Member Info for SeaTank8300

I am surprised that the stock is down on today's production update. PGM production was short of course and guidance for next year has been reduced, but the miss was not huge, and certainly not very material in the context of PGM profitability at current PGM basket price levels, and also a portion of the PGM reduction has been tactically sought in order to support chrome volumes. Personally, I am delighted to heart that Karo is being pushed out, as this is not the right market to load up on debt to build a mine that is high on the cost curve. I woud dearly like management to address the cost competitiveness of Karo because I frankly question the wisdom of building it with such a murky medium term outlook for PGM pricing. But that aside, THS is managing a difficult market very well in my view, and maintains a strong balance sheet and capacity to meet dividend expectations.

Tamesis:

Key points:

• PGM production below – despite quarterly reef mined ticking up well in Q4 (up 27% q-o-q), overall PGMs produced came

8% below our total year forecast. We note that the main driver of this difference in this quarter was due to the lower grade

feed and PGM recoveries as a result of RoM being purchased from 3rd party suppliers (which is still planned for next year as

waste stripping continues in Fy24 albeit at a lower rate). Management are guiding to a lower PGM output in Fy24 as result.

Despite the tougher interim mining environment (& PGM market), Tharisa cleary are not looking to reduce processing

capacity. The company does operate on the lower quartile of the cost curve compared to its peers, and can be expected to

weather a softer market. In turn this also ensures the full production levels of chrome for Fy24 (guidance up ~8% to 1-7 –

1.8mt). This being said, any improvements in reef mined will only have upside for the company as they reduce the margin

loss on PGMs from cost of the purchased RoM (and grade recovery depending on the RoM materials available).

• Chrome concentrate production being delivered into a strong market– chrome production this quarter is largely in

line with our forecast at 413.4kt, with strong q-o-q increase of 9.1%. Speciality chrome production up q-o-q at 75kt (Q3

FY2023: 72.8kt). Full year production was in line and the company is guiding to a c.8% increase in FY24. Recovery rates

are hitting c.70%, reflecting Vulcan’s performance amongst other parts of the operation. Chrome spot price holding up well

at $291/t vs our modelled price of $280/t and we believe the company is well placed to continue taking advantage of the

expected strong pricing environment in Fy24 driven by supply demand fundamentals.

Personally, I'm content with these results, the guidance, and slowdown of the Karo project while PGM market uncertainties persist.

Do you know what a cost curve is? You're another one of these retail morons lurking on LSE with nothing useful to contribute. Go back to your day job.

Intent to manipulate is breaking the law. You display intent. Imbecile.

The only nefarious contribution here is yours: baseless, without any analytical merit, and likely criminal, constituting market abuse as per the FCA (market manipulation): https://www.fca.org.uk/markets/market-abuse/regulation

I may report your sorry ass.

That "20% drop on open" comment aged well for you. You are a waste of everyone's time.

You're a manipulating dumbass. Volatility benefits PLUS, and their office is miles and miles from Gaza, but you don't care do you, because you have an agenda of stock price manipulation via share chats, which is the dumbest thing I've heard all year, this ain't a penny stock you absolute imbecile. Take your worthless chat elsewhere.

I would like to have clarity on where THS stands on the PGM cost curve, including chrome contribution at different chrome price levels. Also Karo, as a standalone operation. I would like to see a chart of where the big mines stand on the cost curve, vs THS at various chrome price levels, and Karo, to offer a visual representation of who will shut production first if PGM prices continue to fall from here. This is important to understand and I can't find such information.

Interesting view that Karo would be loss making at current PGM basket price level. Can anyone verify this please?

I would suggest raising the dividend, even a little, to show confidence in the outcome - don't buy back stock and further kill liquidity.

Https://newtelegraphng.com/fg-resolving-exxonmobil-eni-issues-minister/

"Lokpobiri said, “These things are taken on a case-by-case basis; Shell will come, Chevron will come – as they come, we are dealing with them, and we are not going to waste time in dealing with them – they will resolve it, all those problems,” he said."

Https://www-thetimes-com-ng.cdn.ampproject.org/v/s/www.thetimes.com.ng/2023/09/nnpcl-gas-petroleum-ministers-assure-of-ob3-gas-pipeline-completion/amp/?amp_gsa=1&_js_v=a9&usqp=mq331AQIUAKwASCAAgM%3D#amp_tf=From%20%251%24s&aoh=16960897225032&referrer=https%3A%2F%2Fwww.google.com&share=https%3A%2F%2Fwww.thetimes.com.ng%2F2023%2F09%2Fnnpcl-gas-petroleum-ministers-assure-of-ob3-gas-pipeline-completion%2F

https://www.majorwavesenergyreport.com/ob3-gas-pipeline-project-ekpo-tasks-contractors-on-december-deadline/

They're still talking about completion by end of 2023. I suppose Q1 is more likely, and ANOH commissioning will take a further 2-3 months I guess. In any case, SEPL will provide an update at Q3 results. We've already waited several years for this, what's another couple of months.

Weak response Barcap. You should substantiate your negative view. You become background noise if you can't back up strong headline statements with some analysis.

I think where I've lost confidence is with the worsening financial position and surprise that they have been capitalising significant cost which if had been expensed would have resulted in much lower EBITDA margin. A lot has to be taken on faith here, underpinned perhaps by the rapid growth of the end uses cases. But I don't see why they are so clearly in trouble, as you suggest.

Barcap, I would be interested in being spoon fed your detailed viewpoint on why this is a short, also it should also assist in market discovery of the right share price for this company (which will be in your interest if you are correct)

I would look at it from the other direction perhaps: what evidence is there to suggest the MPNU deal won't go through?

Yes Trek you're right that the special is not guaranteed, although neither is the base, however above $70 noises suggest the special can be expected. Roger has said that they initiated the special in order to raise the payout whilst providing the board flexibility if oil prices fall or there is another need for the cash, but that the intension is to be predictable and consistent as possible. I doubt the quantum of the special will decline in 2024 if POO remains >$70. That's how I get to 17c.

The fundamental driver of rising dividend here is not only strong OCF and expansion of OCF next year with ANOH, but also the fact that there are limited investment opportunities. Oil/gas projects but even renewables projects take years given how hard it is to get anything done in Nigeria, which depress realistic IRRs and frankly discourage big expansion projects. SEPL's board want a proper valuation from the market and understand that achieving this requires distributing more of the cash generated to shareholders. That is why the special can be expected at these oil prices, and ANOH's additional cash generation must also find its way to shareholders.

The risk to this is that they come across a large scale organic or inorganic opportunity, or the POO collapses.

All the broker reactions are broadly positive, noting these issues relate to their transition to being an ASIC provider.

JPM: Outlook & Guidance. The company has reiterated FY23 revenue guidance of $340-360m of revenue or $350m at the mid-point. EBITDA guidance for FY23 is $87m (c25% EBITDA margin). With 1H margins at 17%, the implied 2H margin for the company to meet full-year guidance is 33.5%. We believe that the revenue mix in 2H will shift from lower-margin silicon business (acquired from OpenFive) to more License & NRE revenues, which would catalyze sequential margin improvement.

With no changes to company guidance, we do not expect changes to FY23 consensus.

Https://www-oedigital-com.cdn.ampproject.org/v/s/www.oedigital.com/amp/news/508169-exxon-pledges-more-nigerian-oil-output-presidential-spokesperson?amp_gsa=1&_js_v=a9&usqp=mq331AQIUAKwASCAAgM%3D#amp_ct=1695576158260&_tf=From%20%251%24s&aoh=16955761333371&referrer=https%3A%2F%2Fwww.google.com&share=https%3A%2F%2Fwww.oedigital.com%2Fnews%2F508169-exxon-pledges-more-nigerian-oil-output-presidential-spokesperson

According to the statement, Tinubu pledged to solve outstanding issues and "crush" all bottlenecks slowing the flow of new and large-scale capital into Nigeria's energy industry.

"The knotty issues require direct supervision on my part. Despite many contending obligations, I will sit down and oversee the process of removing these encumbrances," Tinubu was quoted as saying.

"Nigeria has never been more ready for business than it is now," he said.

(and I am certain the MPNU topic came up in the conversation!)

Boring low quality contribution, take it somewhere else

It is safe to assume that above $70 oil the baseline dividend is now 15c (4x 3c + special to bring up to 15c which was paid out last year), which works out at 8.7% yield at 127p. Underscore that's very much the baseline now. In my view it will have to come in above this, not only because the special dividend post full year 2022 results was 5c, which will surely be repeated which will make 17c annualy, but also because ANOH will be generating $60-70m of cash flow to SEPL once fully operational and this can only find its way to shareholders via dividend, which amounts to at least a further 10c of dividend, i.e. 25c come 6-12 months from now. Something to look forward to!