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time for bushy to retreat with his tail between his legs and lick his HUM wounds...In the River and Merc microcap fund update I note they sold out of hummingbird and added to Serabi in the period to March 2021. This is a reassuring statement and it seams everyones patience will now be rewarded... it has not been easy as holders being berated daily by the Bushy fool. Alas he was wrong, and discredited.... he can move on now...nothing for him here.
40k? ... Actual Q1 9k, Q2 expected 8k, Q3 forecast 8k, staffing down 30-35%, exploration suspended to conserve cash.... so they will not hit 40k unless they do 15k Q4...which they cant do...most likely prodn 2020 32k Id say but selling at an average price higher which is good for cash. At some point exploration needs to restart which is negative fr cashflow but positive for NPV. Given the balls in the air its understandable really that we are where we are although cash likely to surprise positively for Q2... Id say
Good interview, production as bad as I feared but cashflow much better...due to no exploration. Obvs this delays real driver of upside and makes the stock pretty geared to current gold price ... 6 months ago the reverse was true where the production and exploration upside potentially offset any wobbles in the gold price. Clearly the gold price has held up very well so far....driven by -ve real yields on bonds....as gold could be viewed as a zero coupon irredeemable ..of infinite duration.
I think the company have managed the current situation really well and corporate communication is good.
I agree that if they can sell any property that are not needed... then this would be value accretive, raising uninvested cash without impacting profitability in the food business. In reality though - £1m here or there doesn't hurt... but increases value by 50p or so...
For me, another deal would be interesting, pushing forecasts for 2021 and 2022 north of £2m .. and therefore VLE becomes an EV story rather than NAV. So you add cash to your valuation of food to determine vale.
I think you need to adjust for value captured in NAV already:
As per results :
Cash = £19.3m = £10.72
NAV (excl min int) £13.85
In the NAV = £3.11 for Food excl Indulgence. Which is the difference between net assets of £26.99m and £19.3m adjusted for the minority interest. So you have £7.6m of value for the food business captured in the NAV.
Taking your £1.7m at 8x etc gives £11.2... deduct the £7.6...80% to VLE....gives £2.9m which is £1.6 a share ie £15.45. Of course you also have indulgence, but if you reduce cash and add it a book value its asset value neutral. Potentially this fails to capture potential for 2021 to deliver more profit on a higher revenue base... although your profit forecast is higher than I would go for.
Technically the NAV will not rise until you see asset sales which I am not expecting... so you have c£20m cash.... and therefore mkt cap less cash for Food... which is £8m.... which is as you state it below. So the shares seem up with events here, unless we see further deals. Im a happy holder.
agree...but...we obviously need to get through the Brazilian covid without further issues. SRB is in a nice place, but its also a delicate balance of financing, capex, permission and production. If we experience further disruption to production, cashflow will impacted. If they get through without disruption, given move in Gold, and news flow already received...shares must go > 100.
“On the operations front we have enjoyed another good month in April with final production expected to be approximately 3,400 ounces and we are starting to be able to change over a small number of staff each week who have been tested for COVID-19 and undertaken a period of quarantine.”
For now they are coping and the BRL/XAU in their favour .....
If demand of existing shareholders covers all the placing, they will want a small discount, maybe a premium... and the shares will go better.. as unlikely sellers. If new shareholders have to take up slack, they will want a bigger discount, and be loose, sellers on the bounce. this will limit the bounce. If it goes well, small discount and reasonable bounce to say 250 I would have thought.
If you take a quick look at the register 60% or so covered by the top guys. If they all stand their coroner then assume 60% done. Lets say at 220... hedge funds sniff a trade and start ringing orders in to try and capture, say 220 to 250... and the banks walk the price up... closing the value in the trade. If the feedback is its done at 230... then it will be virtually the close...238. the more hedge and new holders involved the lower it is...which limits the upside.
Note from Broker was out this week, I will summarise.... the mine site is in effective quarantine at present and there are travel bans in place. They have 350 people working on site. These can elect to stay and work but getting relief is troublesome. The company may be able to get permission to bring 30 people on site through a 2 week quarantine period. Goods eg Soya are still being transported, 5000 trucks pass the site a day, taking Soya to market! Although they have 3 month supplies - getting supplies should not be a problem for now. They can operate at breakeven with 170 staff... which is reassuring over what could be a difficult short term period of about 8 weeks or so.
Although you say you are not trying to de-ramp the stock im not sure how sending a video of them digging graves in Brazil is helpful. Demand for Gold is strong and the mine isn't going anywhere. The NPV of the mine is rising not falling.
Ill try again, think I got removed for mentioning someones blog, anyway buybacks are extremely unlikely I would say. The last move set the business for the longer term and I cant see Landers wanting to take more out at present. Disposals also unlikely given the recent acquisition of Indulgence and synergy potential with Shire. The shares trade at about last reported NAV 1380 and whilst you can justify a franchise value to the business and perhaps more value to Shire its hard to see much more from here. Unless of course they have picked up something else and spent some cash. Next results are not until the end of May.
I think you can rule out buybacks and sales at the moment. They have just bought Indulgence and so if something is a foot it will be potentially a further acquisition. However I suspect equally likely are just small volumes pushing strong shares higher..... results are not due until 29 May but the NAV of 1382 at 31 Dec has been announced. Whilst you can argue for a premium since Shire is doing quite well and likely worth more together with Indulgence than implied by the NAV, it wouldn't justify a significant move from here. The shares have been pushed by share profits and Graeme Neary at Cube which probably explains the move in a frothy market.
Thanks EB this is helpful..
however the Greenstone issue was the least persuasive and most important aspect. First step we need confirmation that Equinox will allow a delay. Secondly, something is wrong at Greenstone and the delay shouldn't be allowed. Best case is they have problems elsewhere and are overcommitted, still not positive for Serabi but presumably resolvable. Worst is they have pulled their commitment in expectation of production being temporarily suspended, resulting in the deal being restructured. The value of the gold doesn't change but its hard to buy the shares with these issues overhanging.
Agree... the prod shortfall may well be annoying but Greenstone wriggling out of the convertible has thrown a spanner on the works. Until we know how this resolves, financing is uncertain, which was the whole point to doing the convertible in the first place. Hopefully news is imminent.