Blencowe Resources: Aspiring to become one of the largest graphite producers in the world. Watch the video here.
That's a pretty dismal update imo. Clearly pretty significant start-up issues at Kou if they've only managed to produce ~1.6k to date. The company are never transparent about these issues when they come up, it's always a vague description of multiple factors given after the fact. Weather? Recruitment? Equipment? Wrath of the gods?
Jam tomorrow is all well and good until you have significant debt maturities in the next year that leave zero margin for error.
Anyone here also a shareholder in Shanta?
Looks very cheap based on current output with minimal debt. Any concerns on LOM or ongoing change in CEO?
And @John - agree with pretty much everything you said. The shares in treasury will most likely stay there unless an attractive M&A opportunity comes up that can't be funded with cash and/or debt.
@testpack - correct, it's not the sole reason that I like the buybacks, just one of the advantages.
They're currently buying back the shares at an implied FCF yield of >20% (accepting that earnings are a bit lumpy) while still able to pay a dividend and make growth investments. If you want a bigger dividend then just sell into the SBBs in appropriate size to maintain your %holding.
@testpack
Assume the current dividend currently costs the company £100m a year. If they reduce the share count by 20% then they only need to pay £80m to maintain the same payout per share. It basically frees them up to increase the dividend in future at no additional cost.
There is no optimum number of shares. They'll keep buying them back until there's only yours and mine left!
That's the whole point, eventually the share price has to adjust upwards to reflect the stable / growing earnings against decreasing share count.
The other advantage of buybacks is that they reduce the burden of future dividend payments, as there are less shares outstanding that are due the dividend.
Share buybacks at the current price are a great use of capital, and if they paid a larger dividend I would just be reinvesting it in more shares anyway.
I can appreciate that dividends allow shareholders to decide whether to de-risk their investment or increase their relative shareholding though. Maybe it appeals to a broader base of shareholders, people that rely on dividend income etc.
You think people are short term trading an illiquid nanocap that is difficult to get in and out of in any size?
Don't think so...
Looks like only about £20k traded today but admittedly it's the most movement in a while.
@Tom78 - Share buybacks are not price neutral if the company is undervalued. Share price should increase over time if buying back below intrinsic value.
Lots of companies hold repurchased shares in treasury, I'm not sure why there is so much fear that management are going to steal them.
DB still doesn't seem to grasp that the market hates ambiguity. The main issue with the interim results was the comment about 1000 oz sold from Kouroussa, which (combined with the lack of any explanation from management) cast serious doubt over their previous estimate of delivering 30k in 2023.
Buybacks here are probably doing some pretty heavy lifting on stabilising the share price. On low volume days the repurchases look to be accounting for >25% of total trades.
Being posted on this board - anyone fancy keeping it on topic?
Gold still sliding towards 1800. Can we expect an RNS when we hit nameplate production? Market needs something (anything)...
Hi Alas, thanks for the considered (if slightly cryptic) advice!
I think I can get a reasonable feel for profitability in "good times" but I'm concerned that I don't have a good grasp on the downside risks hidden in the balance sheet. (E.g.) How much downward pressure in commercial property rent / bond defaults / equity holdings could they tolerate before profits are obliterated?
Perhaps I need to go back through the annual reports in 2008 / 2020 to get a flavour...
Posted this on the L&G board but thought it was also worth dropping here:
Could someone point me in the direction of some educational resources around valuation for financial / insurance companies (L&G, Aviva, Phoenix)? General guides or detailed stock write-ups?
I find the annual reports fairly impenetrable as a non-expert, but instinct tells me that they're probably cheap given current dividends and asset coverage over statutory limits.
Thanks in advance, appreciate any help.
Could someone point me in the direction of some educational resources around valuation for financial / insurance companies (L&G, Aviva, Phoenix)? General guides or detailed stock write-ups?
I find the annual reports fairly impenetrable as a non-expert, but instinct tells me that they're probably cheap given current dividends and asset coverage over statutory limits.
Thanks in advance, appreciate any help.
Best of luck Playboy, suspect that you'll either look a genius or a fool in a couple of years time, but either way without the psychological burden of holding this (!).
This board is extremely polarised between pessimists and full time rampers, so I'll attempt to tread the middle ground...
My thoughts summarised:
The assets here are good, despite jurisdiction and continual Yanfolila own goals over the past 3-4 years. Both mines are mostly high grade open pit, so it really can't get much easier from an operational point of view to get the gold out of the ground. Even ignoring Dugbe, the assets alone justify a share price multiples of where it currently is (that's why we're all here).
But management have a pretty shocking track record of missteps, poor communication with the market, and lack of shareholder alignment. They were forced to issue shares at an all time low share price just to ensure the business didn't go under, and that's with the gold price (and AISIC spread) at very attractive levels. The business would likely be distressed at this point had the gold price over the past 18 months been closer to ~$1500 / oz. While supportive in terms of offering finance, Coris largely have the company over a barrel here (at least they do now have substantial equity on the line).
Looking forward, the underground plans at Yanfolila concern me given the potential costs, complexity, and timing required to get it up and running. Management's full-year Yanfolila guide of 80-90k oz has largely been shrugged off as sandbagging by most on here, but we really have no reason to doubt them. We know that the mining in H1 involved tapping our high grade "low hanging fruit" deposits to ensure decent cash flow generation, and I'm therefore expecting volume in Q3 to be down QoQ. On the more positive side, once up and running Kouroussa is going to absolutely print cash. It'll need to though, given the amount of debt to be paid off in 2024 / 2025.
I'll be waiting until after Q3 results to increase my position, which I expect could be pretty rough if Yanfolila volume is down and Kouroussa not up at decent levels of production. Happy to take the risk that something may happen with Dugbe in the interim, but given the additional debt announced today you'd have to think that no deal is imminent.
Some reassuring comments in the Investor Meet presentation today. Obviously it's been a bit of a disaster so far this year (particularly at ED) but James & co. seem very tuned in to the issues.