Member Info for the_shareminator

Wow don't be so ignorant goldgnome. The flu has a 0.2% mortality rate and there are vaccines available every year. This new virus has a mortality rate ranging anywhere between 1-3% and could well be higher were it not for high tech medical treatment being available. So far very few people have been infected and undergone treatment but if this trend continues to rise health services around the world will find it increasingly difficult to provide support for all infected. Assuming only 1% of the worlds population catches the virus in the next 6 months, that's 70 million people affected. 10% are expected to then suffer severe symptoms. 3% mortality rate would be conservative with these estimates, more than 2 million lives.

Of course the only way to tackle this is to shut down the country and the markets are waking up to this likely outcome of economic suicide. If governments don't act, the above figures will be a drop in the ocean.

https://www.ft.com/content/dab75720-618a-11ea-a6cd-df28cc3c6a68

Brent crude, the international benchmark, dropped from $45 a barrel to $31.02 a barrel in one of the biggest one-day drops in its history, with traders spooked by Saudi Arabia’s decision to launch an effective price war just days after trying to secure a deal with Opec and Russia to reduce production.

Saudi Arabia, Opec’s de facto leader, is now seen as trying to take on and even punish Russia in a fight for market share, including targeting customers in Russia’s traditional backyard in Europe. A price war will also squeeze other high-cost producers, including hitting the US shale sector, the growth of which over the past decade first brought Moscow and Riyadh together.

The tactic is reminiscent of Saudi Arabia’s attempt to win back market share in 2014 during the last price war, but this time it comes as demand is seen falling due to the impact of the coronavirus, which has crimped air travel and the wider economy.

Russia declined to cut output last week with one eye on squeezing US shale, which has struggled to turn a profit despite turbocharged growth, with Moscow angry over Washington’s attempts to target Russian energy companies with sanctions. But the aggressive response of Saudi Arabia now risks a severe hit to the Kremlin’s budget.

Saudi Arabia plans to pump more than 10m barrels a day next month while announcing unprecedented discounts of almost 20 per cent in key markets. Production could eventually surpass 11m b/d, one person close to Saudi oil policy said — well above the roughly 9m b/d Riyadh had previously proposed lowering its output to.

The resultant price fall spells trouble for the entire oil industry, which has only slowly recovered from the last price crash between 2014-16, from publicly owned producers in the North Sea, oil majors like Royal Dutch Shell and ExxonMobil, and the oil-dependent states in the Middle East.

Goldman Sachs, one of the most influential banks in commodity markets, on Sunday lowered its price forecast for Brent to $30 a barrel for the second and third quarters, and warned there could be dips to $20 a barrel in the coming weeks.

WTF is going on!

Why and for what possible reason are LSE deleting posts here?

@adamsmithfreethi - Welcome aboard!

With regards Shanta they have managed to reduce net debt from $32m down to $15m in the last financial year and this while gold prices averaged $1,377/oz. There have been a couple of people trying to talk down the share since the accounts were released but they seem not to really understand the liabilities in relation to the hedged ounces. I do take your point though, it's not the safest jurisdiction in which to invest.

Gold has breezed past resistance today, currently up to $1674 and volumes remain pitifully low. The share price here and across the sector is a long way off highs reached last year and it's evidence of a growing disconnect between the price of gold and sector investment. I expect a 2009-11 style repeat of the explosive growth producers and explorers underwent. The potential here for what is an extremely profitable, cash rich, dividend paying producer is dare I say second to none.

Exceptions being HUM, TSG, SHG in that order.

I'm not sure what point you're trying to make now. Your earlier post suggested an actual cash loss. Then you mentioned the company was unable to pay suppliers. Now you're suggesting these results are based on "record gold prices". Do you see where I am heading? Gold peaked in 2011 and has not traded anywhere near $1900/oz since. The average gold price received last year was $1377/oz compared to average spot prices for unhedged production of $1402/oz.

It's worth pointing out the $8.4 million increase in derivative financial liabilities HAS to be paid out of future production as they relate to the remaining hedged ounces valued at spot prices. If the gold price continues to rise the remaining derivatives will incur larger liabilities on a per ounce basis to the balance sheet. As stated earlier this won't affect cash-flow. The income on those hedged ounces is guaranteed.

The only oily you want in your pf right now. Cash rich, low cost, dividend paying and on the lookout for acquisitions.

Gold returned to mid-$1,600 levels on Tuesday as an emergency rate cut by the Federal Reserve and the increase in cases of the coronavirus drove demand for the safe haven.

An underwhelming commitment from the Group of Seven nations toward fixing the economic carnage caused by the epidemic — with policy makers promising a monetary and fiscal response where appropriate — also worked against risk assets while helping gold.

“It's long been argued that governments aren't doing enough and clearly have a different definition of what's appropriate,” said Craig Erlam at online trading platform OANDA.

April gold crossed the $1,650 mark earlier, hitting a session high of $1,650.40, after the Fed announced a half-point rate cut ahead of its March 18 meeting in a move designed to bolster economic confidence amid the coronavirus impact.

The coronavirus has killed more than 3,100 people worldwide and infected another 90,000-plus.

U.S. stocks erased gains sparked by an emergency Federal Reserve rate cut as investors assessed whether easier monetary policy can effectively combat the economic impact of the coronavirus. The S&P 500 turned lower after spiking as much as 1.50% following the central bank’s 50 basis point cut of its benchmark rate. The two-year Treasury yield tumbled to 0.78%, while the 10-year plunged below 1.08%. Banks led losses on benchmarks.

Investors had piled out of risk assets last week as the spreading virus threatened to derail global growth, only to pour back in Monday in anticipation of concerted action from Group of Seven officials. Oil continued its rebound Tuesday, approaching $48 a barrel, while gold also rose. The yen was higher versus the dollar.

The OECD warned that growth will sink to levels not seen in more than a decade and ever more businesses are warning about the impact of the illness. President Donald Trump said on Tuesday the Federal Reserve “should ease and cut rate big.”
The governor of the Bank of England, Mark Carney, said it would take all necessary steps to help the economy. Australia lowered its benchmark by a quarter percentage point. Its currency rose, however, underscoring how traders’ expectations have rapidly shifted in recent days.

Maybe we should start a new thread LOL

I wonder if we will see $1700 this week

Of the 5,348 oz of bullion that were available for sale at the end of the period of which 2,841 ounces were delivered to the Argor-Heraeus refinery in Switzerland prior to 31 December 2019. Proceeds were due to be received after period end so we might assume the cash position is a little healthier than it was at the end of last year.

All told, cash and available liquidity amounted to $13.7m on December 31st 2019 and I suspect this has continued to increase throughout the quarter as it has done in the past 3-4 consecutive quarters, given the ongoing delivery and remittal of ounces and the 'flexibility' to defer settlement of hedged ounces.

I would rather stick to the facts as presented in the FY results. The company made more than $20m of net capital repayments towards loans and borrowings during the year. I think your claims of being unable to pay suppliers is outrageous and borderline defamatory. There is no evidence to support what you have just said.

At 31 December 2019 the company had a cash balance of $3.5 million as well as the Exim Bank working capital facility of $2.5 million. The company state operating cashflows are sufficient for meeting contractual debt repayments in the forecast period. Further to this "since the year-end, the maturity of the convertible loan notes has been extended to April 2021 and the Group expects to settle these when they become due from operating cashflows".

There's a lot of confused rhetoric being repeated here. Look if the company were making a cash loss as you imply they would not have been able to reduce gross debt to its lowest in more than 7 years. Net debt would not have fallen $17.2m (55%) during the period. Tax payables as you mention would not have increased.

A NON-CASH loss of $8.4m was incurred on open commodity swaps, right? This is separate to the $1.4 million loss incurred on commodity swaps delivered in the year. The difference being the former figure impacts the profit-loss whilst the latter impacts both the p-l and the cash balance. Depriciation of $5m was also NON-CASH. There was $1.0 million NON-CASH charge for finance expense.

Operating profit for the year was down approximately $14m as a result pf the above to $5.1 million (2018: $19.3 million) "heavily impacted by the NON-CASH loss on forward contracts and increased NON-CASH charges to cost of sales in the year". Capitals are my own, quote lifted from the results.

VAT refunds have been an ongoing issue for a while now and clearly are not cash on the balance sheet despite being due. I see no reason to complain about the reclassification of VAT, it should have been done sooner and more to the point does not affect the company's cashflow.

They are still considering financing options to raise the capital for Singida and any development to bring this closer to production is a positive thing. They have the opportunity to pursue this and the new Kenya project precisely because the balance sheet is stronger and forecast margins are higher (even with the remaining hedge in place). If the company are able to proceed with listing Singida on the DSE they expect the IPO proceeds will make up a portion of the capital costs and ultimately allow Shanta to retain majority ownership and operatorship of the project.

I think a few here have got a bit carried away with the results. Hedging production has ensured the company meet it's debt repayment obligations as Daisan pointed out. This was done a year ago or more when gold was trading below $1300/oz if memory serves me. Yes it looks bad on paper now and clearly it skews the profit & loss balance but this is not an actual cash loss, hence why net debt has halved in the period. I believe there are tax benefits, in simple terms it is the same as when you or I lose money on a trade and can write off the loss when declaring annual gains. The drop last week was way overdone, SHG was one of the gold producers worst hit despite gold prices recovering later in the day and after market close. The central banks have announced they are taking action or prepared to if liquidity worsens and this should help market confidence next week. Expecting a volatile couple of days ahead but hopefully 10p will be breached in quick order.

Covering losses and reducing risk at this time are smart moves especially with the lack of direct government intervention that was seen in the Euro crisis 2011 and the crash of 2008. However the world powers do eventually get their act together (historically speaking) and so one might hope they intervene with new liquidity for industries that are at risk, specifically aviation, tourism etc.

Another volatile day on the markets with falls across AAZ (118p), HUM (22p) and SHG (9p). Gold producers across the board have been hit as a result of market turmoil, copper has been rather stable in comparison to other base metals.

Just looking at the charts, gold has been trending higher over the past 3 months and is still up around 12% extending gains made prior to the period. Copper is actually about 4% lower in the same period. It has fallen quickly in the last week or two but that is coming off the back of a decent 2 month run.

Copper probably makes up less than 15% of revenue today. In the last set of Interims up to June 2019 revenues from gold and silver were $35.2m compared to $8.1m from copper concentrate. Copper made up just 19% of revenues during the period and this was back when gold averaged $1,319/oz. The average sale price has risen considerably in the past 8 months.
Full Year results due in March should reveal the average realised price in the second half to be closer to $1,500/oz.

Also trying to get my head around the weak performance across the gold sector this week. ETF buying at it's highest in years and yet following the pullback many have dumped. I tend to agree with TBTT that holders here have been spooked by the larger market sell off. There is absolutely no sense in dumping the stock of a cash rich highly profitable gold producer at a time like this unless you fear volatility will lead to a repeat of 2007/08 meltdown. I think we are months away from that point yet given quarterly reporting delays but markets will be able to assess the development of the virus and it's economic impact in the meantime and that should encourage more and more funds to jump into gold.

Took advantage of the drop this time. Amazed people can still buy AAZ for 132p, SHG for 11p and HUM for 26p.

At the very least we can all derive a little pleasure if any of those targets are not met.

130,000 (or more) ounces of gold are poured between 1 January 2020 and 31 December 2020
AISC of US$850 per ounce
Net cash position by 31 December 2020

Come 31 March 2021 when these RSU's begin to vest those who remain invested at todays price will have been handsomely rewarded.