Member Info for TigerByTheTail

In depth analysis from The Guardian:
https://www.theguardian.com/commentisfree/2020/aug/21/coup-mali-ominous-francophone-west-africa-ibrahim-boubacar-keita-ibk

I think we'll see some hot money moving in next week ahead of the upcoming final results, and the share price rising as a result. You don't need to be a financial wizard to know that the finals will be good - it's all there in the interims and Q3 and Q4 production reports.
It also looks like the current quarter (Q1 2020-2021) will be a bonanza quarter (like Q3 2019-2020). So the clever money will want to get in early on that as well.
IMO, it's all about publicity here. The numbers make an almost irresistible investment case; it's just a question of getting the story out there to a wider audience.

Hi Sotolo!
I'm not really "out" out of gold / silver. I'm just resting in cash a bit, with a side bet on platinum group metals (palladium and esp. rhodium are in very tight markets).
IMO, there is big money to be made in gold/silver in the aftermath of the market crash that will come either before or immediately after the US elections. If I'm right, I'll do well. If I'm not, I get to keep what I've already made this year, which is, well, a whole lot better than if I'd handed the money over to Crispin Odey!
p.s. Apologies for autocorrect in 09:13 post. I really did mean to call you that avatar!

As proof of Ernest Hemingway's financial acumen, I also offer this (from The Sun Also Rises):
“How did you go bankrupt?” Bill asked.
“Two ways,” Mike said. “Gradually and then suddenly.”
“What brought it on?”
“Friends,” said Mike. “I had a lot of friends. False friends. Then I had creditors, too. Probably had more creditors than anybody in England.”
I.e. Financial crises take a lot longer to arrive than you think they will, but when they finally happen, they happen fast.

Hi Stool!
Just up early. Son and heir having bad reaction to his booster injections.
I have to say I regard Crispin Odey as a 24 carat fool. IMO, he is just one of those faux-posh Tory donors and unpleasant self-publicist spivs who thrive in modern Britain, even though his investment results are dire. I'd much rather take Ernest Hemingway's financial advice than his!
My take on it is that the central banks now desperately need inflation, to inflate away the debts (state, corporate, and personal) that are crushing all hope of future economic growth. I think they secretly dream of inflation at 5% to 10% p.a.. Thus, they will be in NO HURRY to raise interest rates over the next few years. I believe the markets are currently pricing in no increases in interest rates until 2025, which sounds about right to me. Short of outright debt monetisation or debt cancellation, moderate inflation is the only way out of the current mess; though what it will do to savings and pensions doesn't bear thinking about.
IMO the bigger immediate threat to gold is higher real interest rates caused by a nasty bout of deflation, which could still happen in the short term. Another risk to gold is a general market crash, leading to margin calls and forced deleveraging, just as we saw back in March. By almost every metric ever invented US markets (the Nasdaq in particular) are wildly overvalued. I'll be amazed if we don't have "a significant market event" in the next three months, especially given that it is US election season.

Ernest Hemingway. “Inflation is the most universal tax of all. The first panacea for a mismanaged nation is inflation of the currency; the second is war. Both bring a temporary prosperity; both bring a permanent ruin. But both are the refuge of political and economic opportunists.”

Hi Sotolo!
No, Capex is the big item outside AISC (all-in sustaining costs). Of course spending money on expansion / new projects is a positive thing to do, which should bring returns in the future. But it does knock down the headline profits.
My quick calculation this morning did make me realise how much HOC is sensitive to the silver price. If silver can hold at current levels, then the company becomes super-profitable.
I'm hoping that Peru is now past the worst of Covid-19, and that it should burn itself out shortly.

Hi Ragnar!
Thanks for the link to the Glencore report. A 42% drop in ferrochrome production is sizeable.
I'd guess that Samancor (for instance) are down a roughly similar amount, judging by their lay-offs and the suspension of operations at various sites (Hernic, etc.).
As always the cure for low prices is low prices. So a turn in the chrome market is coming. The question is when.
Chrome has a short cycle and it is pretty volatile, so I'd expect that the chrome market will have improved by the end of the year. But when it will turn, I haven't got a clue.

https://www.aljazeera.com/ajimpact/gold-mining-mali-unaffected-military-coup-200820042553421.html

Hi Ragnar!
Thanks for working out that rhodium should be running at 30% of THS revenues - it's an almost incredible figure.
I posted some figures about a week ago on the SLP board about the fall in South African PGM production due to the coronavirus limiting deep mine supply. From memory I think it was down 40% in June on a year-on-year basis.
IMO, the platinum and even the palladium markets have enough slack in them to absorb such a loss in production. But the rhodium market (remembering that all supply is essentially either from South Africa or from recycling) is so tight, that any loss of production is almost guaranteed to see the Rh price soaring.
So I think we'll probably see a new record high in the next few weeks.

Hi Sotolo!
I did my own back of an envelope valuation just now, and I also make HOC undervalued at the current price, even using more pessimistic assumptions than yours. (With your production figures, a $14 margin on silver, and an $800 margin on gold, and allowing $100m for Capex, I get a profit figure in the region of £150m, and thus a "current P/E" just north of 7.
As long as there is no wider market crash, and gold and silver remain (at least) stable at the current levels, then HOC should rise. Especially if Arcata can be brought back online quickly.
That said, I still half-expect a major market reckoing sometime before the end of November, so I'm holding 60% in cash as a fixed principle.

Hi Quady!
This is because I understand the basics of finance. But you seem determined not to believe the obvious.
Solgold have no experience in mine building, which is a very difficult and risky enterprise (about 33% of mine builds go seriously over schedule and over budget). Ecuador is a high risk frontier jurisdiction. Solgold have no assets or cash flows to pledge in exchange for loan / royalty / off take finance.
Therefore, only a limited amount of loan finance will be available to Solgold, and it will be on hostile terms. I'd estimate a maximum of 60%. The rest of the cost of the mine build would have to be financed from new equity, and would act as a buffer against loan losses. That means massive dilution for current equity holders.
In fact, I think it would likely prove impossible to put together a workable deal even on these terms.
NM's plan (if he is sincere about it, and it is not an elaborate bluff) is crazy. In the cold light of day, Solgold have no other option but to go for a sale or farm-out of Alpala.
IMO, 60p would be a good price for the company. My fear (which is why I sold) is that the majors will let Solgold very slowly bleed to death, and then swoop in at the last moment in 2-3 years time, and pick the company up for pennies.

Hi L2!
Well, I sold at 26p, and I was happy to take my profit there.
I do think some of the valuations on this board are, well, somewhat unrealistic. And many posters are ignoring the near impossibility of Solgold getting the mine financed on a go-it-alone basis, and they are not factoring in the massive equity dilutions this would require, were it possible at all.
IMO, a 60p takeover would represent very decent value for this company, and an outcome all shareholders should be happy with(*). The only hope for more is if rival bidders fight over Alpala, which is always unlikely.
(* = Unless there is spectacular success from the new drilling campaign).

For those who don't already know:
"Jim Slater's Zulu Principle is a growth investing strategy inspired by UK investor Jim Slater in his book, The Zulu Principle. The strategy combines growth, value, quality and momentum factors. Its most famous ratio is the price-earnings-growth factor (PEG) which compares a company's forecast price-to-earnings ratio with its forecast earnings-per-share growth rate. It also looks for a high return on capital employed and positive relative price strength in small and mid-cap shares."
Zulu companies are - by definition - rare beasts. It's good to see that SLP is back in their ranks after the March crash took it out of their ranks for a while.

https://www.bbc.co.uk/news/world-africa-53843526
The "good" news here goes unspoken, as so often. No blood was spilled during the coup, the army has not broken down into factions, and there is no fighting, rioting, or looting in Bamako. This has a fairly good chance of ending well.

www.ft.com/content/dc14cfeb-4ba2-481a-becf-238594f91996
Shows importance of gold mining to Mali - 7% of GDP and 30% of government revenues.

Rhodium now trading at $12,200/oz, according to JMAT, nearing the all-time high ($13,800/oz) reached back in February.
At 11% of THS's PGM output, rhodium makes up a large share of THS's PGMs revenues. (And palladium is trading at over $2,000/oz as well.)
The next set of figures should reveal some very strong PGM figures from THS.

Rhodium - SLP's largest source of revenue - is trading at $12,200 per ounce today (JMAT price), rising strongly on the back of supply shortages caused by South African deep mine production difficulties. The all-time high, $13,800 from February earlier this year, looks like it might be within reach.
So this should mean super-profits (again, like in Q1 this year) for an unaffected surface producer like SLP.

The RNS today was short and bleak. It didn't offer much hope or reassurance.
I know it's sentimental, but my guess is that investors wanted to hear more optimism from the company about the future.
Actually, the underlying numbers are OK, and I'm buying at these levels.

Note the news that isn't today - there are no signs of fighting between different groups in the military, no armed stand-offs, and no demonstrations or riots in the streets. For now the coup appears to have been "a clean kill" of the old regime. That's a far better outcome for us than two sides fighting it out and blood being spilt.
As for playing armchair general, to defend Yanfolila it would seem that you only have to put a few troops on one bridge. Remember all the difficulties Hummingbird faced when that bridge washed away?