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Brokers are not worth it, they run always behind the share price development, it was on the downside with FRES and now they move slowly the price targets up. But anyhow, I went again through the last quarterly production report - and as well as I mentioned before here in the chat - no-one is digging the numbers. By management took down the full-year production target for gold from 815-900 koz to 785-815 koz, that is a close ten per cent reduction of 7 million ounces of silver equivalent. FRES has to mine another 404-434 koz gold in the second half and 24.2-29.2 million ounces of silver in the second half. With production down in the first six months (including the non-existent lock-down of its mines), not a big thing to fulfil. To compare, in the second half of 2019 FRES mined 27 million ounces of silver and 443,500 ounces of gold. Generally another year of shrinking production! The strategy fits with shrinking investment budgets as production goes down. The current market cap of 9.1 billion £ or 11.9 billion US$ is a heavy price tag for a company that targets for 2020 a production of 1.42 to 1.51 million gold equivalent ounces, with more than half its production hedged till December 2021 - 23.48 million ounces of silver and 706,000 ounces of gold at weighted average call-strike of 19.04 US$ per ounce of silver and 1,809 US$ per ounce of gold. You find the press release at the website of Penoles, dated 23rd June 2020 - no RNS for London. No transparency over shareholders over here and a fair question, how looks then the accounting? It is a tragedy to see such a company in size being busier with itself than to look after its business!
** Gold is set for the biggest monthly gain in more than 4 years
** Spot silver heads for biggest monthly gain since 1979
** Zinc headed for its biggest monthly gain in almost 3 years
** LME copper stockpiles post biggest monthly drop since 2009; decline driven by withdrawals from Asian and European depots
** Gold retesting the highs at $1,980 as USD makes another fresh 2yr low @ 92.50, down >5% in July alone
** DXY US dollar index now at an RSI of 16.5 the lowest since 2006 and has declined 14 of the prev 16 sessions
** Inventories of imported iron ore at China’s 45 major ports up for sixth consecutive week
** Germany overtakes China as world’s biggest retail buyer of gold bars and coins so far this year
The company has a limited cash-flow to finance buybacks. Therefore, any buyback would draw down the available liquidity and at the end, there are only illiquid investments left. It is important, to keep a well-balanced allocation with sufficient cash/liquid investments. What MAFL needs is a higher share price to be able to issue new shares to raise more cash and expand the portfolio, but that closer to NAV than today. I'm sure JV would accept financing in the region of 14 to 16 Pence. This would broaden the shareholder base and MAFL could look forward to a real listing at the LSE.
The current offer to acquire Cornerstone Capital (100 per cent owner of the property) for 11 shares of SolGold is open, but refused by the management of CC. SolGold has to spend certain amounts to get into control of 85 per cent of the property, retaining 15 per cent. CC owns 157.1 million SolGold shares or 7.58 per cent. Adding up its stake, plus the remaining 15 per cent less the tax liability in the books we have a fair value of at least 5.50 c$ per CC share, currently quoted at 3.78 c$, Any idea on the big price differential?
If you add up all the savings, finance costs down 11.5 million, cap-ex down 66 million, special mining rights & profit sharing down 70 million and dividends down 35 million $ = 182.5 million $! Oh, yes, they write down to minimize taxable profits and now they cut spending for real important works in the mine. The test leaching pad at Herradura delivered an increase of 119,000 ounces of gold inventory = 38 million $ uplift in the income statement. As other mines had to shut of COVID-19, if they were affected or not, Fresnillo did continue to (mis-) use its contactors and workers to mine. What did they pay not to shut? A fair question here to ask! Why other well run mines owned by North American companies had to shut and go through weeks length re-start gimmicks. Mexican accounting is hair-raising and has nothing to do with lowering taxable income.
that is perhaps an important note, Woodside owns 35 and Far Ltd 15 per cent, both from Australia with the balance of 10 per cent by the Senegal National Oil Company Petrosen.
The ticket price of 300 million is for the 40 per cent stake (and not 100) - that is even better for CAP!
Did anyone notice the sale of Cairn's Senegalese portfolio to Lukoil for 300 million $? It includes the Sangomar development which is next to CAP Energy plc's Djiffere block. When production chicks in, Cairn can receive an additional 50 to 100 million $. CAP Energy plc has 30 million shares outstanding - can't calculate the current values of the two assets, but for sure, something is there and CAP is there as well. Lukoil is smart, buying a good asset and has the pockets for the investment to bring it to production. With the political interferences between China and the USA, no Chinese state oil company could buy it, but the Russians help out. Another smart move to put its political interests at work in Senegal!
What a chat group - are we here in the silver bullion market or at Fresnillo? Did anyone take notice on the typical lousy numbers of the first half of 2020? Earnings were below expectations, as well as a dividend cut. They blame the devaluation of the MXN of 21.9 per cent over the USD, what a joke. As I wrote earlier here, they hedged more than half of their gold and silver production at much lower strikes and they do not participate for quite a time on the rising spot prices. If silver comes in a bit, good for FRES as they have a lower loss on the hedge book. The production was reported a week earlier, 26.8 million ounces of silver and 381,000 ounces of gold (at silver/gold ratio of 80 = 47 per cent silver production and 53 per cent gold) you arrive at reported revenues of 1,054 million $ at an average price of 1,610 and 16.71 $ per ounces of gold/silver. Costs of sales were down only by 8 per cent to 733 million $ with all their operations in Mexico, lower costs of diesel in the first half. When we take average FX MXN/USD from 1H2019 at 19.15 and 1H20 of 23 with no cost inflation, the costs should be down to 663 million $. But as I say, they are transparent with their shareholders and they should leave the London Stock Exchange and trade the shares in Mexico where no-one cares about shareholder interests.
No one really can explain the trading pattern in the MAFL stock - waves. The stakes of the privately-owned gold mines should keep up in value with gold holding its high price level. Especially when we see the US economy is on a standstill after a slight recovery, or even on the verge of a renewed retracement - stimulus package number XX will be spoken. I wonder why investors always work with price objections - gold at 1'900, and so what? Gold can be at 10'000 like the worthless Bitcoins and then? Setbacks are always hurting more in gold than in other investments, but clearly the way is up. In the meantime, the nice balanced portfolio with the investments in oil (CAP) and zinc/copper (Lagoa Salgada) will appreciate and certainly keep their value (in the ground). Unfortunately, Robinhood cancelled its plans to expand in the UK, would be nice to see new RH-investors piling in MAFL ;-)
I wonder if investors start to realize that the major shareholder in Fresnillo, Penoles, has any interest to be transparent. If one takes the time and visits the penoles.com.mx website - it tells you everything. There was a press release June 26th on the current hedges of 23.48 million ounces of silver and 706'000 ounces of gold between July 2020 and December 2021 with an average call price of 19.04 USD for silver and 1'809 USD for gold. For silver, it is about a bit less than half the annual production and for gold 80 per cent. The Fresnillo mining complex is huge and the mining operator at one end doesn't know what is going on at the other end. Look at the managers, I doubt that one of them knows anything of underground operations. You can contact IR - or independent directors - no response at all. Another curiosity - you never see any of the well-paid directors purchasing own shares!
Cerrado Gold released an update & presentation July 1st, mentioning - "We are currently looking to raise US$5 million at a price of US$0.80 ($47 million market cap) and would welcome anyone’s participation should they wish to invest (see term sheet). While we do not need funds for operations we see great advantage to position key institutions ahead of the IPO and feel an increase of resources in Brasil will materially help valuation for the IPO" - a nice uplift in that investment as well.
Nice run in the share price in conjunction with the move in silver. Looking at the Juanicipio JV partner MAG Silver, who raised 60 million $ at the end of April and another 50 million US$ at the end of June - all proposed to be used for the completion of construction - it smells like a big cost overrun. As we should know, Penoles as a major shareholder of FRES has no real interest in shareholder-friendly communication. You should only own the shares as a play to be included again in the FTSE 100 index, but otherwise, there are better precious metal miners. With all the shut-downs in the Mexican mining industry, the second quarter production should feel an impact, as the work in the expansion of Juanicipio. GLA
If you have to wait for years to get an appointment, you can imagine how long the list is with unheard cases - Panthera is just one of it. As the judge was replaced several times, any new one has no clue about the case and will put it on hold - postpone the hearing to a later date till a new judge will take over. The never, never, never-ending saga of Indian courts!
We have really to question when we see a 7.1 bid to 7.5 offer for 10,000 shares on each side that someone is selling 14,238 at 6.5 Pence! As long we have investors on board who place orders like that - we do not catch the rising tide of the commodity markets here. The market maker will sell the shares later at a much higher price and reap the profit on the back of the impatient investor.
Till the first zinc will be mined, we are going down the road for at least eight years. But that is a horizon investors have to commit in such a story as with further development, the value of the project increases. We are looking out for short term gains, quarterly reports and so on - does it matter? We know what MAFL has, and there is even the producing gold mine of Cerrado Gold in Argentina. Small bits and pieces which will work out in the long term.
COVID-19 is accelerating again in Portugal with 500 employees at a distribution centre of Continente Hipermercados infected. Tracing down the chain (lorry drivers) the infected rate is at 3'000. So the government intends to increase again the security measurements soon. Tourists are afraid to visit the country. Probably not so important this year if drilling will take place or not. School vacations were proposed between 10th June till 10th September - probably government is shut as well. Better to take it easy than having staff infected on the site of exploration drill work.
Incredible, since my last post - nothing was delivered and you still sit out the never-ending Indian story. They dilute existing shareholders for so many years by issuing shares at a discount to business friends. The courts in India will never speed up any case - why should they? Even if the new MD has some experience in Indian court battles - it didn't help the Oilex share price over the years. I wish good luck to those who didn't get a few cheap shares on the issue.
Fresnillo did make the return to the FTSE 100, but we are probably two months away that it could be the case. To bring COVID-19 and the performance of gold in relation is stupid. Everywhere is a mess and economies are recovering much slower than politics hoped for. To catch up the lost business during the last three months, we need a rocket recovery like a J and not a V-shaped one. This will not take place and latest in September/October we will face tremendous lay-offs. How should companies pay the debts they loaded up over the last few months without having profitable revenues? Cost-cutting is what takes place and governments will print more money to prevent the worst. Gold has to be mined and there is a limited quantity available - try to buy gold coins!