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WI tweet -
"Bob Sangha is working hard to ensure that a value crystallization event happens. Fingers crossed."
https://twitter.com/bigdude6669/status/1594094794267320320?s=46&t=WOjrk4zib8UhoGvqk6fz_Q
https://twitter.com/burggrabenh/status/1593743261776154625?s=46&t=VZocl-Z33lo4a4M3oCNVLQ
BHP Group Ltd (BHP.AX) has delivered a A$9.6 billion ($6.5 billion) bid for copper and gold producer OZ Minerals (OZL.AX) as the mining major moves to take advantage of rising global demand for metals used in clean energy and electric cars.
https://www.reuters.com/markets/commodities/australias-oz-minerals-grants-bhp-due-diligence-improved-64-bln-offer-2022-11-17/
"In April, PYMNTS’ “Beauty, Wellness Merchants Get Smart Digital Payments Makeover” report found that consumers are looking more to eCommerce solutions for their beauty and wellness purchases, with 12% reporting they did so more last year than they did at the start of the pandemic in 2020.
That makes keeping abreast of digital trends and capabilities “essential for merchants in an industry where much of their competition already embraces advancements such as live online assistance and product recommendations powered by smart algorithms,” the study stated.
https://www.pymnts.com/news/retail/2022/bath-body-works-credits-newness-q3-performance/amp/
https://capital.com/windfall-tax-uk-set-to-announce-40-levy-on-oil-and-gas-firms?c=38914&pid=cellxpert
What are they doing!
Richbetter, lunchmoney- BHP and all other major producers in South America are aware of these and many other above ground risks and know how to mitigate them. Case in point, issues at Chilean mine ;
"BHP Group Ltd cut its annual copper production outlook on Thursday as operations at its Escondida project in Chile were impacted by labour shortages due to rising covid-19 cases, while road blockades associated with social unrest in the country blocked access to the mine. Chile, the world’s top copper producer, earlier this month sued BHP, among other miners, over alleged environmental damages caused by its operations in the Atacama salt flats."
https://www.mining.com/web/bhp-cuts-copper-output-outlook-over-chile-protests-environmental-concerns/
Las Bambas mine
"The huge Las Bambas copper mine in Peru has started to reduce operations due to recent blockades, the mine said in a statement Thursday."
https://www.mining.com/web/blockades-at-perus-las-bambas-copper-mine-hit-operations/
And
https://www.aljazeera.com/amp/news/2022/6/23/chile-workers-strike-at-codelco-worlds-largest-copper-producer
Can't expect Australia styled low above ground /political risk in South America - If that was the case solg would already be valued above 100p imo.
Does anyone know how net smelter return works? So from below release 0.6% NSR gave solg $50mn. A very silly approach but if we replicate this deal 10 times with say 10 counterparts, does that mean Cascabel will get solg at 6% NSR (10x 0.6%) approximately $500mn or 100x gets $5bn for 60% NSR?
"
Osisko Gold Royalties Ltd (“Osisko”) (OR: TSX & NYSE) is pleased to announce that it has entered into a binding agreement with SolGold plc (“SolGold”) (SOLG: TSX & LSE) with respect to a US$50 million royalty financing (the “Transaction”) to support the advancement of SolGold’s Cascabel copper-gold property in northeastern Ecuador.
As part of the Transaction, Osisko will acquire a 0.6% net smelter return royalty (the “NSR”) covering the entire 4,979 hectare Cascabel property, including SolGold’s world-class Alpala project for which SolGold released the results of a pre-feasibility study in April of 2022 (the “PFS”).
Sandeep Singh, President and CEO of Osisko, commented: “We are excited to partner with SolGold on one of the best copper-gold discoveries made over the last decade. We believe that Alpala has the potential to become a Tier-1 asset with a much longer mine life than currently envisaged. SolGold was a first mover in Ecuador and we view the broader Cascabel property as having the geological potential to support significant further discoveries. Osisko’s investment in SolGold adds yet another high-quality royalty to our portfolio of peer-leading growth.”
INVESTMENT HIGHLIGHTS
Exceptional Royalty on one of the Most Significant Cu-Au Discoveries
NSR covers the Cascabel property comprising 4,979 hectares of Andean Copper Belt;
Total resources at Cascabel currently represent approximately 20% and 16% of the total copper and gold in new major deposit discoveries since 2012 (as compiled by SolGold);
Based on the PFS, the NSR would average approximately 4,700 annual gold-equivalent ounces (“GEOs”) to Osisko over an initial 26-year mine life and 7,600 GEOs over the first 10-years of nameplate production.
Exposure to the Large-Scale Alpala Project
The Alpala deposit is SolGold’s principal focus on the broader Cascabel property. The PFS study on Alpala outlined a large underground block cave mine with an initial 26-year mine life based on Probable Reserves (only 21% of total M&I tonnage inventory);
Alpala Probable Reserves contain 3.3 Mt of Cu, 9.4 Moz of Au and 30 Moz of Ag (558 Mt of 0.58% Cu, 0.52g/t Au and 1.65g/t Ag);
Alpala is estimated to produce an average of 132 kt Cu and 358 koz Au annually over the life of mine with peak annual production of 210 kt Cu and 829 koz Au;
Based on the PFS, Alpala is expected to rank in the first decile in terms of production costs.
Further Exploration Potential Within the Broader Property
Presence of regional targets on the Cascabel property that have similar geophysical and geochemical characteristics to known mineralized porphyry clusters on the property;
Think we closed the gap at 17.1p
Codelco proposes 33% price hike for Chinese copper buyers for 2023
"Chile’s Codelco, the world’s biggest copper miner, has proposed a premium of $140 a tonne for 2023 supplies to at least two Chinese customers, a 33.3% increase from this year, two sources with knowledge of the matter told Reuters.
The proposed premium, up from $105 a tonne this year, is paid on top of London Metal Exchange (LME) copper prices for physical delivery of copper cathodes into China, the world’s top copper consumer, and is a widely watched industry benchmark."
https://www.mining.com/web/codelco-proposes-33-price-hike-for-chinese-copper-buyers-for-2023-sources/
"#BOO looking strong. Zeus Note on my desk"...well invested model..international scale and strong balance sheet (£315m liquidity and £130m of freehold).. improving freight costs.. launch of the US DC (transforming delivery for US customers) ..could drive a sharp recovery "
https://twitter.com/scswsharewatch/status/1589617181092114432?s=46&t=sWVbywe6AQxphrV2HAazJw
And up 4% today? Is solg trying to close the gap on the chart at 17.1p?
https://www.google.com/finance/quote/CGP:CVE?sa=X&ved=2ahUKEwjT-Zr6-p77AhXMiFwKHW5bC6AQ3ecFegQIDhAc
66kboepd and £3bn valuation?
And someone mentioned net debt is to be $600mn in tomorrow update - the net debt reduction was front loaded in first half and second half '22 will see about $400-600mn. Still a sizable debt reduction. How can hbr be valued if Ithaca is looking at similar valuation of £3bn for less than half of production? Something doesn't add up to have 50% FCF yield?
"Ithaca, which produced about 66,700 barrels of oil equivalent per day (boed) in the first half of the year, is expected to make its market debut on Nov. 9.
Shares in the company - owned by Tel Aviv-listed Delek Group (DLEKG.TA) - are being offered at 250 to 310 pence a share, implying a market value of 2.5 billion to 3.1 billion pounds ($2.87 billion to $3.56 billion), bookrunners on the deal said on Wednesday."
https://www.reuters.com/markets/europe/ithaca-energy-ipo-value-company-up-36-bln-bookrunners-2022-11-02/
Should also ask her why the management is not worried about a takeover or an activist shareholder taking a stake given the low share price vs sizable FCF generation. SQZ is valued at close to £1bn for 25 kboepd of gas production - 4 times that would give you 100k boepd - which is what HBR produces. And then there is 100kbpd of oil. If you look at the US listed E&Ps for valuation comparison we would have to be at £8 per share to be in the comparison league. Surely seems ridiculous to be valued flat YTD after the buybacks reducing share count, net debt halving and dividends? Does makes you wonder if the old PE stale hands keep selling their stake - maybe HBR can buy them off their hands ?
The management should do ongoing buybacks of $100mn every quarter imo to keep hoovering the shares which will accelerate the size of dividend per share even if the dividend is kept at current levels of $200mn. Or go for a sizable acquisition in a stable jurisdiction - possibly the next step should be to take over a US listed E&P like Kosmos or the likes and repeat the reverse takeover process and get a US listing so HBR has company of E&Ps like OXY, APA, KOS, etc.
UK or Europe are basically dumpster fire jurisdictions for E&Ps imo.
Need confirmation from hbr on this as we'd still be paying 100s of millions more in tax (as the CEO put it in the webcast), which could have gone to shareholders. Another bit might be if hbr takes over enq at their current price and gut their portfolio, we'd get their $3bn Corp tax losses - could be sizable tax savings.
Hbr investors relations team should also be asked why hbr is not doing a tender offer for its shares at one go for $100mn chunks. Sp Doesn't make sense with the balance sheet and oil price since start of the year.
Banbury - has it been confirmed with the Investor Relations team whether the understanding that multi billion dollar "loss on hedges is allowable to offset against the WT"? Any confirmation from anyone else if this is true?
If it is true then it would mean the whole EPL media hysteria, at least in Harbors case, is possibly a nothingburger?
Lsestocks23 - what you are missing is the main driver for asos and boo has been the macro - rising inflation and the mini budget blew the remaining positivity out of the economy. So what we saw the past few weeks is turning of the latter a bit and more importantly inflation expectations coming down slowly. As we go into 2023, the inflation will start going down as YOY inflation comes down due to high base effects of 2022. That will drive the turn in lower inflation expectations
The more important point is - all your concerns, how much of it do you think is priced in at £600mn market cap? No liquidity issues and in the following 6-12 months costs will go down boosting profitability to show to the banks. £140mn ebitda at £600mn market cap? Granted clothing is not as resilient at Beauty and nutrition is for THG but the brand value and improving consumer sentiment alongside lower inflation expectation should put in a turn?
From HY results ;
"Post period end in July the Energy Profits Levy (EPL) was enacted in the UK and applies an additional tax on profits earned from production of UK oil and gas from 26 May 2022. At an average Brent price of $100/bbl and UK natural gas price of 200p/therm for the full year 2022, we expect our 2022 UK EPL liability to be of the order of $300 million, with c. $170 million expected to be paid in December 2022 and the balance in January 2023."
"Had the EPL been fully enacted before 30 June 2022, these half-year results would have included the
recognition of an estimated additional one-off non-cash net deferred tax asset of $1.0 billion in respect of the EPL through to the end of 2025. The anticipated additional net deferred tax asset arises mainly due to an increase in the deferred tax asset associated with unrealised derivative balances of $1.6 billion, offset by an increase in deferred tax liabilities associated with the carrying value of oil and gas assets within fixed assets of $0.6 billion. The deferred tax asset associated with the unrealised derivative balances held at 30 June 2022 represents the estimated reduction in EPL that could arise if the fair value loss on those derivatives crystalised and was offset against taxable profits subject to EPL in the periods to 31 December 2025."