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A well renowned economist and adviser on wrote a piece this weekend outlining Zimbabwe's predicament. You may want to read his thoughts on the matter. I'll quote some of it here for good measure.

On the 20th [February], the quasi-currency became Zimbabwe’s official currency. This new currency is called RTGS dollars and consists of bond notes and RTGS (electronic money). The official exchange rate for Zollar quasi-currency had been set at a one-to-one rate with the U.S. dollar. But now, the RTGS dollar will trade at a managed floating exchange rate. The rate today is 2.50 per U.S. dollar, not par, as it used to be. So, Zimbabwe’s official exchange rate has experienced a maxi-devaluation of 60%.

Zimbabwe imposes a plethora of exchange and capital controls on its citizens. Under these exchange controls, private individuals, traders, and companies must seek permission from the government to buy, sell, and hold foreign currencies. So, neither the old Zollar nor the new RTGS dollar is freely convertible into a foreign currency. In consequence, a black-market exists.

Exchange controls are nothing more than a ring fence within which governments can expropriate their subjects’ property. From this, it follows that the imposition of exchange controls leads to an instantaneous reduction in the wealth of the country, because all assets decline in value. To see why, it is important to understand how assets are priced. The value of any asset is the sum of the expected future installments of income it generates discounted to the present value. For example, the price of a stock represents the value to the investor now of his share of the company’s future cash flows, whether issued as dividends or reinvested.

When convertibility is restricted, risk increases, because property is held hostage and is subject to a potential ransom through expropriation. As a result, the risk-adjusted interest rate employed to value assets is higher than it would be with full convertibility. Investors are willing to pay less for each dollar of prospective income and the value of property is less than it would be with full convertibility. President Emmerson Mnangagwa has proclaimed that Zimbabwe is “open for business.” This refrain rings hollow in the face of Zimbabwe’s exchange controls and its new currency, the RTGS dollar.

https://www.forbes.com/sites/stevehanke/2019/02/22/zimbabwe-introduces-a-new-currency-and-maxi-devaluation/#482595977e05

Tiger rather than try to patronise me in a schoolboy fashion, why don't you try to explain yourself clearer. Or is that how you debate in your household?

Of course not living in Zimbabwe I don't have feet on the ground but I look at a variety of sources including news channels, articles and company updates. It's clear to me if you balance possibilities using historical averages that Zimbabwe's latest move is nothing more than a desperate last measure. There is no empirical data that supports the case this will adequately solve Zimbabwe's problems that I can find but if you believe it will, show me your reasoning.

The market is forward looking, CMCL are trading near year lows whilst gold is up at year highs. Every other gold producer listed on the LSE / AIM has moved higher in response to improving margins except CMCL.

Definitely not! It was just a trailing limit order. Normally I cancel them or move them higher as the price rises and if they are taken out, well it's just a means of derisking a little at a higher price than I paid. Just posting to see if anyone else was caught out and offered over and above their limit order price as a couple other sells went through at exact price and time.

It's a good thing anyway I think, the ask jumping to 25.5p probably meant MMs were short of stock, good for us going into next week with rhodium above $2700, palladium around $1470 and platinum closing in on $850.

Don't know how that's happened but my trailing limit order has just sold at 25.18, above the ask!

The reason CMCL is at year lows and gold near year highs is not so much political risk at this point but the approaching economic collapse of the country.

CMCL were concerned enough to acknowledge "Difficulties in obtaining sufficient foreign exchange may jeopardise Caledonia's ability to implement the Central Shaft project as planned."

The reason cash held has dwindled in the past year despite operations being profitable is down to the capital being deployed to the Central Shaft. At this stage, shooting for increased production and reduced operating costs at this point in time when cash-flow is worsening at a state level is extremely risky. There is no other way of describing. Worse still the board have declared they are evaluating "further investment opportunities in Zimbabwe".

Just for context Mnangagwa’s government deployed the army against protesters in January following protests. Social unrest in Venezuela and Nicaragua and a heavy handed government response has led to recent investment in both countries collapsing.

If the Board were to scale back on CAPEX and delay the Central Shaft development to a later date in light of the situation there, the share price would take a battering initially. However if explained and the decision taken not be necessity but rather of risk management with better looking quarterly results to show for it the share price may climb higher. Let's remember the company has more than 14 years LoM production and low operational costs. They could throw off an enormous amount of free cash relative to their market value but for the Central Shaft development and with foreign currency restrictions potentially jeopardising their ability to complete this phase of development it makes sense to focus purely on cash generation.

In essence it comes down to perceived risks and the market has rightly steered clear of CMCL who continue to play down events unfolding in Zimbabwe. New currency launched this week isn't likely to solve the underlying issues at hand.

https://www.news24.com/Africa/Zimbabwe/zimbabwe-launches-new-currency-measure-20190220
https://zwnews.com/breaking-latest-news-rtgs-new-zimbabwe-money-latest-pictures-bond/

I've traded this once this year and a couple of times the year before but to little gain. We are still waiting on a proper rerate even after bouncing off 1.5p lows. For what it's worth my strategy investing here for a longer term reward is simply drip feeding profits from elsewhere. It's my only gold explorer moving into development and at this stage the risks are manageable. When I look at CNR and KRS I don't see a catalyst coming in the imminent future to drive their market value. By drip feeding, I am unfortunately paying the brokers a fiver a go but there is a certain amount of risk management to spreading these buys out over a period of time. With that said, I wouldn't feel confident pumping £41k into this stock all in one go unless I knew the financing was coming. Curious to know how do others manage the risk with their investment here and do you mix up your investing strategy depending on the type of stock?

https://www.youtube.com/watch?v=LPVj2qzRR9A&feature=youtu.be

Officials of Italy’s populist government are floating the idea of selling off some of the country’s gold reserves to allay its debt problems. But gold bulls shouldn’t be concerned: for every distressed gold seller, there are plenty of central bank buyers.

The Italian noise is essentially a bit of political theater, designed by a populist government to open up a new line of attack on a central bank that it likes to style as serving the interests of German and French politicians rather than long-suffering Italians.

No one in the Rome government is suggesting selling the gold to cover the whole deficit. Even though Italy has more gold reserves than anyone except the U.S. and Germany, its holdings are barely 5% of its 2 trillion-euro public debt. The current burn in Italian debt would consume them in a matter of months.

Rather, the League party of deputy prime minister Matteo Salvini wants some help at the margin, to allow Italy to stay within European Union strictures on the deficit without unpopular decisions like raising the value-added tax or abandoning campaign spending promises.

They have hedged the proposition by saying it would require a “constitutional law”—entailing a particularly arduous legislative procedure—while at the same time saying that the gold reserves belong to the Italian people and not the central bank.

Whatever the ultimate motives in Italy, one thing is clear: the world’s central banks are going to be big net buyers of gold this year, just as they were last year. Central banks globally bought a net 651.5 metric tons in 2018, an increase of 74 percent from 2017, according to the World Gold Council.

If the big surge in gold after the financial crisis was due to fears that U.S. fiscal and monetary policy would debase the dollar, the world’s primary reserve currency, its main appeal these days appears to lie in providing insurance against the weaponization of the international financial system by the U.S.

According to the World Gold Council, the two biggest buyers in the first 10 months of last year were the central banks of Russia (451 tons) and Turkey (153 tons)—both of which saw their relations with the U.S. deteriorate sharply last year.

As the European Central Bank’s Benoit Coeure said in a speech in New York on Friday, “the prospect of being shut out of major financial systems makes fines or economic sanctions markedly more threatening.”

That angle adds spice to the fact that China, against the backdrop of a worsening trade war with the U.S., started buying gold again in December after a two-year hiatus, and continued buying in January.

https://www.investing.com/analysis/italys-gold-reserves-selloff-a-distraction-central-banks-are-buyers-200389182

I've traded some of my holding here in the past few months, didn't sell on the last rise prior to the update as I thought it should have continued higher, especially in light of sector strength right now. But glad I took advantage of the dip below below 80p to buy more. Nobody knows what the share price will be next week or next month but with BREXIT likely to cause a ripple effect across Europe there is a good chance precious metals will rise. Gold peaked not during the financial crisis of '08 but during the European crisis of '11. Interest rates are at record lows despite huge amounts of QE. Italian banks, Spanish unemployment, Germany verging on recession. All going to get worse in the coming months. Would love to see this at £1 on the day the UK leave without a deal but if not next month then it's only a matter of time.

EU, China Emission Standards Boosting Demand

On the demand front, tightening emissions legislation and stricter vehicle testing regimes are now driving palladium autocatalyst loadings higher in most major vehicle markets. This year, the impact on demand will be especially significant in Europe and China, JM says.

Real Driving Emission (RDE) standards in the European Union and China require outdoor driving tests taken under various conditions in addition to the existing lab-based tests. Higher palladium loadings are now required in catalytic converters to meet these elevated standards.

Said JM:

“The technical difficulty of meeting the new regulations, and the commercial risk of not doing so, mean that the average pgm content of European gasoline catalyst systems is rising quite significantly, although there is considerable variation in loadings strategies between companies.”

“It is likely to be a number of years before European car companies are able to focus attention on thrifting again, because the EU is now implementing regulations which will increase the severity, frequency and duration of emissions testing.”

Platinum Substitution Not As Likely

The record high prices of palladium have prompted questions on whether platinum, which leads the platinum-group metal (PGM) group, will be able to match the dizzying heights attained by its sister metal.

The spot price of platinum, which is used in purifying diesel emissions, hit 2-month lows of $779.30 an ounce this week. Futures of platinum fell further, sinking to 5-month lows of $785.55.

Morgan Stanley analyst Christopher Nicholson said notwithstanding different catalytic converter requirements, high palladium prices may ultimately encourage vehicle makers to switch to platinum.

JM, however, said its tests showed that platinum did not perform as well as palladium, and that would limit the likelihood of significant substitution. But the reverse was possible as palladium could more easily replace platinum for gasoline engine needs, it indicated.

https://www.investing.com/analysis/palladium-squeeze-prices-likely-to-heighten-this-year-200388641

Palladium Squeeze: Prices Likely To Heighten This Year

The world’s most valuable metal is likely to get costlier amid a scramble by European and Chinese automakers for its supply.

Palladium Squeeze: Prices Likely To Heighten This Year
By Investing.com (Barani Krishnan/Investing.com)Commodities4 hours ago (Feb 15, 2019 03:16AM ET)

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The world’s most valuable metal is likely to get costlier amid a scramble by European and Chinese automakers for its supply.

XPD/USD Daily ChartXPD/USD Daily Chart

Palladium, which goes into making the catalytic converters required for refining diesel engine emissions, hit a record high of $1,440.35 per ounce on its spot price on Jan. 17 amid a global shortage.

The metal is expected to come under further pressure as carmakers face a potent mix of stricter emissions legislation, more rigorous testing, and more serious consequences for any failure to meet standards, materials specialist company Johnson Matthey PLC (LON:JMAT) says.

Supply Deficit To Widen Dramatically

In a platinum group metals (PGMs) outlook published this week, JM said:

“The deficit in the palladium market looks set to widen dramatically in 2019, with stricter emissions legislation forecast to stimulate double-digit rises in palladium demand from European and Chinese automakers.”

“Although recoveries from autocatalyst scrap should rise again, the rate of growth in secondary supplies is likely to be lower than in 2018, while primary shipments are expected to be flat.”

JM’s outlook landed the same week as North American Palladium’s (TO:PDL) quarterly earnings, which cited a record net income of $119.2 million for 2018 versus $36.1 million in 2017.

Jim Gallagher, President and CEO of North American Palladium, said:

"Highest-ever underground mine production, combined with rising palladium prices, have resulted in the best-ever financial results in the company's history.”

Palladium ETFs Bleeding Supply

JM’s outlook said with ETF holdings for palladium having fallen to 730,000 ounces at the end of last year, these funds no longer held enough physical metal to bridge the gap between industrial demand and supplies.

At their height in 2014, ETFs held nearly 3 million ounces of palladium.

In the four years since, the redemption of these holdings has added more than 2.2 million ounces of liquidity. Yet, this hasn’t been sufficient to prevent a series of market deficits and gradual tightening of physical availability.

JM added:

“Assuming the palladium price remains high, we expect some further ETF profit-taking in 2019. But this is unlikely to be sufficient to prevent the deficit widening significantly.”

On the other hand HUM, HGM, SHG, CMCL and many more are negative or flat.

CEY announced a significant resource increase today to take it to new year highs. We are due similar news in the coming weeks.

FRES look to be rangebound stuck below £10. HOC announced this week they are closing a loss making mine and have risen ever since.

All the above have much higher AISC than Anglo Asian which makes them more attractive when commodity prices are rising as it makes a larger impact to margins and overall profitability.

AAZ will have it's day soon.

Forecast gold production for FY18 WAS between 64-70koz and actual production came in above guidance at 73koz. Copper production fell far short of guidance at just 1,645 tonnes.

The company have forecast FY19 gold production to be in a narrower range of 65-67.5koz. The drop in terms of guidance is barely anything at all. Last year grades were better than expected, that's all. Gold production guidance is actually similar to last year.

Copper production is expected to make up the shortfall as GEO production guidance is higher than in 2018 and we know AAZ are conservative with their forecasts.

Regarding the news due this quarter I don't think the market much cares rightly or wrong. The operational and financial performance is what matters and will drive the share price to new heights. Of course longer term it matters that additional ounces are added to the reserve but Gadir JORC will not impact 2019 guidance.

Q1 results due in 2 months and FY18 results to be announced a month or so after that. As with TSG recently, up about 50% following their special dividend announcement (their largest dividend payment to date), I'd expect traders will take positions here in the run up to FY results.

The headline figures should be impressive despite the issues faced last quarter.

I expect SLP will report
- SDO delivered 34,044 PGM ounces for the period against 33,892 4E PGM ounces in H118
- Revenue generated for the period of $32.1 million was a 13% improvement on H118 ( $28.2 million)
- Group EBITDA of $12.3 million for the period increased 19% on the corresponding period in the previous financial year, while net profit improved 40%. to $7.5m

Last time around they revised guidance to around 71,000 - 75,000 ounces and production came in at the lower end. This year the guidance was set around 76,000 - 78,000 ounces which means in the second half the company need to produce 42,000 - 44,000. Assuming no further hiccups the lower end figure may still be realistic but I wouldn't be at all surprised if guidance was lowered to say 72,000 - 74,000 so that any additional surprises won't cause too great of a shock. With that said last year the company achieved their highest ever output in Q4 of more than 20,000 ounces and almost 17,000 ounces in the quarter prior to that and improvements have since been made to the Millsell MF2 module. Project Echo MF2 module for Mooinooi will be commissioned in the coming months and water shortage issues that affected us last quarter have been addressed.

The financial performance has improved owing to the continuing strength of Rhodium and Palladium. Cash costs have increased but are more than manageable. The company has reduced the free float with share buy backs and the growing cash pile now earns 6-7% annual interest, with $4-5 million being added each quarter until Project Echo development completes.

Maiden interim dividend likely I think and more buybacks to come.

28-30p target this year. Let's hope we don't get taken out for any less!

Good luck all

*Forecasted copper production is up by around 50% year on year and IF the company achieve this figure it represents a near 100% increase in terms of actual copper production!

volcano - not sure what you think I need to reread as I highlighted all the points you reposted in my earlier analysis. Care to explain? From my point of view there is nothing of concern.

Forecast gold production for FY18 WAS between 64-70koz and actual production came in above guidance at 73koz. Copper production fell far short of guidance at just 1,645 tonnes.

The company have forecast FY19 gold production to be in a narrower range of 65-67.5koz. The drop in terms of guidance is barely anything at all. Last year grades were better than expected, that's all. Gold production guidance is actually similar to last year.

Forecasted copper production is up by around 50% year on year and the company achieved this figure it represents a near 100% increase in terms of actual copper production!

Just to repeat so we are all clear production guidance for FY19 is higher at 82-86k Gold Equivalent Ounces than 2018 FY GEO guidance of 78-84k GEO.

Ah yes I should have wrote, shares went ex-dividend AFTER 30th January, just got the dates confused. Best to count the last day as ex-div just to avoid these kind of mix ups lol.

Indeed if the market has reacted to that sentence alone, out of context then it explains partly why the share price has fallen today.

Forecast production for FY 2018 was 64,000 to 70,000 ounces of gold and between 2,100 to 2,300 tonnes of copper but they produced 72,798 ounces of gold instead, exceeding upper guidance. Copper production last year was much lower at just 1,645 tonnes.

Full year 2019 production guidance is 82,000 to 86,000 Gold Equivalent Ounces, higher than 2018 FY GEO guidance. Also bear in mind 83,736 GEO produced last year was at the higher end of expected guidance.

The company is expecting gold grades to dip this year, unsurprising given gold production exceeded guidance in 2018 by 8%. Copper production is now expected to double to more than 3000 tonnes in 2019 which will boost revenues. Copper and gold concentrate is expected to rise which will have a minor impact on pricing and margins. Operations are however extremely profitable and further cash growth and dividends are inevitable.

The current gold price is $1310/oz whilst guidance budgeting this year is $1250/oz. Copper trades at more than $6600 tonne compared to $6100 tonne forecasts. The company were conservative last year with their budgeting and output forecasts and I'd expect they have been this year also.

The 12.75 per cent. production share throughout 2019 with the Government of Azerbaijan under the Company's existing production sharing agreement is a known factor but may have spooked some new investors.

How much cash will the company make in 2019? How much will be returned in dividends? If the answers are somehow much worse than they were yesterday, the drop is justified. However I very much doubt that. Sellers will regret offloading at 80p today when the company announce a maiden FY dividend in May.

From advfn :
Palladium now consistently more expensive than gold.
Severe shortage of physical palladium could soon break the LBMA/Comex price suppression which could then lead to similar heavy trader attacks on gold and silver leading to breaking of these markets as well.

Positives are the production issues were most likely a one off or at least will be limited going forward thanks to measures since taken by the company.

Palladium continues to march on, now trading at $1350/oz and Rhodium has also strengthened to $2500/oz

Can't believe there's reason to be selling now except for short term opportunities elsewhere but with market uncertainty impacting major markets, oil stocks underperforming and other miners flat one might argue it's better to sit on hands and await the inevitable climb higher.

Still can't believe we are at this price!