Roundtable Discussion; The Future of Mineral Sands. Watch the video here.
Hi Sage, I too read your well informed posts with interest. I am personally entirely indifferent to whether a dividend is paid or not: if the BOD can earn, say, a 15% ROI on Putin the cash to use in the business then that is what they should do. My valuations of Griffin are based around a dividend discount model but it doesn't require that the cash potentially available for dividends is paid out. The BOD substantially improved the balance and net creditor position to H1 2018, something I commented on and applauded in an earlier post. I am hoping the licence is imminent and the BOD can employ the cash increasing shareholder value. If it isn't, and they can't, then I would prefer a sustainable dividend rather than an untested acquisition.
I estimate year end cash after tax payments of 40 - 45 million. A 5p dividend would be around 20% of cash balances which is eminently affordable and would change sentiment about the shares. Last results they were cautious about zinc prices. Since these have held up well the BOD is running out of excuses for hoarding cash. A lot will depend on how close they think they are to licence enactment and start of new production.
Zinc is heading back to my predicted $3,000 and gold has been firm last 6 months. Griffin must have had a good Q1 2019. I am comfortable with my previous forecasts on this forum, but expect that after the 2018 results I will raise my base 2019 forecasts. I'll give an update for both with and without production from new licence unless we are given clear guidance in the results. My fair value as of now is 145p rising back to 160p in 2019, and 185p with new licence kicking in production in Q4 2019
I meant Pilko (sorry, auto complete)
Polio indeed ore quality is a concern. There was a comment at the time that the board didn't expect that ore quality to be a recurring feature, but who knows: they were digging deeper and backfilling more. I did an estimate of volumes and composition by back analysis and pitched my forecast at somewhere between H1 2018 and H1 2017 (ignoring the exceptional H2 2017).
With stocks below 80,000 (well below critical level) and likely trade deal between China and USA + significant shortage of smelter capacity, hopefully we will see a decent rally in Zinc to +/- $3,000
What does anyone think? My own model produces 18.1cents fully diluted after tax or around 13.9 pence. I did a bottom up based on estimated volumes mined, grades, smelting costs etc. and using net selling price of $2,000 zinc and $1,200 gold. Interested in other views.
Zinc up 11% this year. Will we see 3,000 again soon? Good start to the year of the pig anyway
Zinc up 11% this year. Will we see 3,000 again soon? Good start to the year of the pig anyway
Various possibilities: we may see a sale reported Tuesday. Or, MM's may have been marking down the price to flush out some sellers over the last few weeks to build a block for an order. We did have sustained buying by an 'elephant' in H1 2018. Maybe they are back. Maybe this means good results/news?? I think it is easier to predict the outcome of Brexit than the Griffin share price! Still have my fair value of 145p so anything that gets us there is good.
Zinc stocks remain very low, price has been stable through H2 2018 and now above 2,700, gold has been firm, and no reported operational problems. Should get reasonable full year 2018 numbers with strong cash generation and a decent start to 2019. Griffin remains 40% undervalued under current conditions.
Paranoia and so it should. Fair value at these levels for zinc is around £1.40+
https://investingnews.com/daily/resource-investing/base-metals-investing/zinc-investing/zinc-outlook/
A good summary of the current views of industry insiders. I liked the explanation of metal supply vs. concentrate and effect of smelter capacity. Also Section 232 tariffs affecting galvanised sheet steel, and future uses especially in zinc oxide batteries. Bottom line is price of c. $3,000 once the trade war rhetoric dials down
Nice to see some of the better informed rational Griffin's migrating to this board. As you know I keep a detailed valuation model on Griffin and update this board ascand when new information causes me to adjust my estimates. For now I am sticking with my earlier forecasts as zinc has been stable around 2,500 over H2 2018, gold has held up above my 1,200 model assumption, and we have no reported operational issues. Always happy to discuss assumptions and value. I still see fair value at around 145p/share under current conditions. Griffin is a thin market and small volumes have a disproportionate effect on the share price. Many investors are in this stock for short term gains so we see continuous net selling pressure when there is no news and the momentum stops. I believe, however, that all shares revert to fair value over time so happy to wait for the 2018 results and trading update.
Zinc stocks are below the critical 40 day level. This would normally , ex Trump, see a spike in zinc prices to $3,000+. Given how well zinc and gold are holding up in H2 2018, I have slightly revised my earnings forecast up to $35 million pat ( previously $32million). This equates to 14.3p EPS fully diluted.
Please see my earlier posts where I gave the results of a detailed financial analysis of GFM and valuation estimates. Also posted that zinc market fundamentals implied $3,000/tonne ex Trump/China trade spat. Also posted that we were seeing a classic bull/bear tussle at the bottom of the price correction. Looks like bulls have won for now, there will be sellers as GFM reverts to fair value. I don't think this will runback to 160 but I do expect to see 145 being fair value based on estimated 2018 EPS. I may upgrade my 2018 forecast if zinc continues to hold above $2600.
As I posted before, Wood Mac in August estimated zinc would be around $3000 in tight stock conditions if it wasn't for the Trump Chinese trade war. As to GFM share price, this really should have rebounded - indeed the Board are puzzled at the price. However, for a price to rise ultimately there has to be buying pressure. I think we are at the bottom of the trading range but no one is committing new money just now. Until all the sellers are shaken out GFM will struggle to rise far: for all the people who are hoping to buy back in at <85, there are people who will sell into any rally >95. Be patient, this little tussle will play itself out and GFM will head back to my fair value of 145
Velo, the reason for guessing end of Q1 2019 was that by then we will know average zinc price for H2 2018 and so will have good confidence in EPS estimates some time ahead of the results. The market usually prices several months ahead (9 months typically for large relatively stable businesses). Anyway, time will tell. I remain confident!
Good to see the bounce up to 96 intraday. Obviously this flushed out some more sellers. I guess we will see a bit more of this type of price action until those who have lost faith in the stock get out. After that I fully expect Griffin share price to start to revert to fair value, which in my model, is around 145p based on estimated 2018 EPS. If zinc holds I would expect to reach this price around end Q1 2019.
Velo, Mark good to see you on this board. My own estimates are for $45m pbt for 2018 based on a pretty full financial analysis (I used to value stocks and write research for a living). I am more bullish on 2019 as I expect zinc to hold steady, ore grades to improve compared to H1/18 but not quite to 2017 levels, and a small contribution from zone 2. I don't think, even at full production, they will mine as many tonnes from zone 2, but assuming 65%of zone 3 volumes in 2020, and allowing for the different metals mix in zone 2, and with zinc constant at $2,000 achieved selling price, I have $58m and $81m pbt for 2019 and 2020. The big question mark is what effect the reopening of Century will have short term and long term. However, at the moment stocks of zinc are low, 3 month zinc is above spot, and the BOD remain bullish and confirm no operational issues. DYOR but this has to be good zone at these prices.