Roundtable Discussion; The Future of Mineral Sands. Watch the video here.
If we’re lucky they will have loss of earnings insurance too. This is a little less certain though. As we’ve seen from COVID, there are conditions under which it won’t pay. Even if they don’t, a month downtime will cost roughly 1/24th of income. Spread that over 4 years to calculate the impact on share price value and its 1%.
We’ve been down this road before. A lucky break saw manganese go through the roof and JMS relisting. Metal Tiger refinanced RRR under some conditions, including a big cut in monthly costs. Whatever cost cuts were achieved, the company now spends more on admin than ever and continues to invest in write off projects.
The JMS share buybacks and dividends were more than enough to cover ordinary expenses as we waited for movements on existing investments, like Kenya and the JMS iron ore royalties, but management insisted on spending more and more, so there has been more dilution and sizeable amount of debt issued.
How can we expect a second lucky break to be any different?
Although you don’t have to report leaks, many companies do to avoid reputation damage and to prove they have nothing to hide. Without mines society would break down completely but there is a sad truth in that they are among the worst culprits to environmental damage there is.
The Church of England, who have massive investments in UK listed companies and a lot of influence over a good number of other investors, were alarmed by the amount of damage done by mining and set out a code of practice for waste management. Among these was an assurance that tailings were being dealt with responsibly, and any company wanting their backing had to set up a policy in line with their policies. If you follow the link I put below to the CAML tailings policy you will see they specifically mention the Church of England’s standards in their statement.
CAML has a very responsible tailings policy, as outlined on the link below. Accidents like this happen far more often than you’d expect, but mines don’t have to report them. The one thing you can’t fault CAML for is it’s prudence. A company as prudent as them will have insurance. You cannot make a profit from an incident through insurance but think their loss will be almost a non event
https://www.centralasiametals.com/sustainability/tailings/
They estimate 3000 cubic meters were spilt. That’s 3 million litres. The dam wall was breached in Sasa 4, which according to the CAML website only went into operation late 2019 or early 2020. If this is correct the people dumping their shares are making a huge mistake
https://translate.google.co.uk/translate?sl=auto&tl=en&u=https%3A%2F%2Ftelma.com.mk%2F2020%2F09%2F14%2F9643%2F
Tailing dams **should** be insured by all miners. I work in reinsurance and it’s a big industry, especially after the Vale dam disaster. It not great news for my employers though.
https://www.hdi-specialty.com/int/en/insights/articles/tailings-dams
https://www.munichre.com/topics-online/en/infrastructure/risk-prone-dams.html
A company like this will have insurance for such events. Unless there has been gross negligence, which doesn’t seem to be something that CAML would be guilty of, the policy will pay. There’s probably an excess, and a payout will hit future premiums, but a first time accident like this will not be a dealbreaker. North Macedonia can’t afford to spook investors by throwing the book at them for a first offence.
Just pray it doesn’t happen again.
Orion are a big investor in mines around the world. COVID has torn through South America (worlds biggest copper producing region) and slowed things down in other places like Australia. Their big sale could have just been them shoring up their cash position or transferring risk somewhere else.
Helpless, all those points you make sound just like the points made around convincing us what a great bargain Steelmin was.
A historically high gold price has raised interest here because of various gold assets held, not because people think the MD knows what he's doing. The FTSE 100 is up 2% today on the back of a falling pound, something that a UK listed gold miner would definitely benefit from and so RRR should have gone up too, but because of yet another bad decision by AB, the shares are down nearly 10%.
Andrew Bell is unique in that he is the only MD in the world who could scare investors off a gold explorer in a market like this.
Helpless, I spent all of last week going on about how, the minute there is any good news, Andrew Bell takes whatever money or extra equity comes in and flushes it down the next toilet he finds. True to form, after the POW warrants come in the money and JMS declares a dividend (and this is assuming we actually still own JMS shares) , an RNS comes out saying whatever has or is coming in is going straight out again.
Unless we can oust Andrew Bell, this latest project will see RRR pour in more and more resources then be written off within the next 12 -18 months as we come to realize why no real investment professional was willing to take it on.
History repeats itself!
... maybe a cross between El Limon (Andrew Bells failed Columbia venture for those new to the forum) and Steelmin, his failed Eastern European venture
This looks awfully similar the Columbian gold catastrophe.
Wow Helpless. That really hurts. Your are about as good with comebacks as you are at polishing turds.
Helpless, what was that you were saying a few months ago about Andrew Bell now concentrating on developing the African assets, rather than spending money we don’t have? But I suppose this plays right into your hands, getting interest on the loans you’ve extended them with the assets the shareholders rightfully own as collateral
The world economy has just had its biggest crisis in at least 100 years and all CAML had to do to balance the boat was cancel it’s final dividend. Once the debt is repaid and all other things being equal they should be able to pay a 40p per share dividend. Of course, they may elect to hold some of that back for future investments, which is also not a problem. The only possible issue is that they will struggle to find more ultra low cost operations, which seems to be their niche. As we’ve seen with copper bay and Shauk, they have not had much luck with exploration. However, they seem extremely well disciplined with their spend in this area, so it not finding new assets will more likely lead to a very shareholder friendly run off than panic selling.
Helpful, I agree 100% on your point that this is big news on the iron ore side, but still have to be convinced that Andrew Bell will not blow the $4 million on another go nowhere project. How can we trust him to act responsibly with a history like his?
I’ve been waiting years for Kenya to come through and it couldn’t have happened at a better time. The COVID backed gold surge has made this a really valuable company. Unfortunately, if you have a compulsive gambler sitting at a blackjack table with £50 million in chips, you’ll be lucky to find someone to pay £5 million for whatever’s left when he leaves the casino. Get the chips into someone sensible’s hands, and they’re worth face value.
I hope we still have some JMS shares. True to form, AB sold a bunch of them without letting anyone know last year. We were very low on cash at the last financial report and those huge salaries don’t pay themselves
Could be anything. Polar might have another stock they see as a better investment. US technology stocks are going through the roof. Maybe that’s where they prefer to be.