Roundtable Discussion; The Future of Mineral Sands. Watch the video here.
Sparkle, Thanks for your reply. There is a typo in my post in the third line from the bottom it should read " could not rule out ". Had to rush to get a late breakfast and it`s a bit annoying that there is no edit button on this board.
Somnamna/Sparkle, Thank you for your efforts to get a fix on the gold shipments. You ask how management see the guidance on a per quarter basis. In their statement issued on 10th January they stated that they saw it as being fairly even. The company is very prudent in its forecasts as it never wants to miss, since that can be damaging to the company`s reputation. I posted my view prior to this guidance being issued that 600,000 ozs. would be a comfortable target. The results presentation in turn showed the outstanding grades that are being established in the underground. As so often happens in nearly every one has ignored this. This is what happens in investing. People are lazy and do not want to do detail. Today the share price is falling because of the headline that Powell told Congress that he could rule out a fourth quarter point raise in 2018. How could he have answered otherwise. A couple of years ago Josef told me that in due course production would reach 700,000 ozs. per annum and that is where we are heading.
Morningstar are currently showing a consensus earnings forecast for 2018 of 10.36p, which gives a forecast p/e of 15. Morningstar used to provide an earnings forecast broken down across brokers, but with the Mifid nonsense that is no longer given. The company have indicated that all of 2018`s profit will be distributed as dividend which gives a prospective yield of 6.7 per cent compared to the 2017 accounts actual yield of 5.8%.
Uncertain, Thanks for your balanced analysis. As far as the US is concerned I don`t see the Fed deviating from their stated intentions on interest rates. Indeed bank balance sheets have been contracting over the last 12 months as QE has started to be reversed. Pleased to see the rise in sterling against the dollar is now rightly being reversed and that should benefit Cey
On friday the US markets thought that inflation would rise faster than interest rates but gold shares fell. I think the reality is that interest rates will rise faster than inflation in the US, because although wages are rising more quickly output will also be rising, but that may not be bad for gold, Remember what Keynes said " markets can remain irrational longer than you can remain solvent".
This does not suit everyone. If you have already received dividends that fully utilize the �5000 allowance in the current tax year the deferral to the next tax year is highly beneficial. You are then taxed 12 months later and can earn a good rate of return on your capital for another 12 months. My average annualized rate of return on capital over the last three years has been 27% per annum. I therefore do not want to hand over cash to the tax man 12 months earlier than would be the case if the dividend is paid on 6th April 2018.
The payment of the div on that date is very good news for many shareholders. It means that tax is due for payment one year later than if it was paid on the previous day or earlier. That means you have the use of the capital for another year and depending on the size of your shareholding and your average rate of return on capital can be highly beneficial.
The cc is a nonsense but if one wants to wait for it to formally disappear and the confirmation of the go ahead on Doropo that`s fine. It`s just that this massive discount will have disappeared and the share will no longer have double the yield of its peers.
I`ve just come off the call. The big two stand outs are the dividend represents a yield of 5.8% compared to a peer average of 2.8% and this level of dividend will be maintained. There is nothing special about it. This gives an indication of the discount we are suffering because of the cc and being a one mine company. To spell it out if we did not have the cc and were not a one mine outfit the price would be 300 p. Sukari is a world class mine it has been producing for 8 years and we have another 20 years. Most mines have a life of less than 8 years. Doropo is the big news and we should get a decision on a mine being built in the second half of this year. The company has delivered on its promises year in year out and the market is applying a big big discount. Buy before the herd wake up.
Somnamna, You are right. He has not been hired to help Andy Pardey, who remains Chief Executive of the company, to run Sukari. I doubt that Josef has spent much of his time in the last 12 months there either. We have a great management team there and in due course they will be delivering 700,000 ozs. a year. The key developments will now take place in West Africa where we have the potential to create 3 new mines. This will mean that within 5 years we are likely to become a million oz. producer and Mr. Morcombe will have a key role in achieving that. Looks like a good and timely pick.
Just for clarification Ross Jerrard is Chief Financial Officer and he has now been appointed a director which he was not previously. The company is now beginning a search process for a non executive chairman. Josef remains executive Chairman but intends to retire from that role by the end of 2018.
Rebess, The analysts and the market makers work for the same firms and they can profit as much from a falling share price as a rising share price. They make bigger profits from the volatility of a share like Centamin than a steady upward progression. They profit from the emotions of greed and fear. We have to try and keep a level head and not be spooked. It`s difficult unless you really understand the fundamentals of the business. Cowichan, I`m not sure the analysts are useless it just pays for most of them to go along with whatever strategy will make their employers the most money. Your comments about Cleopatra, the Gap and the crusher are spot on.