Member Info for TigerByTheTail

I thought this article was worth an airing on here. IMO, it's pretty solid "advice". It's originally from the FT:
https://www.zerohedge.com/markets/el-erian-warns-financial-stress-covid-far-over

This is one where I genuinely don't know which way the market will jump.
Disappointment over the past vs. hope for the future - which one will win out today?

Poor results, really. And not only due to Covid. They are trying to mask a dangerous decline in grades with a lot of piffle about GEOs.

I think you'll find the Colonel is right, Duffer.
Take it from an East Midland lad, the scandal is only beginning. There is far more to come out about the Leicester sweatshops.
No institutional investor will touch Boohoo now. Deals like the Love Island sponsorship are dead as well.
It wouldn't surprise me if Boohoo was a zero within a few months.
But if you want to invest into sweatshops and modern slavery, go ahead. I figure you deserve your losses.

Hi Sotolo!
I feel much depends on the commentary of the management tomorrow.
Can they assure us that the end of the mine shutdowns is in sight?
And how much has the coronavirus cost the company?

Hi Quady!
How do you know Cornerstone are giving a presentation tomorrow? It's not on their website.
Thanks!

Hi Failed Banker!
The risk you are taking y not using a stop loss is that the share price just keeps on going down as the nasty revelations keep on coming, advertisers run away scared, and consumers boycott the tainted brands.
Remember, this company was trading at a very high P/E (i.e. IMO was wildly overvalued) before this all began. So it has a long way to fall just to get back to a "normal" valuation.
I think sub 100p is a real possibility. My instinct (and a fair amount of local knowledge) says that a complete collapse to zero is possible.

https://edition.cnn.com/2020/07/14/africa/mali-protests-intl/index.html

Hi Quady!
I think we actually agree on quite a lot.
Cornerstone are a distressed company - their share price alone indicates as much. Although they own 15% of a very valuable asset (ENSA/Alpala), they have all kinds of obligations that they can't ever meet on their own. They must find a resolution to their problems, and soon, and the only practicable course of action is to find a buyer.
I'm sure that if no other buyer comes forward, the Solgold offer for Cornerstone (after some haggling and much cursing) will be accepted.
Where we differ is that I believe another buyer will come forward. IMO, that buyer will be a major which intends (in due course) to take full control of Alpala/Ensa. That major is in a position to offer a cash price that Solgold simply can't hope to match.
I lean towards thinking that that major will be Newcrest. But it's possible that Newcrest will sell their shares to Barrick, and Barrick will take over Cornerstone as well. Either way, a major will emerge with 15% of Alpala directly and about a 20% stake in the 85% that Solgold owns. That is a very powerful base from which to launch a full takeover offer for Solgold.
Remember that a major won't be put off by Cornerstone's existing debt and their obligation to part fund the Alpala mine build. They can easily borrow the money, and in return for that investment they get a share of Alpala's profits for half a century to come.

Sort of, but it all gets complicated if the major is also planning to bid for Solgold, as Cornerstone's debt to Solgold would vanish if their bid was successful.
The way I look at it is IF a major bids for Cornerstone with 100% cash premium (i.e. if it offers £140m for the whole company), they would be "valuing" Solgold's share in Alpala (allowing nothing for exploration upside) at £496m, which is more or less Solgold's current mcap.
In short, Cornerstone is a distressed asset, due to the way they are currently boxed in. And a company like Newcrest could establish a really powerful pre-full bid position in Solgold and Alpala by buying Cornerstone now.
I still don't see how Solgold could practically hope to compete with such a cash offer for Cornerstone, even though they have a legal right to match it. The goal is wide open, it just needs somebody to take the opportunity.

Hi Phattrader!
I think you need to include Cornerstone's SOLG shares in your equation. Cornerstone represents 15% of Alpala directly and c. 7% of 85% indirectly (via the Solgold shares).
Roughly 22% of Alpala.
Cornerstone's market cap is currently 120m CAD = c. £70m. (This of course is suppressed as they are currently in a tight corner). I think it is feasible that a major will offer them a 100% premium (£140m) to ensure a quick deal.

I'm thinking we should have two pieces of news tomorrow...
1) Cornerstone's official reply to Solgold's buyout offer. We should be able to judge from its tone whether a counter-bidder for Cornerstone (e.g. Newcrest, Barrick etc.) is likely to emerge in the coming weeks, and thus how likely a full bid for Solgold itself will be launched (by Cornerstone's buyer) before the BHP lock-in ends on October 15th.
2) Some kind of news from Solgold designed to bolster the share price and to provide Nick Mather with something to talk about in the evening. Probably exploration-related.

https://www.theguardian.com/business/2020/jul/13/boohoo-shares-drop-18-as-new-leicester-factory-reports-threaten-sales

I agree about jenga when it comes to the US markets.
It has to come crashing down soon. It has to. Surely the stock market can't go on booming through a recession / depression?

Correction: palladium is now back above $2,000 / ounce - $2,000 / oz as I write.
Happy days...

Solgold opens up in Canada at 0.44 CAD = 25.75p.
That's quite a difference. Do they know something that we don't? Given Cornerstone and RBC and even Barrick are Canadians, after all!

Meanwhile palladium spot price is close to $2,000 again.
Platinum also doing reasonably well.

Hi addicknt!
If I were you, I'd sell up and use the money to go short. (Or possibly to buy Sylvania Platinum).
I've never seen a company so overvalued as EUA is now. It's complete AIM madness!
The main asset (Monchetundra) is worth $50m to $100m at best. (BTW, I speak fluent Russian, know Potanin, been to Monchegorsk, and specialise in PGMs. So I don't know what I'm talking about!)

Hi Gino!
Sorry, didn't mean to be a downer. I think the most likely course for the share price is up - in the shortish term 230p should be a target.
The risks I mentioned were just that - bad things that could happen but hopefully won't.
Remember, this is a debt-free cash-rich unhedged gold miner operating a world class asset with a long life of mine and huge exploration upside whose operations have been unaffected by Covid-19, and which pays a really good dividend.
If you know any other shares with a similarly positive profile for these troubled times I'd like to know!

Hi Sotolo!
I basically agree with you. Interim dividend should be good. 230p should be new target.
But do note how some of H2's production seems to have been pulled forward into H1. Annual guidance has actually been "reduced" from 510 to 540K ounces to 510 to 525K ounces. No news on West Africa again as well.
Risk factors? Mostly things out of Centamin's control... General stock market crash, Covid-19 outbreak gets worse in Egypt and affects plant, Egypt-Turkey military conflict over Libya, Egypt-Ethiopia military conflict over dam and Nile water rights.