 there will be no $48.597m gain (although of course it will be there in the FY figures, I am assuming no revision downwards) and in H2 I am expecting the tax charge to be back to 26-28% after tax exemptions.
In H2 total revenue will be up on H1 (I am assuming the news on Vulcan/Salene and production numbers will be posative) but similarly costs will also be higher in H2 (I agree the weaker ZAR against the $ will help to keep costs down). So this explains my net profit of $130-135m and Sotolo is pretty much in line, which at current exchange rate of 1.16 works out as £112-116m.
I totally agree with you that this is a ridiculous valuation for THS based on the numbers you mention and PE and dividend yield mentioned by Sotolo. I think net cash at the end of September could be double the $48m you mention if Tharisa is now sending less PGM concentrates to Impala and found a quicker way to speed up the processing (greater in- house beneficiation) which will reduce the PGM trade receivables.
Likewise I agree with you that this will be the first annual accounts without the confusion of the non-attributable shareholders at the year end but part was still there at H1 (the BEE interest which have now exchanged their interest for shares in Tharisa) but don't forget we have signed up for a similar arrangement in Karo which might not be evident until production has started in 2024 (effectively the Zim government owns 15% of Karo Platinum without having to pay any costs with an option to buy more, Tharisa owns the equivalent of 63.3% x 85% and the Leto Settlement the rest).
As I have said before it is good to exchange numbers so if you think my numbers are wrong or I have missed anything then let me know!

On Friday the S African chrome 40-42% price CIF China was slightly higher at $190-200/tonne bulk.

Hi RetiredBanker,hope you are right. A 3rd director also bought 20,000 share on 6th Sept. The directors are not allowed to buy/sell between the end of the financial year at the end of Sept and the publishing of the accounts in November so they are jumping in now, which suggests some optimism and perhaps the numbers will be better than expected.
Your net profit for FY 2022 of USD 150m + looks too optimistic to me but again I hope you are right. I am expecting Profit After Tax to be $130 to 135 million. We will know more after the Q4 production numbers are published in October.