Member Info for tealo1

I wouldn’t be buying at that price in the first place unless the fundamentals improve in 6-12 months!

Thanks mate.

Let’s hope we get our price points before we go for it! I agree also with the long term attractiveness. I’ve never been a trader ha ha if I get in somewhere I’m long all the way.

Good luck to you pal.

I can’t see it myself just yet mate. I believe it has further to go before it starts getting really attractive. Price to book is too high for a mining stock, given uncertainties in cashflow and production for the short term. Look at the EPS for HY!

Long term I do agree with you but for now I remain cautious (or being greedy waiting to swing the bat at an expected lower price!) but good luck to you mate.

I strongly agree with you on short term Nickel - I think it will become much better value with a greater margin of safety in the upcoming months or 6.

Long term scope does look very attractive given prospects and macro positive for PM price potential if we enter a recession in the next few years. I am sitting on the sidelines before I can hopefully scoop up a more attractive price. Price to book currently concerns me given cash outflows. I personally can’t see it at 900p for a long time (2 years) for this reason alone! Believe me I would like to see it but for now there is a clear overvaluation on the mcap.

Cheers

Hi carvegy,

EBITDA is not a measure of cash flow.

Operating cash flow is calculated by adjusting net income for items such as depreciation, changes to accounts receivable, changes in inventory and other working capital items which is a big deal!
EBITDA does not take off capex / maintenance expend which is vitally to support production, especially in the PM industry.

Key thing to take off this is that EBITDA does not equal cash flow and you’re insights are widely skewed off the mark.

I’m not taking away that FRES will come good late 2020 offering attractive returns - but you’re wrong in your views. The dividend has already been cut to 2.6 cents for this half year and with a policy of paying out 33-50% of PAT; it will be seeing a serious reduction on previous. I do believe FRES will be a great call for a minimum 2 year time frame but for the next couple of months I wouldn’t be surprised if it falls further. The truth is FRES has been having a cash outflow due to capex for long term (very promising) prospects.

I hope this doesn’t upset you mate as it isn’t intended to come across as being clever.

Thanks

In my opinion, FRES won't be rocking up to 900p like some have stated any time soon. Due to required capex to develop operations the cash flow statements clearly show a rapid burning of cash. Our debt situation has worsened over the past 4 years. Dividend has been drastically reduced like in previous cycles to help accommodate - but even then there is a large cash outflow, resulting in a hit to the balance sheet. Currently priced at roughly (very rough as haven't analysed FRES properly in a while )1.7x price to book core.
To me, I feel like there isn't enough margin of safety to justify an investment at the current price. If it falls sub 500p - which I believe it very may well do due to prospects not likely to improve much for the FY, I will reconsider. Back end of 2020 I can see a return in share price improvement due to projects coming online boosting the bottom line which indeed looks promising longer term , but for now with uncertainty in PM and the company I see a further price reduction. I am holding off into the new year before I swing my bat.

GL all. (I know this is a contrarian opinion given current SP - but numbers don't lie.)
Thanks