Member Info for TigerByTheTail

If it's Mike Surt again, then it can be safely disregarded.
A complete lunatic and fantasist - pretends he lives in South African, actually lives in UK, etc.

I looked at this stock over the weekend again. If you believe that Hummingbird will set annual guidance later this week of, say, 115K ounces at $900 AISC, and that they will achieve it and that in the meantime the gold price won't tank, then this stock is indeed incredibly cheap. And that's allowing for the current "official" short mine life.
Given that Hummingbird have flagged that a "good news" RNS is on the way (guidance + life of mine extension), I'm surprised that more people haven't bought in.
For myself, I'm still on the sidelines. Mainly because I don't trust Dan Betts not to do something completely stupid. Once bitten twice shy, I guess.

p.s. I'd agree that the Grasvally sale must be doubtful now, as well.
But that was always just a nice bonus "extra", not a core reason to hold these shares.

Hi Ragnar!
Thanks for the post. Having thought it through, I've come to the conclusion that the Samancor staff cutbacks (even if they do happen as advertised) will not affect SLP all that substantially.
Yes, there may be some losses of production due to suspension of Samancor mining operations, but these will be more than balanced out by the huge increase in SLP's margins.

For those who are interested!
https://www.kitco.com/news/2020-01-23/Endeavour-Mining-meets-guidance.html

Hi Top Catz!
Maybe. But what about water and power supply issues for Jubilee if Samancor place the Hermic complex into care and maintenance?
(Note: especially water supply! I don't understand this.)

It's more than "could cut" - Samancor have started a formal process of consultation with the unions about the proposed job losses (that's the law in SA).
Yes, if the chrome price picks up in the next couple of months then Samancor may change their plans. But that's a fairly sizeable "if".
I don't understand to what extent Sylvania could get by on tailings only material if, say, one or more of their host mines are put on care and maintenance. In particular, would there be water supply issues, given most of the water Sylvania use comes from the mine's slurry feed?

Hi TopCatz!
You are probably right, definitely you should be right. I guess I'm just a bit battle-scarred and shell-shocked from past raises!
Meanwhile, Samancor (new owner of Hernic and major chrome miner / ferrochrome producer) are cutting 40% of their workforce due to low chrome prices and power supply issues:
https://www.businesslive.co.za/bd/companies/mining/2020-01-21-samancor-joins-a-growing-list-of-sas-mining-companies-retrenching/

Samancor are cutting 2,500 jobs - i.e. about 40% of their total workforce:
https://www.businesslive.co.za/bd/companies/mining/2020-01-21-samancor-joins-a-growing-list-of-sas-mining-companies-retrenching/
Presumably this means they are also cutting a decent percentage (30-40%) of their production, as a reaction to the recent dreadful chrome prices and Eskom electricity supply problems.
As Sylvania's operations are directly "plumbed in" to Samancor's chrome mines, using the slurry feed from the mines as well as tailings dump material, this must affect Sylvania's operations and ouput. Does anybody understand fully what the likely impact of Samancor cutting production and/or closing operations will mean to Sylvania?
All info gratefully received as I am at a bit of a loss with this news.

Hi Kalan!
Yes, PGM income will definitely be up. (Chrome prices still very low, though - $135 per tonne of 42% UG2 concentrate.)
Medium term, it's all good. But there must be a cash flow crunch right about now due to the heavy monthly payments to Samancor for the Hernic chrome deal and also for the costs of Kabwe.
JLP really ought to be able to borrow money to cover any short-term lack of cash - either from Riverfort or simply from a bank. But I'm a little jaded from experience, and I half expect an equity raise...

Hi Oddbod!
Yes, JLP report tailings production as 6E PGM.
A little concerned by long silence from company. They have to pay quite large monthly sums to Samancor for the new Hernic chrome / PGMs deal, as well as having bills to pay for Kabwe. I hope this isn't the prelude to another placing...

p.s. Just checked - palladium futures settlement this month should be on the 31st at 4pm, London time. I predict chaos - probably a huge price spike.

Hi Deepjoy!
Doesn't the situation you describe add up to an opportunity for us all?
The last RNS was good, and (at face value) this share is trading "too cheaply". Therefore...

IMO, the palladium market is simply broken. Rental rates have exploded, there's a huge spread between bid and ask for spot prices, futures are in backwardation, there is simply no physical metal available, and God only knows how the price will jump around on options settlement day. There could be an enormous squeeze and price spike in the making.
But all this paper market drama affects Sylvania only so much. Sylvania are interested in the average metals price over each quarter, not in short term spikes. Q4 2018 will have been good, price-wise. This coming quarter looks right now like it will be even better, but time will tell.
What really matters is that the company must be making money hand over first at these prices, and their cash pile must be growing fast.
I wonder if we'll find out if the Grasvally sale has completed in the quarterlies as well. That would be a nice bonus "extra".

JLP always report as 6E PGM production (i.e. they count iridium and ruthenium as well as platinum, palladium, rhodium and a smidgen of gold in their figures). Ruthenium is fairly cheap (about $250 per ounce) and quite plentiful in JLP's output, so this lowers the value per ounce of their output.
It's not unheard of for PGM producers to report as 6E - Tharissa (THS) do it as well. But others, e.g. Sylvania Platinum (SLP), report their output as PGM 4E. We should always remember to take this difference into account. In value terms, 1 unit of PGM 4E production equals (very roughly) 0.7 units of PGM 6E production.
I wouldn't say Tjate is "in play" yet. There's still mothballed production to be brought back on line first. But things are looking up for PGMs. If hydrogen fuel cells become widely adopted (and look at their role in "farmfree foods" as well as transport) then the future is bright indeed.

At what point should Sylvania lock in at least some of the gain from the current fantastic palladium and rhodium prices via the futures market? Surely it must be soon.
(I know rhodium is tricky to hedge, as it is directly traded. But there's an active futures market in palladium.)

Hi Cowichan!
p.s. I wrote to Centamin IR along the lines that you suggested, querying the lack of results from BF and the missing Cd'I study. No reply yet...

One thing is for sure in all this, Centamin couldn't be more of a target now if they had a roundel painted on their back. Thanks to Endeavor, we know that EMRA won't stand in the way of a bidder, and that several major shareholders are unhappy and see value in becoming part of a larger company. It's an almost perfect scenario for a predator.
If the BOD want to avoid a takeover, they need to act fast to regain the market's confidence. First up, they need to appoint a new CEO and Chairman!

As I see it, some speculative "hot" money is now flowing into the palladium and rhodium markets. That's probably the cause of the last move up. But underneath it all the market for the metals is in a serious long-term deficit, which will likely only get worse as more and more countries impose ever stricter pollution limits on ICE vehicles.
I don't see much signs of catalytic converter manufacturers substituting platinum for palladium for gasoline engine vehicles. I've come to the conclusion it may be one of those things that is technically possible, but not so easy to do in practice.
So, all in all, I think $1,800 palladium and $5,000 rhodium (at least) are here to stay for the medium term - barring a major worldwide economic downturn.
I believe now we will get a rally in platinum as well - perhaps to $1,200. I put some money in a platinum ETF at $920, so I hope so!
Sylvania's margins must have exploded over the last few months. They may or may not have lost some production due to the Eskom load-shedding issues in December (none currently), but the financial results should be excellent due to the increase in the basket price. I'm rather expecting a repeat of last year, when the February interims caused a major re-rate.

Hi Candid!
I'm thinking the Glenover licence is about due as well. Really here for Star Zinc. But the Glenover licence would be very welcome. Especially as I think it will be followed very rapidly by the sale of Glenover's phosphates to Omnia.