Member Info for ragnarlothbrok

Hey Troajan, costs being too high are indeed a ‘mining dilemma’. Costs are roughly split as follows: 40% mining, 15% milling, 20% SGA , transport mine to mill 10% and 15% TC/RC/ transport

They would have known when they built the mine that transport would cost more than average and factored that into the mine plan. But what they haven’t factored in is the mining downtime which is limiting the available ore.

Everything is set up for 1,250tpd. Ventilation, power, dewatering, hoisting/haulage, milling, transport and associated labour etc etc…significant fixed costs for that planned volume. They should be consistently hitting 95% nameplate or more but I think they hit it in only one quarter in the last 3 years. Once you get the mining right you’ll get the consistent feed at the required quality and you won’t have idle cost, the mill won’t need to turn off due to lack of material (as it has in the past) and you won’t have empty dump trucks. It sounds like the mill could use a refurb as well but that’s been less an issue when they haven't had the ore.

Most likely they underinvested in maintenance over the last few years because of the cash flow problems and now the gear isn’t performing. What they are proposing seems inherently sound to me and why I've been buying. Getting some new equipment and a contractor in to help run it will ensure they consistently move 1,250tpd, which means 7,500tpa copper to start and a profit at the current elevated price. The various planned enhancements and production improvements will mean the mine can make money at lower copper prices too

Hey Visitor, Yes that sounds all about right now

If prices are close to what they are in a years time then the price should double. At these current prices I see cash generation over the next two years a little less than current market cap. It is very hard to believe! The valuation is implying a huge drop in PGM prices

True, grades are above average, but costs are equally high to match. The company hasn't turned a profit since 2015, even when copper prices were at $7,000/t. If they have the upgrade optionality now they surely had it back then.

I'm often overly critical about new investments as I probe for holes and weaknesses. But I actually bought some this morning, my order at .3312 got taken up. The market is starved for near term long life copper production in safe jurisdictions and at this price its a steal.

I think there will be a few mining companies phoenixing old unprofitable mines out of the ashes. We will know we are in a proper resources bull market when the dirt miner IPOs start. If copper is a month or 2 above $8,000/t it couldn't be too far away

A more strict lockdown in SA? PGM markets say yes... rhodium is the most sensitive to potential supply disruptions and is already up $1500/oz this year.

https://www.news24.com/news24/southafrica/news/fact-check-will-president-cyril-ramaphosa-take-sa-into-a-hard-lockdown-tonight-20210104

https://www.sabcnews.com/sabcnews/south-africa-cant-afford-a-more-stringent-lockdown-economist/

I guess there are a small number of buyers who got in at 25p who are taking 20% but given the spread/cost of entry doesn't seem like much of a return. And there cant be many who got in at that level. There must be plenty of disgruntled shareholders who have finally had enough. And I get the strong impression that the concert party were very FIRM in their negotiations. The company was closer to going bust than we realise. Minority shareholders received a royal shafting on that capital raise.

Looking at the 15 year chart is not a pretty picture. I've been reading through old presentations and they've been peddling the 1,350tpd and 2gt grades storey for years now. I've gone back through quarterly results to Q118 and I haven't seen them get even close to 1,350 and the highest grade has been 1.5%.

How did the previous CEO destroy so much value yet last so long??

Hopefully Toby plugs up the holes one by one. They seem to have missed the Q3 production update so hopefully we see some news on progress at a Q4 update in Feb

Who's selling? CE Mining locked in for 6 months, Lombard for 3

Hi Kane, I think gold will range trade between 1950 and 2050 and POLY will test its high of 2100p but wont get much higher for 3 months

Since the 20th November (when THS finally busted through the 70-80p range it had been in for 4 months or so) there have only been 4 or 5 red candles on the chart as the SP doubled. That's phenomenal! A down day or three is expected.

In the case of a Covid shut down Tharisa has shown, as one of the few open pit operators, that it would continue to operate. There would likely be a spike in rhodium and perhaps even the other metals if there was another SA lockdown as all the underground mines would be closed. I don't think thats likely though, SA is on the edge of going bust, another lockdown would be ruinous for them and it sounds like they will push through

What happened to Q3 operational results? Except for the record low dry tonnes milled on page 7 of the presentation I can't see these anywhere. Using this as a guide they are likely to be truly awful

As Troajan mentioned, chunks of shares being flipped and going to be flipped for several months. Lombard in particular is a snake in the grass. You need to watch your back with them. Any strength will likely be sold into but it seems that the churn is being done at 33-34 at an orderly pace so far.

There are close to a 1.5 billion warrants out there at 0.2p as well which will take some time to churn through. You have Lombard's shares coming on in 60 days or so which they may be flipping.

I would say at this point PIs are absorbing a lot of the churn, but some fresh institutional faces who have done some due diligence would help stabilise the register as well.

Hi Visitor, are you referring to the BEE 26% share in the Tharisa mine which is taken out at the net profit after tax level? I believe that EBITDA is at 100%

In your post on 8th December you also mentioned $245m EBITDA with detailed calculations

At its most simple PGM revenue for 2020 was $220m. Prices are up at least 50% on 2020 so you would add $110m straight to 2020 EBITDA of $113m to get 2021 EBITDA of >$220m. I think $180m is a bit low

btw did you see the jump in the iridium price on BASF this evening?

It certainly seems euphoric.. I've just started thinking that today after seeing platinum surge 5% and then fall $40 in an hour. After the last year and the impending vaccination roll out some euphoria is probably justified.

As they say, "bull markets climb a wall of worry". And its times like this when you grit your teeth and run your winners. We are in an unprecedented era of money supply and low interest rates so we will no doubt see wild swings but the trend will probably be up for the next 6 months as investors hunt for yield and push risk premiums down down down., assuming the health crisis abates.

Some of the metals, in particular iron ore, nickel, platinum and copper could use a breather and a period of consolidation for a while. It reminds me a lot of the commodities boom 15 years ago, copper hit a multi year high in 2004 or so and everyone got nervous so it bounced around for a while but then it doubled over the next year after that. Now we have all this additional money supply, record low rates and the green energy revolution so its hard to apply the traditional valuation methods sometimes

Tharisa could use a breather as well. I would have been happy with 100p so 140p is outstanding. But given the recent momentum upwards its unlikely to suddenly turn on a dime and head the other way. What a turnaround from the dark days of March and April!!

I've been buying here ever the last few weeks, happy to continue accumulating below 0.35p. For £30m odd market cap you are getting a funded, long life, relatively decent grade resource and operating mine in a low risk jurisdiction with a run rate of close to 10ktpa by the middle of the year and some brownfield optionality to further ramp that up. New management with a turnaround track record has already substantially cleaned up the previously ugly capital structure of notes and related party loans.

Looking at the SP performance there are no doubt some disgruntled holders but this is a new beast with a fresh start and its time to look forwards. There is some controlled selling down at the moment but with a value of north of 1p I can overlook that as long as the copper price continues to grind higher. We will need to see the promised grade improvement being delivered before the market gets too excited so perhaps its a little early to be diving in but you've got to be in it to win it!

This a juicy asset ripe for some transformation with some enormous cash flow potential. GLA!

Hi TBTT, I think we're in the midst of a once in a generation commodities boom, especially for metals with any tinge of green to it. I'm a bit suspicious of FAR but keeping an eye out. I've held PAF for a long time now, as long as SLP. I think PAF is still relatively undervalued but is far more expensive than other juniors so probably not a buy now. But if gold prices carry on at close to $2,000 even Evander would be making money.

I don't think BMN is cheap for its ferro vanadium but the VFRB industry could do what solar did in 2020 and be in a for a huge rise in the process becoming detached from any type of valuation (perhaps like Tesla).

Anyways, enough off topic from me for now, carry on north please THS share price. Not far from doubling over 2 months at this rate

Hi Nimrod, Thanks for sharing that stockopedia top stocks article.

This share has become a firm favourite among PIs for a couple of years now meaning that even though most funds have bailed out over the last 1-2 years the SP has continue to power north. Great to see a victory for the 'dumb' money. Majedie, Marlborough, M&G all bailed at below 50p and that Israeli hedge fund was out at 18p after a quick 20% or so gain.

I don't subscribe but its great to see stockopedia allying with PIs to deliver great returns. Why would you ever put your money in one of those funds when tools like stockopedia exist?

Hey Tones, and a HNY to you. Its times like this when those hours of research become so rewarding eh? It really moved from 90p to 130p in the blink of an eye. I wasn't really expecting that

Some rise today.. sometimes POLY can be a difficult one to hold and seems to ignore the movement in gold, I suppose reflecting its Russian and GBP exposure. But there are very few opportunities for large cap precious metals exposure in the UK market, and when you look at the other players which have had various production issues POLY looks very attractive. Poly is also guiding for an increase in production which is a rarity among the producers.

I'm not a gold bull but I'm pretty bullish on gold right now. I can't think of a time when the market forces were so positive for gold: low to negative interest rates, huge increases in money supply and the spectre of inflation in the future create an extremely bullish previous metal environment. And the commitment of the Fed to tolerate above average inflation and maintain low interest rates is the cherry on top.

I can see this Goldilocks environment persisting for another 3-6 months or so. I think the Fed will be forced to reset expectations in summer when the vaccine begins to take effect and they will need to consider raising interest rates again

Hey Visitor, hope you had a good festive season.

Rh creeping up again... my 2020 year end prediction of a nice round fat $20,000/oz was a little bullish, but then I didn't expect Amplats to get the ACP back on line so quickly. Maybe we will see it soon though.

I am intrigued by the movements in Iridium. You don't see a 60% movement in a month very often for a metal. Its one of the rarest metals with tiny quantities. The capacity of users to absorb price increases (as they have done with rhodium) will be interesting. Rhodium went from $7,000 to $17,000/oz in a year. I think iridium could move much quicker and add an additional 10-15% to EBITDA

I think you meant $280m 2021 EBITDA? I have about $270m based on spot prices

Hi TBTT, Hope 2021 has started well for you! I also spent my holidays looking for opportunities but could come up with very few options that could match the cash flow of THS. I'm overweight THS and SLP, but I think valuation wise they both allow a pretty generous margin for error, operate in a rising price environment and they both have management teams with responsibility and integrity so I'm relatively comfortable with the positions for now.

I'm keeping my eye out for mining turnaround plays, underappreciated mining small caps, and undervalued precious metal stocks. Resources wise over the last month I've been buying RMM and BMN, and hold a decent chunk of POLY, HUM, HOC, PAF and CAML. Valuation wise they don't offer the same cash return as THS but as they say "the rising tide floats all boats"

After the recent run THS has overtaken SLP as my largest holding, which I thought would be the case eventually. I have valuation for models for both and THS clearly has the higher upside

My model tells me that based on the current combination of prices, including a rising ZAR headwind, we are looking at an EPS of 47p/share in 2021, which gives a P/E of a little under 3x. If Phoevus maintains the recent dividend payout ratio this gives a dividend yield of +10%. My favourite measure of value, being the forecast FCF yield, is in excess of 30%, rising to 40% in 2022, assuming the production expansion plans are partially executed.

The Q1 production report next week should give us some comfort over production, and in particular grades and recoveries, which are expected to improve as a result of the pit optimisation investment

If we see prices continue to perform a 50% rise this year to 200p does not seem unreasonable