Rainbow Rare Earths Phalaborwa project shaping up to be one of the lowest cost producers globally. Watch the video here.
I don't think 14 days, or 7 days from now, is such a big issue.
Remember companies given an additional 2 months to report because of the virus.....
Thanks jetcom,
Wish we had more discussion on this rather than bonds and BOD. POX is key. It's worth a huge sum in itself. Probably more than Pog's market cap.
As you say, final production capacity in koz will depend on the mix of concentrate. If they get high yielding 3rd party concentrate and use excess capacity it is perfectly possible to hit 1 million oz next year if you add in the non refractory ore.
So a move from 422 koz to a million oz in just a few years. That's twice the production of Cey, valued at 2 billion.
Then add on a few more autoclaves. Zero in the price for IP and 10 years of research...
A major JV coming soon imo.
I agree if you doubt management intentions there is no point holding.
For me, it's more a sign of incompetence. The results are delayed because of the postponed vote. Now they will have to change the announcement and the presentations etc.. Plus there are general delays with the virus to cope with.
I bought a few more today. Impossible to find a gold producer with the potential here in terms of production increase and cash generation.
Temi is also a fantastic asset. Hope we don't wait a year to get it. We'll soon be losing the additional 25% of production..
Thanks jetcom,
The most valuable post for a long time. RetriedBanker said 1 million oz was a nonsense. But he doesn't do his research and makes very generalised comments like valuing POG on a p/e of 6 with a 100% rise in revenue and 50% in pure profit in a year. And then claims that there is a fixed relationship between kt and koz. So 450kt processed leads to 450koz of gold.
But as you rightly point out it's much more complex than than and depends on the grade of concentrate and the efficiency of POX ( which is still improving).
So
''Commencing 5 July, a total of 61.2koz of gold were recovered in 2019 from 32.5kt of third-party refractory concentrates, with recoveries averaging 94.9%''
So POX has the capacity to process 500kts of concentrate leading to 1 million oz of gold. Then you need to add on non refractory gold of around 300koz or so....
Anyway, as I posted a few days ago, production of 422-515-720-1 million is the trajectory Pog in on in terms of production.
Rusty,
I've been following POG since 2009. I sold when they failed to get ftse 100 promotion a decade ago more or less. I bought back in last year on completion of POX as that was a material change in fortunes. I still maintain it breaks the first principle of investing if you don't have any faith in management. You may disagree.
Protecting liquidity is just a face saving comment. Though keeping a healthy cash balance is important in these times. Plus we have to spend millions to purchase 3rd party concentrate so need the cash.
Temi is a fantastic asset though and we're going to lose 25% income from production this year.
In the round, I'm not that bothered either way.
Though I'm more surprised at the negativity towards management on this thread. The first rule of investing is to have confidence in management. I wouldn't touch a share if I didn't. It's unthinkable really as an investor.
And that dollar rouble slide started from $61 to $79 across Q1. That's a 30% decline in the majority of POG's costs. Of course, averaged out it will be less, but still hugely significant.
Reckon AISC will be around $900 for 2020. Gold could well average $1800. Production say $700koz. Revenue growth near 100%. Quite a bullish scenario but perfectly possible. The rise in gold, and energy cost savings could push 3rd party margins to 30-40% imo..
Rusty,
Without the POX hub we'd be screwed.
I'm sorry now I even started the cey comparison. My point was that we shouldn't be valued at less than 50% of cey given growth trajectory.
On Temi, my point was that production at Elginskoye is scheduled to begin H2 2020 coinciding with depletion of Albyn. So we will lose 25% of the profit from that production is all...
It's also important for pog to have the cash to purchase concentrate. That's why cash retention should be a priority and why I don't object to the Temi 25% purchase. I, like you, have had enough of borrowing.
Plus those Temi assets are coming into production in 2020. I haven't seen any estimates of the cost of lost 25% production we will face by delaying for another year, but I hope people are aware of this issue...
Rusty,
I'm surprised you disagree with gross revenue for H1. It's really quite simple based on company guidance. So Q1 is likey to be 170koz at around $1650 for gold so a total of 280 million. Q2 will be around 180koz with gold around $1700. Gross revenue of around 600 million.
Your questions refer to profit. Which is a different matter and harder to guess. I think Tamesis had a profit before tax estimate for pog of around 400 million for 2020. But that was with gold at 1550, not 1730. The unknown as you say is the margin on 3rd party processing. But recall we are not processing for a 3rd party, we are buying 3rd party concentrate and processing it for ourselves. Margins will depend on the price negotiated obviously. But I am quite optimistic the strike price was agreed for processing taking place now months back when gold was 1550. If so, margins could be very juicy indeed as we are now selling that processed ore for 1730. We should have a clue as to margins come results.
As for cey's revenue for 20219, you need to read further below to get the full year figures in Q4 trading update...
I'm referring to Q4 final year results. Not Q1 this year.
rusty,
cey's 2019 gross revenue for the year was just over 600 million. This will be about the same and pog's H1 gross revenue for 2020. So pog is growing much faster. H1 revenue this year will be 100% up on last year. There's no miner out there with that sort of growth.
Final point on comparisions, don't CEY have to make large royalty and profit share payments to the government? Almost equivalent to the interest pog is paying on the bonds if I recall...
Pog's H1 revenue will probably match cey's annual revenue for last year...
Anyway, seems like the recent transaction in pog is over and the share price back on the up.
Going to be an interesting week..
Half year revenue comparison is going to be nice reading. Last year H1 = 305 million. This year = 600 million likely. So 100% growth in revenue with a rapidly declining cost base. You can't say a p/e of 6 for that. p/e of 30 would still be very conservative...
RetiredBanker,
You are making a huge error here. We don't process 3rd party ore for 3rd parties. We buy the ore and then process it. There is a huge difference.
I agree the margins on the ore are unknown. But we've been buying the ore at significant discounts to the present rise in gold.
Again you are not thinking about growth. In 2021 there will be another 200koz refractory ore coming from Pog's direct mining operations.
And I'm not throwing abuse about IRC. You said it was a basket case. But someone is willing to buy it and pay POG a significant sum for taking on the loan guarantee. So it isn't a basket case. It's an asset.
And that million koz for 2021 is a possibility with say 200koz 3rd party purchase.
Yes, KRSS. 1.2 billion in revenue perfectly possible this year. And costs down significantly. Debt can be wiped out in 12 months. Or rather, having the cash to do so if necessary. If not, they can refinance at 3% given the improved credit horizon.
Also, RetiredBanker, you can't get away with taking the biggest gold miner and saying its p/e ration should be taken as a standard. That's almost criminal in its simplicity. P/e ratios are closely aligned with growth.
And, at least compare like with like - Russian gold miners, or industrial POX hub gold miners.
To say that Pog should be valued on a p/e of 6 with growth at 50% is quite a strange claim to put it mildly...
Thanks for the book recommendation on cancer though. I've just purchased it.... Something to cheer me up in these times!!
I think you need to get your facts right in any market cap comparison.
Pog is in the process of selling its stake in IRC, receiving a payment and disposing of its contingent loan guarantee. So despite what RB has said about IRC being a basket case, someone disagrees with that.
Pog's net debt in the last half year report was $557 million. Not $625 million. In the next report, I expect further reductions.
But they key issue is growth. Pog is now growing at 50% compound. Production gone from 422koz to 517koz to 720kz to around 1 million koz in 2021. The companies you mention, CEY and HUM are not growing much, if at all. They are rising on the back of the rise in gold.
Also, remember Pog has a 1 billion industrial POX hub.
800 million for all of that is nuts.
And that doesn't include the dollar Rouble exchange and the decline in oil which will take costs down dramatically.