The latest Investing Matters Podcast episode featuring Jeremy Skillington, CEO of Poolbeg Pharma has just been released. Listen here.
Well, we can say with absolute certainty those Q2 results exceeded all shareholder expectations! Market taking a moment to catch it's breath
Singida AISC came in at $736/oz! - "AISC were around 40% better than budgeted predominantly due to more ounces produced as well as lower than budgeted Open Pit mining and Processing costs."
https://www.shantagold.com/_resources/Q2%202023%20Production%20and%20Operational%20Update.pdf
Ah that came out a bit of a mess. To clarify discounting the cash pile of circa £10 Serabi should generate net cash this year equivalent to around 80-90% of the remaining equity value or about half the current market valuation.
"Net cash attributable to the Group has increased by US$5.1 million during the first six months of the year."
On an annual basis with production set to creep higher and the gold price expected to remain strong (CB tightening coming to and end + inflation easing) Serabi should generate net cash equivalent to around 80-90% of the current market!
Quite why the market is only pricing Serabi at £19 million when 50% of that is cash I cannot work out! These tiddlers throwing off cash should really entertain share buybacks, even 2-3% taken off the market.
Q2 2023 highlights
• De Beers and the Government of Botswana reached an agreement in principle(2) on a new 10-year sales agreement for Debswana's rough diamond production (through to 2033) and a 25-year extension of the Debswana mining licences (through to 2054).
• Copper production increased by 56%, reflecting the ramp-up to commercial production levels at our new Quellaveco mine in Peru, while production from our operations in Chile decreased by 2%.
• Steelmaking coal production increased by 28%, reflecting higher production at the open cut operations, which were impacted by unseasonal wet weather in Q2 2022.
• Iron ore production increased by 9%, principally driven by a strong operational performance at Minas-Rio where production increased by 29%.
• Nickel production decreased by 4%, reflecting the impact of lower grades.
• Rough diamond production decreased by 5%, as a strong operational performance was offset by expected lower production from Venetia, as it transitions to underground operations.
• Production from our Platinum Group Metals (PGMs) operations decreased by 9%, mainly driven by short-term operational challenges and 2022 planned infrastructure closures at Amandelbult, as well as the planned ramp-down of Kroondal.
Cut your losses and nurture the winners. Which one is PREM? Some fantastic miners out there releasing record numbers SHG, MTL, SRB and others due important operational updates in the next week or two like HUM. What possesses people to keep holding garbage like this
Good spot Daniel! Interesting to note the share price which had been making small gains through this year jumped on and in the days following the release of Q2 results. It's currently 15-20% above the level it was trading at.
Link to the update for anyone interested
https://www.lse.co.uk/rns/THX/q2-2023-operating-update-3vem6amilv811te.html
Their gold recovery of 23,078oz was 'in line with expectations' and 'the planned step-up in production' was met with 'Mining forecast to remain at this level for the next three quarters'. No positive surprises and yet there was a surge in interested buyers which have held onto stock rather than cashed in. Personally I don't believe for one second the market has priced in all of the financial information, there is no consensus over figures and clearly the market in this case had failed to price in the company achieving Q2 guidance. There was nothing in that update that was particularly extraordinary.
Odey's fire sale has unfortunately resulted in an overhang that has distorted the gap between market value and the relative value comparative to peers based on sector norms, financial expectations etc.
Net debt was $19.6m ($29.1m debt vs $10m cash and gold) at the end of Q1 with a further $1.5m working capital available. The latest presentation quotes Liberum research forecasting Shanta to turn net cash positive within 6 months.
https://www.shantagold.com/_resources/Singida%20Five-Year%20Plan%20Presentation.pdf
Assuming first quarter costs at Singida come in 20% above the top end 9-month AISC guidance of $1400 accounting for inevitable higher costs per ounce as operations ramped up, Singida should still have ended this quarter cash-flow positive, particularly as certain costs such a royalty payments won't be due this quarter.
Shanta were pumping $6-8 million each quarter into Singida until last quarter so we should see a fairly sizeable reduction in the amount of net debt alongside growth in group revenue and profitability. All the metrics moving in the right direction and certainly paving the way towards dividend increases in the not too distant future.
Q2 will be Shanta’s first quarter as a two-mine producer (and no longer funding the capital of it's second mine through the cash generation of the first.
https://www.shantagold.com/_resources/Singida%20Five-Year%20Plan%20Presentation.pdf
Oh I don't know where to begin. Such irony calling others novices when just eight months ago you were struggling to read a balance sheet! It is a crying shame you did not learn a few lessons in decorum while you were away.
You were completely wrong on liquidity and equity raise claims, wrong about poor operational performance and teething problems at Singida, wrong about the price action also. The share price only began to slide last month from 11p+ level so unless you knew Odey were liquidating an 8% stake in the company then I fail to see how you called any of this right.
Latest release indicates Steppe Cement have to postpone dividends and will make a decision later this year as to whether they can afford a 2-3 pence dividend. At best then they have slashed the dividend and this comes alongside a rather tepid set of results IMO. The primary reason people hold Steppe is for the generous dividend payments it was known for which are now reduced or removed entirely. No reason to hold when this continues to lose market share against a backdrop of high inflation and possible recession.
Too early to know what the combined production will be in Q3 but taking Shanta as a recent example it took them less than one quarter to ramp up to full production at their Singida mine. We could safely say production will jump to around 40koz give or take 5% either side of that as they are aiming for more than 50koz by the beginning of Q4 and in each quarter thereafter.
SRT Marine Systems (LON:SRT) – Sensible £3.95m Fund Raise To Boost Working Capital
This £97m global provider of integrated maritime surveillance systems and digital navigation safety transceivers has announced a £3.95m capital raise @ 50p a share – which looks totally sensible to me.
The raise price was at 50p, a near 14% discount to the closing price last Thursday night.
The company intends to use the net proceeds of the Fundraising to facilitate accelerated growth through provision of working capital for the company’s systems and transceivers divisions.
CEO Simon Tucker commented that:
“In the last few years, SRT has transformed its prospects as demonstrated by a 265% increase in revenues to £30m last year, a current forward contract order book of £160m, and a pipeline of new system contract prospects which has grown to £1.4bn from which we have also recently announced a further award notification. This fund raise is timed to support this acceleration of our business.”
Analysts Kimberley Carstens and Michael Hill at finnCap have a price objective of 100p out on the shares, almost double the current market price.
The analysts consider that with the profitability expected this year and next, there is plenty of room for upgrades as a track record continues to be established.
They are expecting the group to more than double its sales in this year to end March 2024 at £70.9m (£30.0m est), while adjusted pre-tax profits will explode from an estimated £1m loss in the 2023 year to an excellent £7.3m profit this year.
Looking further ahead for the 2025 year, £104.8m of sales are estimated by finnCap, the group’s broker, with profits leaping to £11.8m, taking earnings up to 6.2p.
The group’s customers include national security and safety agencies such as Coast Guards and national fishery agencies as well as individual vessel owners.
Its products and systems provide customers with enhanced maritime domain awareness in order to solve problems that include maritime and border security, illegal fishing, marine environment protection and navigation safety.
These shares at 51.20p, after the funding, are still very cheap and are certainly not for selling yet – we have had a good ride so far and there is obviously so much more to come.
Filtronic (LON:FTC) – Firm Hold For Further Recovery
Last Friday morning’s Trading Update from this high-tech products supplier showed some positivity.
The company, which is involved in designing and manufacturing for the aerospace, defence, telecoms and critical communications markets, informed shareholders that its supply chain issues have started to ease, while its opportunity pipeline is still building.
CEO Richard Gibbs stated that:
“Throughout the year our primary markets have remained robust, and we enter the new financial year with a strong order book, a significant number of promising development programmes and opportunity pipeline that has doubled during the course of the last year.
Notwithstanding the disruptions caused by shortages of electronic components, we believe that we are continuing to make the right investments in the business to capitalise on the exciting near-term opportunities in our core markets.
We have been encouraged by the closing of two new telecoms infrastructure contracts early in our new trading year and will look to build further momentum as the year progresses.”
Analysts Michael Hill and Kimberley Carstens at finnCap now have estimates for the year to end May this year, showing a slight dip in revenues to £16.3m (£17.1m) while it might only show a £0.1m adjusted pre-tax profit against £1.5m previously.
For the current year they look for a partial recovery to £0.8m profits from £20.5m sales.
The brokers have a price objective set on the group’s shares at 20p.
We should get a bigger picture of the group’s progress on Tuesday 1st August when the group reports its finals.
The group’s shares, which have been up to 17.34p in the last year, are currently 14.50p valuing the group at £31.3m.
The shares are a firm hold for further recovery.
From what I can see trading is not dead, the market is simply risk averse right now owing to near double-digit inflation and the economic outlook. This is affecting many similar resource based stocks. The base rate is expected to go above 5% in the coming month(s) which is causing a major shift in investment strategies. Investors are simply chasing better returns on their investments and there are much safer companies paying 10%+ dividends right now.
That being said you could argue trading looked 'dead' in Resolute Mining in the second half of 2022 prior to it's financial reorganisation raising money to clear overhanging debt. The share price jumped from around 9p to 28p over 5 months so it's not like investors won't touch these producers, they could be waiting for an appropriate time or certain catalyst. Cash build up, net debt clearing and dividend hikes are all likely but not confirmed so I'd expect trading to pick up once the Half Year results are out and providing there is a noticeable difference with Singida having been in production and very little capex required in Q2.
PhatStyle - Shanta is already producing at a rate equivalent to 100koz / annum but as with HUM the production numbers are forecasts based on current run rate and have not been proven (yet). Certainly with Shanta the market is awaiting actual reductions in debt with realised increases in cash-flow and that will take months as bonkers suggested earlier. This is the right time to buy though, both SHG and HUM will experience the rerate RSG went through earlier in the year after it cleared it's overhanging debts
Forecasted Earnings in 12 months are $700m placing it on a Forward PE Ratio of 3.7x which would make it cheaper than the likes of Serica and Ithaca!
More than 5% wiped off the market value since an Egyptian security officer went on a rampage killing 3 Israelis. News outlets suggest it is "one of the most serious border incidents since Egypt became the first Arab country to sign a peace treaty with Israel in 1979".
It does appear markets are pricing in the possibility of retaliatory actions IMO although not escalatory and I guess the risk premium here has increased temporarily as a result.
ENOG still look cheap on an earning comparative and yield more than 8% with quarterly dividends expected to increase in the coming years. Not without risks even at today's price
I'm not convinced that's the immediate concern of markets but it may be contributing to sentiment for sure. Thessues relating to Covid handling over the past 3 years and even recent events with the sudden change in policy breeds uncertainty. Risk of lockdowns, restrictions or adverse health implications to factory workers, no matter how low, is still an ongoing concern for markets, given the lack of transparency. The management of the company may also leave something to be desired as they slashed the dividend to bring down debt fasters.
https://time.com/6283257/china-xbb-covid-outbreak/
The global economy and everyday folks could only wish for sub $50 oil once more but when have us peasants ever been rewarded for our patience and hard work? More likely oil will remain range-bound and my 8% dividend will turn inflation beating in the coming months. Still, this won't make up for recent losses... A good price to enter and hold.
£64m (46p p/share) for a stake in the world leader in media investment analysis.
More than 600 media specialists operating from 18 offices - covering 80% of global advertising market, 70+ of world’s top 100 advertisers use Ebiquity as independent media advisor.
Could do £10-11m profit this year and £13-14m in 2024
Trading Update (H1 2023) late July
Only follow Hunting at the moment but considering entry if sentiment has now turned. It has looked oversold for a while and perhaps today's upgrade will reignite demand here.
"This order, again, breaks Hunting's record for the largest single order received for the Group's OCTG and premium connections and supports management's belief that international market sentiment remains extremely strong as governments and countries address the challenges of energy security, the development of domestic supply and post-COVID economic recovery."
"Hunting's successful run of significant OCTG and Subsea orders since H2 2022 demonstrates that our technology and global footprint is well positioned to deliver significant growth in the medium term. US market activity remains stable and with the orders received for China, Guyana, Brazil and now India, Hunting continues to see a strong growth profile given our standing and recognition with major energy companies, coupled with the strong international market sentiment being reported in many regions."