The latest Investing Matters Podcast episode featuring Jeremy Skillington, CEO of Poolbeg Pharma has just been released. Listen here.
Mr T, I think this share is dependent on the real gold price, gold's much as it was 3 years ago but inflation has been 20%, therefore profit form gold even at a flat aisc is half, as is the share price very roughly, plus a little more for the reduced percentage of profit now paid out in dividend. So when gold rises in real terms I expect so shall we, and if it falls so shall we. We will be helped a bit by increasing ounces and falling real terms aisc, but we have been holding up lately surprisingly well on the expectation of these. So imho baring a great new discovery it is mostly the gold price we are gambling on here, now the ship is steadied.
Shareholders holding 10% or more
Medway Developments Limited 111 627 006 4
Rance Holdings Limited 40 548 241 1
Shareholders holding 5% or more
Fujian Wuhang Stainless Steel Co., Limited 19 419 920
Maaden Invest Limited
So the family are much the biggest, then the hines and Middle East mining co
Yup and platinum and palladium gently declining both down around 10% in 3 weeks, so the basket is still falling faster than chromium rise sadly. Most annoying is that we are now around 2/3rds or more profit from chromium, but we wil return to being a mainly PGM miner when Karo comes on line. If this fall continues I wonder if it will, or be mothballed? Finally extraordinary to me that SLP produces about half the PGM we do and valued about half of THS, apparently completely ignoring our highly profitable chromium
Yes Tornado, very reminiscent of Mrs Thatcher’s son Mark, amazing how the cleverest politicians have a blind side when it comes to their children. However unless it becomes a big election issue and enable Trump or De Santis to win I can’t see it having much effe t on Centamin, nor of course this board as Mizolgit points out, but gives us old men some fun
Dark, it seems to have settled around 90p for now and rising or falling with PM prices, maybe until the report in a fortnight? I am still expecting the price to rise sooner or later to around 120p at current gold and silver price, remember we are heavily indebted just now and dependent on Inmaculada cash to pay for Maria Rosa and Pallancata whose profits are in the future.
Dark Knight, I am thrilled and happily surprised. This is not a compromise but an absolute result. All the politics that hit us and made our share quarter is now through. Borrowing has become high and production fallen and costs up, but this does not justify the share still having more than halved. It won’t be an easy next 12 months but Inmaculada should be churning out the cash to pay for Maria Rosa and Pallancata exploration. Then we should be a 400k oz a year mine, not far short of Centamin and with similar costs, but getting on for a third of the value. My view is the share price should be around 110 or 120, but let’s see the results in a couple of weeks. And if gold and silver were to pick up a bit I should hoe for 150. I wickedly added a few more this am.
Cowichan, I respect your opinion, that you are already out and suggest the rest of us scarper to gold miners in countries in better jurisdictions. Well many of these are actually in African countries from Tanzania to Mali, which have proved at the least problematic, and even South Africa that looks far more dangerous than Egypt, or Argentina with its exchange controls, Peru with its left wing government that made Hoc tumble, Columbia with its insurgents, Chile with its increasing taxes on miners, problematic permitting etc etc. I would feel far safer with Centamin and a company that has not had its tax/royalties changed, mining in a peaceful out of the way area, in a country with an unpleasant leader but good for the company. It seems very fairly valued now, so there seems more likelihood of upside than down, in this long life near tier one miner, even if t is a shame that a main attraction, the high dividend, has reduced from most of the profit to min 30% tho actually a bit more. And a shame that they continue to pour money down African holes in the ground for their own aggrandisement, but overall it seems to me this is one of the safest gold miners to invest in rather than as you suggest super dangerous. So I am with Sisi Imho
Tornado. Remember near 20% inflation over last couple of years so $1900 hedge is near a $1500 hedge back then. I really wonder why they have done it reducing income by $25 an ounce. Overall miners are usually better at mining than timing the market, unless lenders or poor balance sheets force a hedge.
Tornado, it means they can sell 240,000 oz or just over half their output at $1900 in 12 months time and the counterparty can buy 240000 oz in 12 months at $1900. If price stays above $1900 it is worthless to us, if it falls below $1900 we can sell those ounces at that price, however far gold falls. bBeing a paper option it means we can sell gold at whatever price over the next year and then on the last day claim the difference between $1900 and the lower gold price if that is the way gold goes. The option will also rise in value as gold falls towards $1900 and could be sold early. It will not have been that expensive. However it is slightly surprising for miners to spend money hedging unless needed to enable them to continue paying losses and of course if they continue doing it is an extra cost. I wonder why Centamin thinks it worth the money or if they are really gloomy on the gold price. It is quite surprising how bad miners are at predicting the gold price though not as bad as analysts. At least it doesn’t reduce the upside other than the cost of doing it, unlike Hochschild who yesterday said they had hedged to sell around 2100/$2200, guaranteeing them this price,, a very different and more expensive view, and necessary to them with big debts.
Not bad results, decent output and nice aisc, but dividend down another 20% much as expected and half what it used to be so no longer a high yield share (at least at this share price) as we know.
Here’s a thought
When Maria Rosa is at full pelt, and IFFF Inmaculada permit is solved, production should be close to that of Centamin and costs similar, but Hoc valuation is only a third.
Of course Hoc debt is high, and there are the debt servicing costs, and there is the new hedge but that could be a benefit.
So even if Hoc should be valued a third lower than Cey that would still mea a doubling of the share price…IF
These results don’t look bad to me and I would be bold buy Muri’s holding sold yesterday if had the cash and bravery.
Production is up slightly on the last quarter, if still quite a bit lower than historically, overall debt at over $200m is very high but as expected for necessary Mara Rosa investment to make up for collapsed Pallancata.
At least we have saved a bit of cash having had to reduce exploration at Inmaculada pending permitting. Yet again the board suggest the conclusion will not be binary, and they are negotiating a compromise which will result in increased costs/lower production/less exploration but the big question how much.
There are more hedges but at gold prices above record high, efficacy of them all depends on inflation, ie if it continues high then aisc could rise at 10%+ a year meaning hedges turn out less than today’s price in real terms, but if inflation is rapidly controlled could be good - Hoc has a good track record of hedging and with debt so very high can’t afford to ride out gold price falls as well as other so makes sense. And as Tornado says probably necessary for the banks, just a big shame they hit peak borrowing and gearing ata. Time of peak interest rates but hen Hochschild have never been lucky, wonder if that is partly why Bustamente has given up?
Razor, you are right, the truth, especially in these times, is horribly tiresome, from how the NHS is failing, to greater inequality, poor productivity and falling standards of living, to Centamin’s fallen profits. However if costs can be cut at all despite inflation our shares would rise, or if gold rose $300 we would get that 40% rise you think we deserve, or a combination of both.. Curing NHS, inequality, productivity etc might be more challenging and will continue making most of us rather tired of it all. Thank you for the good cheer and thoughtful words as always
Razor I would love a 40% higher share price but why do you think we deserve one? Our historic PE has been around 12 or 13. Our valuation is £1.085m. Profit should be around £85m I reckon, at current cost and prices, so PE of 13 which seems spot on the norm?
Last week the chief operating officer, who must know a thing or two, sold 75000 shares. I suppose the big question, as I have asked here before, is whether rh bottoms at $4000 or heads down below $1000 which would obviously be a bit disastrous for THS. I guess Michelle is worried by the latter, particularly if it goes into next year with reduced demand because of BEVs, so she has taken a large chunk off the table. We should know the rh answer within the next week or two but I guess on down is sadly likelier. Her other worry may be falling Chinese demand for chromium. Or she may just need cash and think around 83p the best she is going to get for now….