Rainbow Rare Earths Phalaborwa project shaping up to be one of the lowest cost producers globally. Watch the video here.
Yes, Pavel wasn't making it up...
listing, divi, merger is my bet ...
I wouldn't have a vendetta against the institutions. I'm afraid it's just like credit card debt. If you are in difficulties you pay more interest. The more you earn, the less you pay. Pog was in a bad place. Now it's in a better place.
The institutions will pay you your profit at the end of the day, too.
The dividend move is for the institutions not the private investors. It will bring in substantial buying. A dividend policy is important going forward. I wouldn't expect anything this year, but a policy statement for 2021 based on clear metrics would greatly benefit the share price.
Pog's early stage recovery was last year. It's now in full blown recovery mode with a likely 10 fold increase in profit this year, and we are already at the half year stage.
With debt likely to be 1x ebitda this year, it's no longer such an issue.
It all comes down to cash generation and growth.
Revenue this year likely to be 1.2 billion. 40% more than its market cap and still growing rapidly.
Corporate merger very likely and soon imo..
Fully in favour of a divi policy. That's how the stock market functions. It will attract a lot of institutions.
Temi will be purchased in due course. The convertibles we can't do much about. The other bond can be refinanced at a much lower level of interest.
Pog might not exist in 10 years. Ride the wave and decide on your exit strategy. Move on to the next wave...
We've already had the worst market crash since 1930 during which POG rose. In the best of markets stocks crash. Always something going up or down at any time.
Poly has gone from 1750 to 1450 in the last month. Pog from 22p to 28p. It's that differential that you're buying. And it's called a 10x increase in net profit and a 1 billion tech hub. I prefer that to any wave theory or trying to double guess world markets.
Of course, if the gold prices collapses completely there will be an impact on profit. But that's a statement of the obvious and would apply to any business.
Yes it produces gold, but it also processes gold. And that 15% margin will be there even if gold drops.
Pog will soon be monetising its IP for autoclaves.
Pog is a corporate recovery play with a high tech vision. The assumption that it's all down to the price of gold is flawed.
Should be double the price to bring it into line with peers. Though Pog is growing many times the average.
DavidTheGrim,
Take care of yourself in these difficult times. It's easy to have one too many, or to fall on negative thoughts.
Rusty,
I'm quite happy with my thinking thanks very much.
I don't think this is hypothetical at all. I think it's very much on the cards.
The institutions would be all in favour, too.
In the meantime, POG should continue to grow quickly along with its share price.
Look forward to the next production update in July..
I'm not saying we should have 1 million oz of 3rd party ore. The discussion was in relation to the merger. If we merged, that would be our ore not 3rd party.
As for margins in general, temesis estimated 10% margin on 3rd party. I think that will be higher given the rise in gold.
But margins are not transparent in the results because the price paid changes on a daily basis. That's why you can't see poly's margins either on POX. In fact, you'd be nuts to declare specific margins as that would adversely affect negotiations.
My point, is that the merger makes perfect sense to me. The synergies of having access to higher grade refractory ore for POX and then having the funds to build more specialised autoclaves going forward would guarantee growth for many years. It would certainly get my vote..
Rusty,
35kt of high-grade material processed at 72.3g/t resulted in 84.2koz. High grade refractory ore produces x2.2 in gold. That's the 3rd party stuff. Our ore is around 30/40gt and produces x1.1. Half the amount. POX with high grade ore at capacity can produces 1.2 million oz. With low grade ore around 500koz..
Rusty,
So if a lot of companies have concentrate they can't process, why are we worried about securing supply? Did you read the transcript of the results at all?
Temi 25% won't guarantee our own supply. We are limited to low grade ore. It will be profitable but it could be much more so.
High grade ore for POX would produce 1 million oz. Lower grade only 500koz.
Growth with POG limited to 24 months. I'd prefer more than that...
Yes, I agree KRUS...
It's all in the mix and very likely.
Great synergies and huge growth in earnings. POG's growth projection limited to 2 years max. Then they will need more debt to expand POX.
POG has glimpsed the allure of tech. That's why they want to get rid of IRC. They are industrialising and need supply and funds for the next level of expansion imo.
We need access to high quality refractory ore. The results were disturbing in one respect: there there were 2 contacts for refractory ore in doubt. It's difficult to obtain at high grades. The merger would solve this issue immediately.
We need funds also to build the next generation of POX. Another 2 at least. That's 600 million. That's if you want to grow beyond 2022.
A merger would make us 50% of the biggest gold miner in Russia. The synergies would be fantastic and the debt would be minimal allowing large divi increases.
All makes sense to me.
Merger a distinct possibility.. and soon.
So is clarity on a divi. They'll set up some metric, probably for next year.
Gold going way higher now the Fed have said no interest rate rises till 2022. I expect some explosive moves ..
Growth of 10x in profit for 2020. Very conservative with gold at 2000.
The incentive to merge and utilise POX to the maximum with a high gold price is clearly present. POG needs access to high grade refractory ore and now. Contracts and supply is unstable, hence the wide production guidance for the year.
End of H1 in a few weeks. 70% increase in production. 35% increase in gold...
So Germany decided to give 300 euros per child credit overnight. Reminds me of the 1970's when we'd wake up to free money in the post. And to say that's not inflationary...
But not that relevant to POG. It should keep growing rapidly. Next update soon enough..
UpDownFlat,
I agree with you on IRC. The offer of 10 million is way too low. IRC can make 60 million of ebitda this year. So you're buying that revenue at a huge discount. Normally, it would be the other way so a purchase of 60 million would be X3-4 ebitda, so around 240 million at least.
We're being ripped off.
The reason though is POG's shift to a high tech processing company. That's now their vision. Without POX, POG would be in terminal decline.
Do you think Strukov has bought 22% of POG for it's mining operations. That's nuts. He's bought a percentage of POX because it's a fantastic fit both operationally and technically. It's the future. Which is why the merger is a real possibility and soon imo.
When it happens, you'll have a near 2 million oz production combination. The market loves these synergies.
No one likes debt, but you need perspective. POG's debt to ebitda has dropped from X6 to X2.1 falling to around X1 this year.
Poly has nearly 1.7 billion in debt. No one seems to mention that.
It's quite likely that POG's contingent loan guarantee is history. Even if it isn't IRC is in much better shape and a few million payment is nothing to maintain payments. Also, it's worth noting that someone is happy to take on that guarantee and still pay 10 million for the asset.
Yes, KRSS, 1 million oz is certainly technically possible with POX as I've tried to show despite all the negativity.
Comparisons with HGM may be valid to some extent but HGM don't have a 1 billion POX hub which has enabled a 70% increase in gold production in Q1.
Rusty, you say POLY has much more transparent reporting. In that case what are the margins they are making on autoclave production? That would be a much more useful point of comparison given both are now industrial processors.
Always need to remember what a beast POX is. With high grade refractory ore POX can produce kt to Koz x 2.5. At that ratio POX can produce 1.25 million koz per year. Of course POG's refractory isn't that rich in ore. So although high margin it only equates to kt to koz X1 so a maximum of 500 koz a year from POX.
POG are having difficulties securing enough 3rd party ore. Two contracts are in question, which is why there is such a wide range of production forecast.
If UGC has ample supplies of high grade refractory ore it would be game changing for both companies. 1.2 million oz from POX plus the non-refractory ore of another 1 million oz. So a 2 million oz combined concern.
Then build another 2 autoclaves for low more complex refractory ores...