Member Info for ragnarlothbrok

Hi highanddry, not many options for rhodium exposure. You have SLP which is the best, which current derives around 60% of revenue from rhodium. Tharisa is around 30% but you get 40% chrome exposure with them. I assume you have JLP as well but that's a mixed bag and I don't hold so not really sure what the proportion is. The SA miners/producers Implats, Sibanye, Amplats, Royal Bafokeng etc all have some exposure but much more diluted given the weighting towards other PMs

At current prices looking at a good 75m free cash flow per year and free of net debt by June 2021 CAML. If prices do hold for another 6 months the dividend could be large indeed.

Zinc flying at the moment up 2.6% so far today to an 18 month high
Copper up 1% to a 29 month high

Where does your order book calc come from Frac? Only around 30% of revenue is from committed term for 2 years, so from the year end the maximum order book would be £60m x 30% x 2 years = £36m. That 30% could be higher by the year end if they continue to convert. £36m is still pretty good!

Still 20p to go to pre-Covid levels. By my calcs the CAML metal price basket has increased by around 23% since pre-covid levels. CAML is generating huge amounts of cash flow at this basket

Yes results should give the much needed clarity around costs, margins, cash flow and net debt which the market needs to make up its mind.

Check out page 16 of the deck... although its a year old the top 5 shareholders own around 80% and are unlikely to have moved (and FIL has increased by 1.5% since then). A lot of the remainder are likely to be pretty sticky as well so my guess you only have free float of around 10%.

https://www.tharisa.com/pdf/investors/presentation/2020/different-by-design.pdf

Indeed TBTT. Can't see the family selling for less than £1. I think the IPO price was around 60p, not much of a return over 6 or so years, they'll be looking for more no doubt. Their other investments aren't performing particularly well, Petra looks a pretty good chance of going bust, RBW a shadow of its potential... although Chariot Oil has exploded recently. But this is pocket money compared to the value of the Tharisa holding.

I recall having similar conversations about SLP when interest was low and liquidity stifled. Hard to believe there were times when SLP only turned over £10k in a day, but this happened regularly in 2017. Now its rare to see less than £500k

The cycle will be broken eventually, the herd will follow the cash flow. It always does in the end

Good spot TBTT. It seems the market values the cash in SLP's bank account more than it does the THS operations. On an enterprise value basis THS is still be larger, but must be swiftly converging on that measure also as net debt turns into net cash.

For 2020 I expect THS EBITDA to be about 50% more than SLP, but 2021 could be 100%. Fag packet you could say 1.5x SLP is reasonable taking into account lower SLP capex on cash flow comparison. But that's ignoring the ROM security and established duration of the Tharisa mine.

The lack of free float and subsequent extremely low liquidity is a key differentiating factor for me. Monthly value traded in THS is around 10% of SLP. THS will suffer a big discount to other miners and SLP due to this.

Perhaps a selldown from the Family wouldn't hurt to inject some liquidity. Speaking of which, I wonder what their intentions are.. is it to deliver another Eland style realisation or perhaps dividend income for retirement

News of the second vaccine knocked the wind out of LOOP's sails yesterday just as it looked to make a recovery. Market flipping and flopping on vaccine sentiment free of any reference to fundamentals but simply looking through to summer 2021 and 2022.

Can't see a TU until early Feb so unlikely to get any steer on H2 performance until well into the new year which in these times makes investors understandably nervous and we don't really know how LOOP is doing at the moment... no doubt revenue wise they are killing it however they have been recruiting heavily so perhaps this will be offset by the old 'investing in growth' chestnut...

Yes indeed..they are probably sharpening the pencils as we speak. last year the update was on the 22nd which is this Sunday so could be next week if its the 23rd

I don't forecast EPS, as a headline measure I don't find it very useful, but if consensus is hit we should see a 300% odd rise in EPS v 2019. Either way it should definitely meet the 20% disclosure requirement

Seems like ChromeSA see the change as mind boggling stupidity (to put it politely)

Hey BigDano, Looks like 6 out of 8 Eve Sleep products are now out of stock. Boots website seems to be creaking as well, its very slow

https://www.boots.com/sitesearch?searchTerm=eve%20sleep

Actually I thought about this a bit more and the Chinese putting tariffs on their own exports to South Africa in retaliation was a silly idea and would completely undermine their competitiveness...

I presume what they would do instead is ban some imports of other SA goods, like what they have done with Australia and its copper concentrate, barley etc or perhaps slap some tariffs on imports from South Africa like they have done with the US

Either way it could get messy

Indeed TBTT so many questions. Assore will definitely take it the hardest (third largest chrome miner).

The tax is worth a few hundred million to China, maybe as high as $0.5 billion. Based on their reaction in the past, and which I expect to be the likely course of action, is that they are likely to hit SA with tariffs on some of the products it exports to SA. This would render the tax pointless. The Chinese are unlikely to officially respond until the tax is enacted but give the nature of the government the response is likely to be swift and decisive.

I don't think the other countries have anywhere near the volume to substitute for reduced SA demand. Particularity for the specialty chrome. And there certainly hasn't been any price reaction from Turkish chrome prices recently, as if they are expecting vastly increased demand. You may have the situation where China initially refuses to import chrome as the diplomatic squabbling takes place, but there is only 4 months of port stocks so any stand off would be short lived.

So my guess is that Chinese producers will pay the tax but will return the favour on exports of machinery to SA.

List of SA imports from China below
https://tradingeconomics.com/south-africa/imports/china

This isn't the type of share to take off.. it never has. It grinds higher under the weight of slow accumulation.

Today the SP is on track to close at a 9 month high. Still another 25p to get to pre covid levels, even though copper and zinc are more than 10% higher.

Hey Visitor. This one is deep value. As deep as it gets. The huge family overhang is a massive headwind for any SP movement upwards. The recent news on the chrome tax is another one. Buying a sizable holding requires a longer term commitment. And belief in the rhodium rally. We aren't likely to see the short term trend followers and ten percenters here.

Hopefully results give us some juicy FCF. I will be sorely disappointed with anything less than a decent net cash position.

I think you're not far off on the dividend (I'm going for 2.7p based on maintaining historic payout ratios) but that's certainly not enough to get the heart racing. Next year is far more interesting, Q1 prices are already well up on last year. At the current basket I can see EBITDA closer to $200m than the $144m consensus. That would translate to a dividend in excess of 10% using the minimum payout ratio.

Vulcan and our 200kozpa has been delayed more than once, and is maybe 2 years behind now. Vision 2020 is a forgotten dream, maybe we will see Vision 2022. The prospect of Karo unsettles me a little, particularly how those billions in project funding will be obtained for what will be probably the biggest, most complex project in Southern African history

I think you're right. Trading has definitely focused on the more liquid, large cap value part of the market these recent weeks. The pointy end of the market has had limited interest unless there is some news. Eve has had one or 2 days of value traded over £100k in the last month and one was Tuesday after 4 or 5 large sells

A lot of cash on the sidelines still, I'm sure of it

Hey Frac, Well looks like the market has forgotten about the working from home theme... any of the hedge funds who were in this for a covid play rather than the fundamentals seem to have rushed for the door. There is no doubt LOOP is getting a one off hit from this year and the consensus estimates reflect this. But there are a few things which indicate elevated levels of revenue and give me confidence for the foreseeable future:

- longer term, a majority of workers would like to work from home, covid or no covid. Indeed many people are leaving cities with the 'work from anywhere' philosophy becoming more mainstream
- a lot of companies are rationalising their office footprints with less office space and more remote working. Tech companies are offering full remote working
- LOOP has won a number of new clients from Covid, and we know how sticky the revenue can be and they have increased market share of the professional segment in line with their strategy
- 30% of revenue from committed contracts with minimum monthly spend guaranteed and average term of 24 months (13% at the start of the year). Covid has allowed LOOP to dictate terms to customers and this will partially protect the business from the disappointment of 2019. LOOP is on the path to a recurring revenue model
- an increase in economic activity means more minutes and more revenue
- business travel is likely to be depressed for some time. Airfares will go up and companies have become more accustomed to meeting remotely.

We may have hit peak earnings this year but still a lot to look forward to

If you look at the history of expectations compared to the result they always disappoint. Liberum have been caught off guard each time as well, assuming they would make a huge payout just because they could afford it. But one day they are going to pay a real whopper and then Stuart can retire a happy guy.

They really need a clear dividend policy, I think they make it so wishy washy they don't need to commit to anything. Take a look at the POLY policy, now it doesn't get any clearer than that

https://www.polymetalinternational.com/en/investors-and-media/shareholder-centre/dividends/

I reckon the dividend could be as low as 1.6p but I'm going to guess 3.2p. They will be pretty pleased with themselves if they can double the normal pay out. I don't think they will have much regard for the cash balance when making the decision but will be more concerned about the optics. I think they're more interested in growing the dividend over a number of years than making a huge payout. They're patient like that. But saying that, 1.6p is only £4.4m, so 4.8p would be £13.2m, against a cash balance which could be £80m by December. Whatever they decide there will be a lot of cash left over.

I would expect it to be announced with the half year results, probably mid Feb. But I'm much more interested in the project news... we should have a plan for Volspruit by then. I think the value in that could represent a significant uplift on the SP

6p per share, last year was 6.5p so looks like the leak cost 0.5p. Fair enough