The latest Investing Matters Podcast episode featuring Jeremy Skillington, CEO of Poolbeg Pharma has just been released. Listen here.
Tornadotony - "If we get no offer then the argument that it only worth the takeover offer becomes the only game in play."
Come on Tony, are you playing devil's advocate because nobody in their right mind believes that! The market will value Shanta based on it's fundamentals not what Patel and our sell-out Board of Directors say is 'fair value'.
The Board doesn't need to be removed. They will have to respond to shareholder discontent but their interests and ours will still be aligned once the offer is rejected. The only potential clash of interest going forward may be Patel's involvement given his declared intention to acquire the company's assets.
In the event of a no vote and no further offers Shanta reverts back to fair market value. The share price was 12.6p on the 19th December the day before the recommended cash offer and had been creeping higher over previous weeks as interest in the gold sector had begun to pick up.
Would be interested to hear why anyone thinks Shanta will dip below the 12.6p pre-offer share price in the event the offer is rejected.
Yet to receive mine either (ii) although mine is set to 'reinvest' so I won't have the chance to hold it in my hands, speaking metaphorically of course :)
Adw - we cannot assume institutions like Ruffer have made their decision to vote yes or no. They are buying now with a certain degree of surety in the event it succeeds but depending on the share price on the day of the vote they may well be able to sell at or near the offer price through the open market.
If you only consider their recent buying of 12.95p and assume Ruffer vote in favour of buyout that means they have guaranteed 4.5% with the dividend thrown. They have actually been holding for a while now and so stand to gain considerably more. Ruffer are open about making 8% annual returns over the years so their recent buying would indicate they may be content with the offer going through, regardless of Shanta's fundamentals and assuming there is a sizable gap between the ask and the offer price on the day of the vote.
However if we assume the share price is near or around the offer price in a few weeks from now which is likely given recent indicators and interest, there comes more incentive to vote down the offer, especially when other small cap gold producers are rising at a faster pace thanks to current gold price trends. There would be more incentive for all shareholders including those increasing their leverage at this time to retain holdings in a company whose outlook has never looked so rosy, given it has afterall been the target of takeover by at least four companies in the past 18 months, has the support of multiple institutional investors (some of whom continue to buy) and is expected to make record earnings (EPS) from our now two producing mines, setting new records in terms of output, earnings and cash generation.
ADW - As Equanimity has said there are a couple of scenarios that will push the share price above 13.5p. I can give a personal example of a not too dissimilar event that I witnessed when Petropavlovsk conducted it's rights issue to raise cash. The rights issue was for shareholders to purchase additional new shares at 5p, a substantial discount to the share price on the day before the announcement. The price cratered to around 4p at it's low but what then followed was a series of institutions scrambling for stock and this pushed the share price over and above the 5p rights issue price to around 12p at it's height such was the demand for shares with the option to subscribe for new shares. The market had effectively shown the rights offer price was too low and that demand for these rights significantly outstripped supply. With the offer deemed by almost all to be too low for Shanta and institutions scrambling for stock knowing this deal is likely to fail they may well be positioning themselves for a higher offer and should further offers fail to materialise the market can at least put a base value of 13.65 on shares assuming production continues at more than 25,000 ounces a quarter and the gold price remains strong.
Ruffer LLP have increased their holding by 2,343,333 shares taking them to 25,750,000 (2.44%)
For reference they initially declared 17,250,000 shares (1.64%) on the 20th December
https://www.lse.co.uk/rns/SHG/form-83-shanta-gold-limited-i50bti95i1508tp.html
1.64
MTL, SRB, SHG, RSG and CEY are operating in friendlier jurisdictions than Peru and better positioned to reduce excess debt (if they are holding any!). The risks associated with Hochschild have played out again and again over the past decade and look to be as prevalent as ever.
"Dekker is correct" repeated three times. You seem awfully defensive of this 'Dekker' today Tony and not at all concerned with the false information you are helping to propagate. You know full well THE REASON net profit is a paltry $4.67m (2021) and $6m (2022) is because cash-flow from New Luika was redirected back into Singida. I don't have the figures to hand but it well north of $50m invested into capital development of our second mine. This is company accounting 101, keeps tax obligations low whilst growth can be prioritised.
Received a notification from my stockbroker account issued this afternoon. Ignore the noise from new posters here, hold onto your shares and vote with a clear head (2 producing mines, 100koz p/a, gold price all time high, company debt free, low AISC, $70+ million annual earnings forecast in 2024 with likely cash build of $8-10m per quarter)..
'Shanta Gold Limited has announced details of an offer by Saturn Resources Ltd, a wholly-owned subsidiary of ETC Holdings (Mauritius) Limited. The offer is to purchase all of the outstanding shares of Shanta Gold Limited via a scheme of arrangement.
Under the terms of the offer, you will receive GBP0.135 for each Shanta Gold Limited share held.
The scheme is subject to shareholder approval at a general meeting and a court meeting, both to be held in due course.
There will also be a court hearing in order to sanction the scheme.
If approved, the proceeds will be credited to your account following completion of the scheme, which is expected to be in the first half of 2024.'
Mr Tibbles you're making yourself look a right plonker!
No operating costs?
From the latest Interim results released September:
Adjusted Cash Operating Costs of US$1,009 /oz (1% below budget) and AISC of US$1,293 /oz (4% below budget) were achieved at New Luika during the Period.
Adjusted Cash Operating Costs of US$655 /oz (36% below budget) and AISC of US$825 /oz (32% below budget) were achieved at Singida during the Period.
As for production stripping you can find the amounts under 'Deferred stripping asset' in the Annual results. That waste stripping is reported differently is neither here nor there.
Are you going to stand by the rest of the bunkum you wrote?
Lol MrTibbles did you write that out yourself? Come on, be honest, that was a hopeless attempt. In terms of FACTUAL analysis it left much to be desired.
Surprised you didn't receive more of a slap down from our regular posters here who are well versed with Shanta's past performance. It's very odd certain holders would even validate such claims given they are simply not true.
For avoidance of doubt Interim results for 2023 are available here:
https://www.lse.co.uk/rns/SHG/interim-results-30-june-2023-fey4rhruntc4tbr.html
Shanta has been paying a dividend for at least 2 years that I recall.
More importantly New Luika cash-flow has been directed into Singida mine development (exploration, capital costs etc) for years. This information has been widely available for in various presentations and reports.
" but historically the company could not generate cash from the New Luika Mine when it had a grade above 5 g/t Au" - in essence what you (or your helpful analyst) failed to grasp was that free cash-flow ended up funding Singida into production, a mine that brings annual production to more than 100,000 ounces each year going forward. If New Luika wasn't profitable during that period how on earth did they manage to fund Singida to today!?
Hounddog - I read that part too, direct buying wouldn't prevent associates who later transfer or organise a related party transaction. When it comes to AIM stocks there is nothing the FCA will do or perhaps that should be nothing they can do to prevent this form of market abuse. It happens in it various forms and given the set up with this deal and our dodgy BoD all clapping in favour of a 13.5p sell off I wouldn't put it past them.
There is also the possibility they 'switch' to an offer from scheme (mentioned in the agreement doc) which would, as Tony points out, mean they can buy on the open market during the offer period. I would hypothesise this may also include purchasing stock from certain affiliates who were mopping up stock during this initial offer period. All conjecture of course and I hope my imagination is proven wrong in time.
Link to ETC Holdings page dedicated to the 'Offer for Shanta Gold' which contains downloadable PDFs of all documents thus far released.
https://etcholdings.net/offer-for-shanta-gold/
The Co-operation Agreement (20th December) has an interesting section pg.11 - (6) Election to make an offer, which details how a bidding war might play out, I think this was mentioned earlier in the week but just getting around to reading now.
Just to clarify this offer is coming via court-sanctioned 'scheme of arrangement' which under Guernsey companies law, and is subject to the "satisfaction of 75% approval by the requisite majority of shareholders".
No doubt ETC (via their newly formed subsidiary Saturn Resources (Bidco) are keen on acquiring Shanta. They even have a dedicated page up with all the relevant documents thus far but I doubt Patel thinks the majority of shareholders will go along with this. He is acting in his own best interest knowing whatever happens he stands to benefit.
ETC takeover goes ahead then no doubt he stands to gain recognition for the deal within ETC, influence, financial recompense for his efforts as well as the 13.5p on his holding.
ETC takeover fails then Patel remains in effective control of Shanta with a collective increased holding and likely reap greater financial rewards as Shanta's market value along with any other publicly traded gold producer rerates next year (can't ignore quarterly cash gains on the balance sheet of $8-12m!)
MrBond007 - The point isn't so much that they have the power to vote down any offers well in excess of 13.5p although from what I understand any offer requires 75% or more in support so they could in theory drag their feet.
The point is that by declaring their interest with this little drama that has ensued (pushing out holders like yourself) and assuming they increase their collective holding to 25% it places Patel & co in the driving seat for any *potential* offers that come along, either in the near future or a couple of years from now.
In simple terms they are conducting a shakedown to mop up cheap shares but the intention to buy Shanta now at 13.5p is surely a ruse destined to fail.
And assuming an offer well in excess of 13.5p comes along (perhaps it is being lined up as we speak) it will be Patel and Co with their 25%+ holding who will be negotiating the price through whatever conduits (legal or otherwise) at their disposal as any offer will require their support to succeed.
Bankrupty and BP - intersting analysis! So a low ball 13.5p offer effectively guarantees Patel controlling interest!
- Share price value to remain depressed during course of offer period.
- Declared 19% interest wards off other interested buyers but equally shows ii they don't have majority support yet
- Commence shakeout of disillusioned shareholders and those fearful of missing gains elsewhere.
These events combined generate an increase in volumes, sellers taking 12.9p the highest price in a long while and at the same time providing cover and opportunity for Saturn to build their stake into a controlling interest. As BP mentioned, another 6% of market share will mean Patel can squash any other future offers including relatively low ball offers. Is this bid then just a ruse to declare a controlling interest with the knowledge that other parties are interested in buying Shanta for a fairer value of 16p+ for example?
Credibility shot to pieces. Cash flushed down the drain and nothing to show for it. The signs were there in the HY results although barely a mention of a 'going concern'...
Net debt went up on the previous quarter despite production in line with expectations. Reading between the lines many of the reasons remain and according to the last update will persist for a couple of quarters. The major issues being (planned) lower grades as well as increased capital expenditure. This is the cause of the recent sell off whilst the price of gold has surged higher.
Operational issues may continue to hamper gains in the short term, it's the same reason I sold down GDP and HUM.
If you can sit on hands and wait this will no doubt rise with the tide; gold is certain to push through $2,100 in the new year. But I'm not convinced THX will make a good return in the next quarter when compared to the likes of MTL, SRB or even SHG which is currently depressed owing to a hostile offer. Net debt is likely to have increased or is set to depending on when gold shipment settlements fall in relation to quarterly updates. The right time to buy will probably be when management hint grades are returned to normal and that may take another quarter. In the meantime the company's financial situation will stagnate which the market is unlikely to treat kindly given we are in an inflationary environment with gold selling for record prices.
"My theory is that as shareholders sell, they are replaced by others who are picking up with an aim to hold for 13.5p.. Does this mean that the share price should get tigher to the t/o price as time goes on as the sellers should gradually dry up?"
Based on my prior experiences of takeovers / buyouts in this sector with Randgold, Highland Gold, Trans-Siberian Gold, Vedanta and others whose names escape me the inevitable closing of the gap is happening and will continue to keep the price on a gradual trajectory towards 13.5p. But for this hostile bid the market should have responded more positively as it has done elsewhere (MTL, ADT1, GPM, SRB, HOC, RSG) with gold futures creeping higher and this morning to just below 2,100/oz Shanta's two mines are throwing off more cash than ever.
Thank you for going to this effort Kaduval. I don't frequent the LSE boards as much as I used to but still holding 160,000 shares and intend to vote down this hostile bid at the first opportunity.
It will be surprising if major shareholders vote in favour of this deal given the encouraging gold price environment we are in and expected to remain as rates begin to drop early next year, but there is always a feeling of uncertainty whenever a shady deal such as this is pushed by the board onto it's shareholders.
Disappointing not one board member thought this will reflect badly on themselves and the company moving forward (assuming the deal collapses). Maybe that is part of the plan, encouraging disgruntled shareholders to sell. Well, my intention is to hold and buy any dips should the opportunity come along.
We need to first vote down this deal and then with the support of major shareholders who are not connected with Saturn / Patel consider replacing certain members of the Board.
Last I checked we are on course for a 12% dividend in 2024 although this may have changed with the geopolitical upheaval in the ME and with the investment / farm-in news. Things move very quickly though, just this past week the oil price has rallied nearly 8% on the deteriorating situation in the Red Sea, somewhat zealous headlines pushed by Middle Eastern media outlets to spur on the price of oil (no doubt there are vested interests) and welcome relief for the oil producers who were just a month earlier contemplating sub-$70/bbl prices.