Member Info for ragnarlothbrok

Lessons like Evander are valuable ways for execs to get experience and make them better leaders. Unfortunately it cost a lot of shareholder money but Ir hope that he will be better custodian of shareholder funds in the future. If he messes up Elikhulu then its a different story.

One criticism I do have of him (and his management team) is his tiny shareholding. He really needs to put his money where his mouth is and buy some shares. His holding is tiny for a CEO.

You won't have the opportunity to vote against Cobus. The CEO is appointed by the board, not elected by shareholders. Berating the CEO at the AGM adds very little value, I'm sure that he has taken a beating from the institutions over the last year and has a pretty thick skin anyway.

There is a huge working capital deficit which is the result of the lag between SCS taking on customer deposits and purchasing the stock from suppliers. I would say that surplus cash is closer to £15m, which is the cash balance less the working capital deficit.

Its quite a unique, asset light business model which yields an incredibly high return on equity - net assets of £28m compared to full year NPAT of £9.4 gives ROE around 33% but it trades at substantial premium to NTA.

Asset impairments are irrelevant to measuring business performance and standard practice within the global mining industry. In a year as bad as PAFs you want to kitchen sink everything and start again with a reduced equity base, clean balance sheet and optimistic, forward-looking investors.

In such a year it is easy to focus on the negatives but on the positive side Cobus has almost transformed the business from a high cost underground miner to a low cost, long life material processor.

There are big IFs about delivery but if this is successful (and my forecasts are correct) PAF will be generating £30-40m of free cash flow at steady state from 2020. It will be producing sufficient cash flow to completely repay its debt in short space of time, pay a healthy sustainable dividend and fund its growth options, through any point in the price cycle.

With AISC in the first quartile, I think costs will be lower than 90% of global production, without the risks of industrial action and mining accidents. Its exactly where you want to be.

The company is indeed highly cash generative even in an extremely competitive retail environment. The business has a solid history of carefully rolling out new stores in well planned locations and thoughtfully reinvesting profits into marketing expenditure.

Don't forget that a big chunk of that cash balance relates to customer deposits and will be required for inventory purchases and working capital funding. There is a healthy surplus cash balance but its much less than £50m.

I think the shares may have been held back recently by the administration and sale of HoF. While the low receivables balance suggest minimal one off impact, the stores contribute 7% of sales (from memory) which could take off £1m in annual profits if the concessionaire arrangement doesn't continue with Mike Ashley in charge. Some clarity around this will help, although results are due on October 2nd so maybe we get more info then.

Hi MRPoisson. That is indeed a long time, good to see the investment is starting to deliver for you.

$57m of that NAV relates to exploration properties (Grasvally etc) which at this point probably aren't worth anything. Its interesting that these haven't been impaired despite the low platinum price environment. We may see an updated resource estimate for Grasvally this year which may yield some positive results.

Excluding these properties leaves you with the SDO plants, working capital and cash which is pretty close to the current market cap. For a business generating $30m EBITDA at a margin of 35%-40%, 1x NAV is still very good value in my books.

Key unknowns/uncertainties for me are:

- Pipeline adjustments, depends on timing of production within quarter and trend in prices;
- Prices, assumed current spot. Anything could happen with Rhodium and its now 30% of revenue;
- By product revenue. They have only recently started disclosing this, iridium and ruthenium prices have been going up, maybe there is also some chrome but I'm not sure;
- Full feedstock supply and plant availability. Always a risk with not owning the mines, constant threat of industrial action and the Eskom power issues
- production estimated at lower end, could be some upside;
- working capital movements (always difficult);
- production and efficiency. I believe they have a list of production enhancing or cash cost reduction initiatives up their sleeves. This could support growth in production/earnings from 2021 onwards;
- Lannex: previously they said this would close in 2019 but in the lastest pres its going out to 2021 at least;
- Echo, I haven't assumed any impact from next Echo modules, could be some big upside there;
- Lesedi, made a small profit for 2018, could be some upside there if they can get cash costs down
- Grasvally might be worth something but PGM assets unlikely to have any value at this point.

I have ignored dividends but my divided model suggests that they can pay out $80m over the next five years, fully fund their capex and still have a cash buffer.

All my own research and opinions.

Hey Visitor, thanks for sharing. Ive spent a number of hours poring through SLP news going back as far as 2011 and have made a full model which generally is pretty close. This is how I arrive at my 2018 estimates (all USDm unless noted):

Basket Price: $1042/oz (YTD Plus current spot for remainder of year)
Production: 76000oz
Revenue (Gross): 79m
Less Refining Toll: 12m 15% based on historical average, not included in SDO cash cost
Reported Revenue: 67m
SDO Cash Costs: (36.5m) $480/oz
Admin Cash Costs: (1.8m) $24/oz
Non operating costs: (0.4m) (Exploration)
EBITDA: 28.3m
Depreciation: (6.4m) Based on 2017, maybe higher in 2019 (2018 capex/full year Lesedi
Interest: 0.5m Interest of cash net of finance unwind
PBT: 22.5m
Taxation: (7.2m) at 32%
NPAT: 15.3m
2020 NPAT: 17.1m
2021 NPAT 17.2m

Current Market Cap = $82m at 22.5p. 1 Year forward P/E of 82/15.3 = 5.4. EV/EBITDA = 2.9

Cash Flow

EBITDA: 28,300
WC Mvmt: (4,100)
Tax/Interest: (6,700)
Capex: (12,000)
Free CF 5,600
Free CF 2020: 12,200
Free CF 2021: 21,400

I'm not furious. I'm more focused on cash flow and net debt. The net debt number was conspicuously missing from today's update. Maybe more bad news to come

The monetary system of the island of Yap in the Pacific Islands was based around stone disks that were shaped from large rocks and could weigh tonnes. The value of each stone was linked to its history; the older and more eventful the history the more these stones were worth. They become worth more when the stone was transported from far away, was brought by someone of esteem or if someone died transporting it.

There is a story that one day one large stone was being transported between islands in a canoe that was hit by a storm and they lost the stone. This did not affect the value of the stone, even though it sat at the bottom of the sea and would never be recovered, it was still considered valuable and used for trade.

Unfortunately the rest of the world does not accept an oral promise as form of payment and the gold in Evander is not like a Rai stone. It’s not worth anything until prices improve enough or technology changes to reduce costs sufficiently to allow it to be profitably recovered. The fact that they shut it down tells us that the gold can’t be recovered economically.

https://www.npr.org/sections/money/2011/02/15/131934618/the-island-of-stone-money?t=1536919542056

Its a terrible result MickyBee despite a fairly healthy gold price. But last year is ancient history its all about the outlook now

Thanks for setting the record straight Visitor. I hold both but I think SLP is a couple of years ahead of PAF in terms of cash generation and risk profile. As you mentioned being debt free counts for a lot in this market. And SLP give very clear guidance against which the market can measure performance. Its difficult to tell with PAF what earnings and costs will be with the moving pieces, hence the constant speculation. The assets are good but PAF have produced some truly awful results recently, it will take a couple of positive reports to restore my confidence.

While bringing on Elikhulu ahead of schedule is impressive, without a doubt the fall in the rand is the primary driver of recent SP performance. It's floated the entire SA precious metals sector. But good to see the SP breaking out of that 7-8p range nonetheless.

Gets the occasional positive write up in the share magazines but you're right no price target recommendation. Cenkos last published something in July after the half year trading update with 2019 pre tax profit of £16.2m implying a pretty low multiple on a MCap of £200m. As house broker they obviously have it at a buy.

My end of year SP target is 170 if they hit their targets and confirm the growth trajectory.

Took a hit from the news over the weekend that Transferwise is lowering its prices but seems to be recovering.

The tangible net asset value certainly seems to be providing a cushion to the SP. I have been accumulating below 30p when the chance presents itself.

We should get a pretty good idea over the next 6 months how the current Belong arenas are performing. If they are then an esports business with a solid level of revenue growth should attract a premium multiple. Consumers can be fickle and at the moment the market says that its not worth anything.

CFlather2000 my view is profit taking and sector sentiment. SA and precious metal miners took a battering today and combined with the SA turmoil there is no doubt an impact on sentiment. The SP has run very hard over the last few weeks, its not surprising to see some take some cash off the table.

The basket as I type is $1030 which is very healthy in the current metal price environment and is line with 2018. Platinum is very weak but you will struggle to find a metal producer with a similar YoY trend in prices. It looks like rhodium ticked up 0.5% again today and prices of our other by products (Iridium and ruthenium) have increased substantially over the last 6 months. The company is investing responsibly in gradual increases in production.

I'm not a ST term trader so I ignore the ST movements (although sometimes it hurts). In the 18 months over which I have been following SLP it has tended to bounce back eventually after days like today. LT fundamentals are still solid.

True but they are the only broker to provide coverage and the only ones who have physically visited the assets outside of the company that I know of. A SP target is always subjective and I take this with a grain of salt, but their forecast is in line with my own numbers which I have prepared independently.

Over the last two years the increasing SP has been increasing in line with the revisions to the target price.

https://www.marketscreener.com/SYLVANIA-PLATINUM-LTD-7671108/consensus/

I see that Liberum has upgraded the price target to 30p. Their SP target has progressed from 16p to 20p to 26p to 30p over the last 2 years, pulled upwards by constant earnings upgrades. Just what you want to see. I believe they have a new broker note as well, though I haven't seen it

Hey Phoenix, cheers, I've spent a lot of time over the past 18 months trying to cover off everything that could affect future cash flow. There are always risks but I'm still pretty confident in this investment. I periodically flex my model when there is an update to economic assumptions just to keep an eye on things.

The latest investor presentation gives some really clear guidance on everything you would need to forecast SLP future cash flow, cash costs, EBITDA, capex etc and also what this would look like under a change in assumptions. The extensive guidance (and also consistent delivery of results) is one thing that led me to shift funds here from other underperforming investments over the last year.

No harm in a bit of profit taking but wasn't really very convincing, volume well down from the last week or so. Some short term volatility is likely given the emerging market issues at the moment and the drop in market sentiment. I haven't seen the charts but I'm guessing the SP is flashing overbought on many measures.

ST movements aside the valuation is still very compelling. The plummet in the rand means that 2019 cash costs are now looking to be below $500/oz and EBITDA margins in excess of 40%. I think SLP could be looking at EBITDA of $30m this year. SA economic conditions always a bit of a concern, hopefully Eskom can keep the lights on with SA officially in recession.

Well spotted Lindon!

Market waking up. Growth in production and the lower rand will mean a big jump in NPAT in 2019, at least 25% by my calculations.

The annual report is worth a read, a very frank assessment of the market from the Chairman and an interesting contribution from the CEO.