Member Info for uncertain

Is this the break out?

Bank repayment schedules can be renegotiated, and possibly early repayments were in the original agreements. For instance some mortgages can be repaid early, but sometimes there are restrictions on this. We just have to wait for an RNS or more likely, given this lot's communication record, the annual accounts to find out what their intentions are

The ratio of debt to shareholder's capital is dependent on two things: one is the total amount of net debt and the other is the value of all the shares in the business. My view is that the problem is the undervaluation of the company at the moment. Whatwill make this go up? Well a sensible dividend on a regular basis would certainly help - perhaps 0.2p to begin with. We made a net profit last year. We shall do the same this year. Next year is likely to continue this trend. We have resolved the cash flow issues with the new bond issue. Profitability is likely to grow after the POX investment is completed next year. Free cash flow should also be boosted. Shares that don't declare a dividend are held back.

Contrarian, just thought I would let you know that you have at least one supporter in the dividend camp - if not this year then definitely by 2018. It is a way of expressing confidence to the market. The new bondholders have expressed confidence in us so let's pass it down the line.

Hi kenj, as I said earlier today I am not going to go round the roundabout of our recent posts any further, but I am willing to discuss the English language. When I look through some of my posts after posting I often spot small grammatical and spelling mistakes, and sometimes the posts don't strictly make sense without a liberal interpretation. I have no doubt your posts suffer from the same problem, but I am not going to check on that unless you continue with your campaign. On the question of whether Rusty's quote make sense, we need to consider what "real debt" means. Since it is not an accounting term with a formal definition, it is a matter of interpretation. Rusty was, I think using the term to mean net debt, or perhaps to assert that debt had not been increased in any real way. Making sense is not actually a requirement for a sentence. That would be a very restrictive requirement. I will be keeping a close eye on your use of commas in your next few posts. i don't think you are being consistent. I am fairly sure you should have put one in after likewise ATB uncertain

Kenj. for your information there are three present tenses in English and Rusty has used two of them in a perfectly correct manner. It is in any case OK to use the present tense and the future tense in the same sentence because it will make sense as in this sentence. nvrgiveup, I do finally give up. I see no further point in us talking past each other. I am clear in my mind about what I am saying but I won't repeat it again. I look forward to discussing the annual accounts when they come out and the company's strategy for using the cash from the bonds when that becomes apparent.

Hi nvrgiveup, the $200m or so of new bond unterest payments will have to be paid course, but they will be offset by some interest payments that would otherwise have had to be paid on bank loans which will now be paid back early. I think it is more helpful to think in terms of net changes in interest payments, My view is that the net change in interest paid if we knew what that would be, We don't of course know this exacty, but it will be nowhere near $200m. Can I also suggest we will gain more from these discussions if we all try to maintain a greater level of politeness ( I include myself among those who could improve a little)

from the descending wedge yet? Must be getting close. All chartist comments welcome

Hi kenj, you are quite right $500m - I shouldn't post before I wake up properly! Agreed on the amount owed, but I can't imagine that will stay that way for long. It may be the case that some of the bank loans will be repaid in time for the end of the year and will appear in the next financial RNS. Agreed that interest payments in the short run may be bumped up considerably by the aggregate debt, but I would expect this to be a very short period if financial management is any good at all. I would expect the company to have already negotiated revised payments with their banks ready for when the cash comes in. A simple version of this would be for the money to offset the loans immediately while the loan facility is left open but at a much reduced level. I expect it is more complicated than this. So I can agree with you - the debt interest may rise substantially on issuance of the bonds. However, this will probably be of such short duration as to result in a relatively small financial loss. The management may choose to use some of the bond cash to improve liquidity. That would result in an increase in overall interest payments, but would be a price worth paying to ensure cashflow. I also think a very small dividend is not out of the question, perhaps after 2018

I'll have one last go at this using your figures kenj. Bank debt $512.9m Bond debt $100m New bonds $400m less cash from bonds $400m net debt $612.9m What are they going to do with all that cash? What they say they will. Refinance the debt. How will they do it? Pay back the bonds as soon as they can and renegotiate payment schedules with the banks. What will they do in 2022? Renegotiate with banks any of the $612.9m they have not paid off from their excellent cashflow Or issue new bonds Has the interest rate gone up - marginally, but they are being charged current Russian base rate Should they have stayed with the old loan on a slightly better interest rate? No because their were possible cashflow risks which have been avoided by the bond issue Did they need to issue quite so many bonds? We don't know the details of their negotiation with the banks but this gives them lots of wiggle room What are the main risks to the business post refinancing? Takeover at too low a share price co-ordinated by the institutional shareholders to the detriment of PIs and unexpectedly low gold price

From 2015 I think

Small correction of my last post. I should have said that the gold price is higher so far in H2 than it was in H1.

nvrgiveup, you implied the $200m was extra by adding it to the amount we have to repay. I don't agree that we have 4 years to find the $600m because this is not an addition to net debt (yes I agree there will be refinancing costs but they will not be massive). We don't have 4 years to repay because we can exit this process with some net debt - there are few gold miners without some debt! The arithmetic indicates that there will be quite a lot of liquidity added to the company. What is this for? You haven't anwered this question yet. Here are some of my possible answers 1. An early introduction of a dividend in response to a second year of positive net profits 2. The repayment of the previous bond issue at the earliest possible point, ensuring no further share dilution occurs 3. A rescheduling of bank debt repayments, bring forward repayments backloaded in the previous debt restructuring 4. Ensuring the capital programme is expedited and meets deadlines to increase future revenue 5. Creating space so that a new debt package can be negotiated in time for the 2022 bond repayment 6. Creating some liquidity to cover possible gold price reduction when the hedge runs out 7. Creating liquidity so that all existing interest and debt repayments can be made without risk of default Perhaps others can come up with some additional ideas. I don't know what mix of the above is in the minds of the managment. There will be a a short term interest cost to the increased liquidity, because not all old debt will be replaced immediately, but it will be considerably less than $200m. My estimate of free cash flow over the next 5 years was actually quite conservative as it was based on a continuation of H1 performance. Output should in fact rise during this period and the new investments should see that costs are at least held down but may actually be reduced. The gold price is not as easy to predict as we all know, but was higher in H1 than H2. I appreciate that those who have had bad experiences of refinancing packages for POG in the past have understandable concerns. My concern is different: that the institutional investors shaft the PIs by some kind of takeover bid before the share price has fully recovered.

The bonds can be redeemed from March next year. If that did cost $100m, what exactly are they planning to do with the other $400m? The October presentation suggests free cash flow covers capital expenditure.

that the Russian base interest rate is currently 8.25% as set by the central bank. This makes it easier to understand the rate set for the new bondholders. That is the price of capital in Russia at the moment.

nvrgiveup, you are correct in saying that about $200m in interest payments will be made on the notes issued over the next 5 years up until the maturity date. You are not right in implying that this is an additional cost because the money raised will be partly used to pay back existing loans and redeem the last bonds issued, interest on which will no longer be paid. It will also ensure no increased equity will be issued in relation to the last bond issue. Net debt was $570m at the end of H1, and this should fall slowly over the next year and then rapidly once major capital expenditure is complete. Net debt will not be increased as a result of the bond issue While it is difficult to predict profits over the next 5 years, EBITDA was $114m in H1, and in my view this is likely to increase in the future post POX and other investments. Even if EBITDA were to remain at $228m pa, this would give free cash flow of $188m after interest payments on the bonds. Some of this will go on capital expenditure, but this likely to reduce as the major projects are completed. Depreciation is likely to exceed new capital expenditure in this period, so free cash flow will be greater than net profit. My back of the envelope estimate is that after 2018 we should have $150m available pa My view is that POG will not go for a zero debt scenario, but will instead refinance in the run up to 2022, perhaps by retaining borrowing agreements from the banks during this period. This will allow dividends well before 2022. All this is dependent on the price of gold, the success of the POX project, the avoidance of difficult weather or geological conditions etc. But these are normal risks associated with most mining companies.

The things wrong with the analysis include a failure to explain the phased transition to a 50% profit share, an odd distinction between gold produced and gold sold as if gold stocks held will not be sold, a failure to discuss West Africa, and no discussion of the big increase in output we all expect next year (with in my case an expectatio that costs may fall too) Otherwise some reasonable comments on recent results. The profit share is the main issue and I think the market is still trying to digest the consequences of this.

Happyaz, my divi gets converted from $ to � on the day of payment and goes straight into my ISA. I never see a cheque

our trading range for November this morning. Posibbly we will return to the low 140s where we were late October. Any chartists out there with an opinion. I have read chartist suggestion on other boards that we were stuck in a downtrend that was difficult to break out of.

I use kitco historical http://www.kitcometals.com/charts/copper_historical_large.html because it gives stocks as well as prices over a long period. It is in $/lb