Member Info for shakhtar

My sentiments exactly, thank you cjm68. I’d rather read a board that has two posts a day but informative or offering well thought out and reasoned views (positive or negative) than one with hunded posts of junk. All those keen on posting insults are welcome to leave and move their views to facebook or instagram.

I’m sure they would sell it as a package. Buy one grt one free. And Lichkvaz would be part of that “significant potential” they refer to. It’s not worth anything on its own.

I notice they didn't name the mine which means there is some sensitivity on the seller's side. I assume this is because the owner is a listed company. I can only think of one polymetallic mine producing gold, copper, zinc and silver in CIS that has produced around 50koz of gold equivalent in 2017 and is part of a listed company. My guess would be this is Kapan in Armenia, owned by Polymetal. Had a look at their financials to see if I could cofirm against other numbers quoted in the RNS, but couldn't find detailed info. Noticed however that Kapan is a very high cost mine with AISC of just under $1100/t. Anyway, I'm sure we'll know soon enough.

I think you may find they already changed JPM to UBS, a few months ago

Rastuss, there wouldn’t be any payments for any services to vendors other than consideration payments described in the release - $675m initial (cash and shares) and $225m deferred in 10 years time. If there were any other payments, they would have to have mentioned these. Notice, which is important, that transaction is a class 2. This means that total amounts that kaz would ever have to pay to vendors do not exceed 25% of kaz market time on the day prior to the announcement. If there were any unknown amounts, the listing rules would automatically require this deal to be a class 1 deal, which would require a full circular with full details of the deal to be posted to all shareholders and an egm to vote on the deal. So don’t read too much into what doesn’t exist - all payments would have been reported in the announcement. It’s quite an interestind deal structure, as I see it. Kaz effectively have bought 100% of the asset from the start, but the payment for the remaining 25% is deferred for 10 years, and it cannot be more than $225m, in either cash or shares. Today’s value of that payment is minute. Think about it, if Baimskaya is a first quartile asset producing 250kt of copper, it would generate annual ebitda of $1.5bn at least, so at that time the $225m payment would be just 2 months worth of production, i.e. peanuts. And I agree with you that it doesn’t say anywhere that the deal is subject to feasibility study. But it doesn’t matter, as if feasibility study turns out to be negative, the asset will not be developed and will be written off. I agree with, I think it was Autonomy who said it is just an option on copper price. If it falls, kaz have just lost $900m plus the cost of feasibility study - call it even $1bn (hence I don’t understand why the company got hit with a $2bn reduction of market cap on the deal news). But if the price rises and the mine is built (even delayed and over budget) they would probably at least double their ebitda to $3bn, more likely $4bn (at copper price of $3.5/lb). Even at kaz’s customarily low multiple of 6-7 times that would make this company worth $21-24bn less debt (approx $4bn), so roughly £27-30 per share (fully diluted)! But that’s all in 8-10 years from now and usual caveats apply. DYOR etc. GLA

Stop moaning about this Russian deal people. I really don’t understand why KAZ and its board are not appreciated for their long term vision. How come KAZ is so different from First Quantum?! Just consider this. In 2013 FQM bought Inmet for $5.5bn with its flagship undeveloped (!) asset which required, if I remember correctly, some $6-7bn of capex. At the time FQM ebitda was (in 2013) 1.3bn and net debt 5.5bn. Yet the shares only dropped to C$15.40 post-deal giving FQM market cap at the time of US$9.3bn, and an EV of just under $15bn! That’s an ev/ebidta of almost 11 times!! Similarl to KAZ FQM was paying a tiny dividend and its assets were in Africa and they added Panama to the portfolio. Ok, it’s not Russia, but frankly not much better, and with Africa I would argue much riskier. KAZ is replicating First Quantum’s success but in Central Asia and CIS, and arguably doing it better, yet the market was giving it ev/ebitda of just 6-7 times at the top of £11 per share and it now trades at below 4x! And this is after KAZ has proven itself of being able to deliver two massive projects in parallel in Kazakh wastelands at minus 40 degree tempretures. Surely they can do it in Russia. And once they show they can, again, I would not be surprised if they become a great fit for FQM and a takeover then (at great premium) might just be possibel. In fact, I’d be surprised if FQM were not already thinkng of this now or at least keeping one eye on KAZ.

Rastuss, you have a very low opnion of the BOD. All of the non-execs are very reputable and they have their reputation to uphold. I don’t think they’d care mch about the fees. Not only many of them are directors on other boards, some also run companies where they are shareholders. They have much more to lose if they don’t stay independent than these fees. This is a proper board, and KAZ has always made sure to distinquish itself from ENRC in this respect. And as regards the director buys, they would have been prohibited from bying when the deal was under consideration, and now that SP reacted the way it did, I don’t blame them for using the very first opportunity they had to top up. Look at CEO, last time he bought outright (as opposed to exercising his options) was at 78p - that was the gery bottom! This guys knows what he is doing, he is obviously clever. That tells me SP is right at the bottom now. I am not much of a chartist, but I would agree with Cartist2 in that I also see 430 as a strong support. We might test that, but not much lower, imho. If we do, it would only he because copper price has crashed below 5500 or the larger market went into a slide. It could happen...

Retour, all this talk about RNS is nonsense. Why would they bother? They released a deal announcement and half year results 2 weeks later. They said everything they wanted to say. Just listen to the results presentation. They don’t care about those investors who are not prepared to support the company into a long term. They pretty much said: “go ahead and sell if you don’t believe our judgement; we delivered two massive mines before and the same team will deliver this one; and we will reward those who stay with a dividend”. I bet you the board was unanimous on this, otherwise we would not have seen director buy announcement and instead we would have seen resignations. That again tells me they are confident about what they are doing and this is a positive.

I remember your post, uncertain, I nearly replied to it then. You were talking about responsible funds exiting over time carefully to limit their losses. On this occasion this fund in question appears to have acted completely irresponsibly and was happy to take a massive loss on closing their position, and doing so quickly. But apparently otherwise there’s been very limited selling. Analysts saw the price move and all assumed that investors universally hate this Russian deal but the reality is, apparently, that investors are not selling. And given the sp fall, they are not buying either, hence sp keeps on ticking down. Once this overhang clears, sp will recover. New buyers would come in seeing an opportunity. We need a sustained recovery in copper price to above 6300 for this to happen. Global risks, Trump, time of year are all contributing. A perfect storm. You couldn’t find a worse time to announce a deal like this if you tried very hard! The board and management were absolutely stupid or ill-advised, they should have delayed the deal until October.

After a few month I come back and I see nothing has happenned here. In the meantime gold went down to below 1200 and the whole commodities basket has been battered quite a bit. This can only mean that raising equity for Chaarat has become so much more difficult than previously, not to mention debt providers who are probably completely out now. Centerra probably wishes now that they supported the offer, but it doesn’t matter now as this has become near impossible to pull off. Well, that’s what happens to those who try to buy companies when they have no money. 99 times out of 100 it’s impossible and all the clever and complex structuring makes it even more difficult... And in the meantime the company also increased its admin burn rate massively. Oh boy, this is going to be a disaster. The only benefit to shareholder so far is that they were able to spend the summer without having to worry about falling SP and rising losses. How long can this drag on? Sooner or later Martin and Artem would have to admit defeat and trading will resume starting at 6p a share. All imho of course and I could be totally wrong and for the sake of those holding I wish I am wrong.

I said this already and will say it again for those who apperently don’t understand the listing rules. Kim cannot buy a single share without this triggering a mandatory takeover offer for the entire company. Why do you go on about this when this is a practical impossibility?! I was happy to see CEO buy £80,000 worth of shares and, in case people didn’t notice, the director of projects who was in charge of building Aktogay and Bozshakol, and who will be building Baimskaya also bought $100,000 worth of shares through ADRs. That is hugely positive in my books. Not to mention a bunch of board members topping up their holdings. The reason for SP falling so much is not shorters as some suggest here. I’ve heard from a reputable source that there is a fund which irresponsibly dumped all of its holding (just below announcement threshold but very significant) and once they are out I would expect it to stabilise and recover to £7 to start with. GLA

Cuddothisnow, Saker, I completely disagree. This is a very high quality asset, yes under development. It is not dissimilar to KSM in Canada and go check how much Seabridge trades at! And we’re talking about a $1bn company with no operating assets unlike Kaz which just reported annualized $1.3-1.4bn ebitda from their flagship mines with costs lowest in the world. Kaz should have a $7-8bn market cap now, and it will or else it will be bought out by Kim & Co and they would be right to do that given how unfairly their company is being treated by the wider investment community. I would absolutely do just that if I were them. And when they do, they would have to pay somewhere close to where the deal with Russians was done, around £7-8 per share. I just bought 6000 more shares and will be holding and buying more just for that possibility.

RdR, Kim can’t buy a single share because he would have to make a mandatory offer for the entire company if he did so, as per takeover rules. I’m sure he would love to, at this price, if he could. I would not be surprised if he and management take the company private now that investors have shown continued distrust to them. These guys have a long term vision and investment horizon unlike the institutional investors with their short term expectations.

No, it’s 700 us cents, the share price, so 1.71%

Couldn’t ask for better results. Ebitda $690m, 63% margin! Costs at both Aktogay and Bozshakol below the bottom of guidance. Net cash cost 82c/lb must be one of the lowest globally. This is a cash powerhouse. And 6c divi a cherry on the cake. Guidance on production volumes and costs maintained and similar final divi indicated. That would make it a 1.74% yield on yesterday’s price. A bit small, but still a vote of confidence from the board. Can’t see anything new about the deal, but they did stress that allocatuon of capex to development will be subject to feasibility study. This board know what they are doing despite what the market seem to think of them. They delivered before, and they will deliver again! I’m happy to hild my $600k in this for the long term and will add more if falls further.

Assuming deal completing (5% dilution and $436m paid) I calculate 2018 forward PE at 6x and EV/evitda at 4.7x at current share price. Amazing how a little exposure to Russia can wipe out so much value. What would give some boost to this share? Dividend on Thursday?

I’m sure there are plenty of reasons why the deal could yet collapse, but I don’t see anywhere saying it was subject to feasibility study. I would expect a prudent board to have capex being spent on project development being subject to feasibility study, but that would mean wasting $675m of initial consideration, so they must be pretty confident that the feasibility study would confirm the project is profitable beyond the amount of money they paid to acquire it. Havind said that, I would guess that your best bet for the deal collapsing would be sanctions on the selling oligarchs. In the current environment the board would have had to make this their main condition. So if you pray enough to Mr Trump slapping some sanctions on Abramovich, your wish may come true.

Re listing, that’s a completely different point you are making. What about a FTSE100 giant Glencore? I’m not going to get into this discussion. Dig deep enough and you’d find every other company on LSE had some shady roots.

I said all I had to say on this, Rustuss. Just a couple of facts (from memory so may not be ptecise) to compare the two companies, both producing circa 280kt: 1) Kazakhmys admin costs of $700m against Kaz at $100m? 2) Kazakhmys employees 66000 against Kaz at 13000 You do the maths

I have to disagree Rastuss. Some of the mines that were gifted had cash cost of above $4/lb! By 2012 Kazakhmys was right at the top of the cost curve. Forget production, just admin costs were $1/lb! I’m quite sure that if old mines were not divested, there would have been no chat for this share on here now as the company would have gone bust by 2015. Kazakhmys may be generating some cash now but this is pure luck from the massive devaluation of the local currency and rising copper price. Kazakmys is finding it very difficult to get debt financing even now (I know for a fact as a friend of mine works at a bank that’s looking to give them a small loan). The smelter business is barely cash positive. I looked into this. Smelters generate marginal profits at best. Why do you think only Chinese build smelters nowadays? Or those forced to by the governments (Indonesia). That’s because smelting is a rubbish business, adding litle to no value in the chain (in terms of shareholder returns, of course). Oh, and it’s not the board that recommended the sale. Get your facts right. It was an independent committee of the board, which obviously excluded Kim and Novachuk, supported by an independed fairness opinion from the sponsoring investment banks. This is London Stock Exchange after all, and a premium listed company we are talking about...