We would love to hear your thoughts about our site and services, please take our survey here.
This is almost certainly the case @Dunk_Biscuit
The residues of zinc and lead are very deep in the tailings dump. At that time the price of gold was far too low. It wasn't worth extracting the 0.x g/t. But at today's gold prices, this could be a "bonanza." Plus, of course, silver.
Very good - Correct @Dunk_Biscuit
The 3 tailings dams is a very interesting aspect. There are approximate dates for 2 dams. This makes an initial estimate possible. The following parameters:
Dam 1: 6,875 Mil T with a material value (Au/Ag) of $40/T
Dam 2: 5m Mil T with a material value (Au/Ag) of $36/T
Total material value $455 million. Assumed EBITDA margin 70%. Analogous to CAML in Kazakhstan with Kounrad copper tailings dump.
Vast share: $15.6 million - with 2 dams. For 3 dams >$20 million (there is no data for the 3rd dam yet.)
Formula: 455*70%*49%*10%
P.S. I've been invested again since yesterday.
P.P.S. Those are just the dams. Then there are the mines.
Here are the statements on working capital (level Kefi Gold and Copper) from the RNS:
"Group Working Capital
The Company working capital requirements are currently being met through:
· ARTAR funding KEFI's GMCO joint venture contributions whilst we optimize plans for our first development at Jibal Qutman by mid 2024. We currently owe c. £3.5 million to ARTAR and intend to settle the amount owing in due course rather than be further diluted in the GMCO Joint Venture.
· Unsecured advances being provided by a UK-based lender, for general working capital, as implemented regularly in recent years. As of December 31, 2023, the advanced amount stood at £1.5 million."[
As of January 1, 2024, the Saudi share for Kefi is (the planned) 25%. In addition, Kefi owes ARTAR £3.5m. In addition, there are £1.5m debts (plus “heavy” interest) to a (HAA-known) lender. Probably from Cyprus with ties to Xxxxland.
The next round of financing is just around the corner (figuratively speaking): The same game occurs: the price is "bought up", investors sell into the up-move and then purchase the shares at a lower price. Because the issue price will have a 100% discount on the last (“bought up”) prices. Unfortunately!
There is no question: Kefi Gold and Copper has (very) good, profitable projects. But the long period of time before anything substantial happens requires a lot of patience and a lot more capital.
HAA made a strategic mistake by not partnering with a financially strong miner after resuming development in Ethiopia (after the civil war). Like Orca Gold in Sudan with Perseus. HAA is standing in its own way - and is constantly burning capital from the shareholders of Kefi Gold and Copper. He himself escapes (relatively) unscathed; because he doesn't bear the dilution; with every capital increase he receives shares that are taken into account for his "work" or his “waiting”.
@SandyShore459
You calculated like this: "of which Vast's 4.9% = $107,738 (gross), subject to any adjustments for terms of contract (shipping, impurities, tax, etc.)."
107,738 per month. Correct? Over one year: $1,292,856. Then your assumption of (net) $1 million. So you calculate costs for processing of $300,000 p.a. (Vast share). Correct?
@SandyShore459
I read very carefully - even though I am a German native speaker. The 1.6 grams per ton of gold must be extracted. This are processing costs. Vast receives 4.9% of EBITDA (earnings before interest, taxes and depreciation.) That's exactly what it says in the RNS: Vast will be entitled to a 10% share of the earnings before interest and tax that Gulf receives from its 49% interest in Aprelevka ; (...)
This is your calculation (copy/paste):
"(966 X $2,046) + (9666 X 23) =
$1,976,436 + $222,318 = $2,198,754
of which Vast's 4.9% = $107,738 (gross), subject to any adjustments for terms of contract (shipping, impurities, tax, etc.).
I'd estimate the immediate annual net figure to be somewhere in the ballpark of towards $1m, with upside as indicated from project optimization."
With your estimate of $1m annual net value, you are assuming processing costs of $300k. That would be an EBITDA margin of 77%. Maybe that's even true - we're missing exactly this key number.
Sorry @SandyShore459
That is not right. Vast receives 4.9% of EBITDA and not of revenue. Therefore around 50% at the beginning - If production is doubled (as planned), then your calculation could be correct. But we don't know the AISC.
That's exactly how @DaProphet is
I was also "ripped off" this month. Exactly the same procedure: first manipulate the price downwards and then a "very" generous discount. FYI: I got it at 5E Advanced Materials.
@JohnHenry
According to RNS from 20 December 2023:
"The Placing will be made to certain existing shareholders and other institutional and high net worth investors."
Afterwards, KE1 must have spoken to “investors”. But it is correct: there are no institutional investors who have exceeded the reporting threshold.
I had Helium One Global on an extended watchlist. That's why I've now sent KE1 into the (German-language) wallstreet:online competition. But not because I see a super investment case here. But - if finally - the planned drilling can be carried out - without massive technical problems and with the results (expected since the beginning) - in January 2024.
Clearly, Helium One needed capital NOW. Because without this capital, the technical and personnel requirements - which will (apparently) still be available in January 2024 - would no longer be in place. The consequences would have been further delays (many months) and (presumably) much higher costs.
Now the question naturally arises: Who will buy the over 2 billion shares at 0.25 GBX. And who influenced this pricing? Was it “just” the market that no longer offered – or rather existing institutional investors who dictated the conditions. With the reference, of course, to the time pressure and the losses that have accumulated so far.
My stake is very modest: 1,000 GBP. For this you get 400k HE1 - and you have a good 0.1 per mille. Now, of course, it's worth looking at past financing.
In December 2020, HE1 launched on AIM in London with 500m shares issued at 2.84 GBX. For 0.1 per mille (50k KE1) you would have had to invest 1,420 GBP. If you had participated in all the capital increases and absorbed the dilution - and always 0.1 per thousand - you would now have around 340k shares at an average price of 1.4 GBX - or an investment of £4,760.
These figures show that the issue price was probably “pushed through” by existing institutional investors. But this also means that the price target could be somewhere around +/- 1.5 GBX if the drilling is successful and the expected results are achieved. For those who have started now it would be a 6Bagger.
Very good question @ChesterGreen
Since I am (newly) invested in Ecora Resources, I wanted this matter clarified. Simple answer: Yes, Ecora Resources (still) owns a 2% NSR on the Dugbe Project in Liberia. See PDF page 45 (or page 43 in the annual report):
https://www.ecora-resources.com/application/files/8816/8019/2368/230329_ECOR_AR22_FINAL.pdf
Anglo Pacific acquired the 2% NSR from Hummingbird Resources in 2012 for $15m. There is a feasibility study (NI43-101) from 2022 for the Dugbe project. It is available on the Pasofino Gold website.
pdf Page 371: Commercial royalty % of Gross Revenue 2. This is the royalty from Ecora Resources.
pdf page 375: 22.15 ROYALTY (COMMERCIAL)
A commercial royalty payable to Anglo Pacific was included in the assessment and is equivalent to 2% of gross revenue.
At an average of 160koz Au p.a. (14 year LoM) and a gold price of $2,000/oz, the 2% would be around $6 million.
The Dugbe project now belongs 100% to Pasofino Gold:
https://www.pasofinogold.com/news/news-details/2023/Pasofino-Gold-Announces-the-Acquisition-of-the-Remaining-Interest-in-the-Dugbe-Gold-Project/default.aspx
In addition to the (recent) copper deals, Vale's Voisey's Bay cobalt stream is a core investment of Ecora Resources. The general conditions are as follows:
- APG entitled to 22.82% of total cobalt produced,
- Ongoing payment of 18% of the cobalt reference price,
This is 70% of the deal that was concluded by ex Cobalt27 in 2018 for USD 300m. Ecora paid USD 205m for the 70%. With the current price of 0.88 GBP, the market cap in USD is 286m USD.
In 2022 the bill looked like this:
Ecora received 19 deliveries of cobalt during 2022 which totaled 380Kt of cobalt. (70% of which goes to Ecora). Total stream revenue from this cobalt was $18.8m and, after
cost of sales, generated $14.6m of net portfolio contribution. An average price of $32/lb was achieved
Formula 2022:
380t delivery for entire stream. Ecora share 70%: 266t or 586,530lb at $32/lb: $18.8m. Of this 18.8m, Ecora had to pay 18%: $3.4m. Less storage and selling costs of $0.8m. Net $14.6m.
Voisey’s Bay is currently transitioning from open pit to underground. From 2026, full production of 2,600 tons and a payability of 93.3% should be achieved. According to the deal, Vale must reach 85% of Name Plate capacity by the end of 2025, i.e. around 2,210 tons. Otherwise there will be refunds or an increase in the stream share. The good thing is: Ecora would not have to be on the front line fighting for compensation. WPM (Wheaton Precious Metals) would take over this, having secured a larger share in 2018.
Based on the billing as of 2022 and the exact conditions of the deal, the following parameters arise:
- Full production of cobalt 2,600t
- Minimum production from 2026 2,210t
- Payability 93.3%
- Ecora share 22.82%
- Purchase price 18%
- Storage and sales costs 4.3%
The all-important factor now is of course the cobalt price. Currently 15/lb. On the occasion of the deal, assumption of 20$/lb and necessary spot price, so that, for example, Jervois only wants to put the completed primary cobalt mine in Idaho (USA) into operation when the long-term cobalt price averages 25$/lb.
The Excel sheet calculates the following contributions ex cobalt stream in favor of Ecora from 2026 with 85% mining output, each with the corresponding cobalt price:
$15/lb: $12m net
$20/lb: $16m net
$25/lb: $20m net
Once the UG mine reaches full capacity at 100%, net revenues increase by 18%. At a price of $25/lb, that would be $23.6m. Yes, it's a good deal; the cobalt price will recover.
urai5
Part 2
Although Russia accounts for just over three-quarters of Polymetal’s production volumes, the Kazakh unit contributed more than half of the group’s net profit and provided all of the cash flow in 2022, due to the US sanctions against the Russian company in May.
Nesis aims to finalise the sale within the next six months, but acknowledged that obtaining approval from Russia’s Federal Antimonopoly Service — a standard prewar procedure for most deals of such scale — could potentially slow the process.
Among the bidders for the Russian unit are Russian and Chinese companies, mostly from the mining industry, said Nesis.
The group intends to use the proceeds from the sale in Russia to enhance its mining operations in Kazakhstan, where it has been listed since 2013 as the first foreign company traded on the Astana Stock Exchange (AIX).
According to Nesis, the long history of operating in Kazakhstan and a “clear business purpose” there made the redomicile possible for Polymetal, while for many other big companies, it is not a viable choice.
The relocation to Kazakhstan allows Polymetal’s Russian unit to pay out dividends. Last May, Russia’s president Vladimir Putin signed a decree prohibiting Russian subsidiaries of companies from paying dividends to shareholders in “unfriendly” countries.
Polymetal shares on the London Stock Exchange, where it listed in 2011, dropped 80 per cent following the invasion. They have been suspended, and trading will not resume as the group plans to delist from the LSE by the end of August.
The LSE shareholders will have either to sell their shares or open an account at AIX and transfer them to Kazakhstan, said Nesis.
“We made every effort to keep the LSE listing. But it required the active participation of financial services providers, primarily registrars, who declined to co-operate due to sanction-related risks,” he said, adding: “This has been a painful process, especially for shareholders in the retail sector, we acknowledge that.”
Part 1
Polymetal, until recently one of the world’s most profitable gold miners, aims to sell its Russian business within the next six months, with a list of Russian miners and Chinese investors among the potential buyers.
The plan follows the miner’s relocation of its domicile from Jersey to Kazakhstan this month as it looks to carve out its Russian business despite Moscow’s onerous exit restrictions and western sanctions.
Vitaly Nesis, chief executive of Polymetal, said in an interview with the Financial Times that while a discount on the sale of its Russian assets would be “inevitable”, it would not be “catastrophic”.
“If we had remained in Jersey, the risks of losing the Russian business’ value would have been exceptionally high. And now I am optimistic that Polymetal International will be able to reap significant benefits from its sale,” he said.
If successful, Polymetal’s sale of its Russian assets will be a rare example of successful corporate manoeuvring under new regulations of asset sales from the Kremlin and western sanctions.
The gold miner, which has mining operations in Russia and Kazakhstan, is incorporated in Cyprus, but is owned by a holding entity that has now switched its domicile from Jersey in the UK’s Channel Islands to Kazakhstan, a country categorised by Moscow as “friendly”.
After Russia’s invasion of Ukraine, Moscow banned the sale of Russian strategic assets including gold mines owned by “unfriendly” countries, which includes the US, the EU, the UK, and their offshore jurisdictions, such as Jersey. It has been implementing an ever-growing set of criteria that limit sales involving all entities of “unfriendly” origin.
Asset sales require government approval — which frequently depends on having personal connections with the Kremlin rather than formal criteria — and are restricted to a maximum value of half the assets’ worth. The seller must also make a “voluntary” contribution to the Russian budget.
Polymetal does not believe that Moscow will seize its assets, as it did with Danone and Carlsberg, where its Russian operations were nationalised. Both companies were negotiating exit deals with potential buyers, but there are no precedents of the state taking assets away from the owners of “friendly” origin, said Nesis.
“I think such a step does not fit into the current approach of the Russian authorities,” he said.
The group has eight gold and silver mines in Russia, and two in Kazakhstan, with the group producing 764,000 ounces of gold equivalent in the first half of 2023, up 3 per cent from the previous year. Its revenues for the first six months rose by 25 per cent to $1.3bn, on the back of a sales recovery in Russia and higher metal prices.
Thanks @JohnNth
Of course, I share your assessment and I also hope that it will come true. In particular, the low ruble rate - as you mentioned - could contribute to a higher valuation of Russian assets.
Thank you for the feedback. Yes, it's true: I made conservative assumptions. I'd rather have a positive surprise than a negative one.
Of course, the price of gold is very important for the value of the company. @JohnNth It is true that historically the price of gold is very high. Unfortunately, OPEX has risen disproportionately for mine operations as a result of inflation. This imbalance weighs on the profitability of the mines and thus puts pressure on the fair value of the company. At a gold price of plus/minus $2,500/ozAu, the valuation would look very different.
Therefore, for better or for worse, we have to calculate with the current parameters. There is, of course, scope for my conservative assessment. However, there is one big BUT: Polymetal needs to find a buyer who is willing and able to buy the assets. So spontaneously I see three possible interested buyers:
1. Polyus JSC. Looking at Polyus' pipeline, the company is focused on the development of the Sukhoi Log super mine. But I suspect Polyus relies on Western technologies for quality Sukhoi Log development. Polyus JSC is sanctioned. Until further notice, they cannot procure western technologies. But the time will come for Sukhoi Log - but not in this decade. So it would make sense if Polyus JSC would buy the profitable >1moz AuEq p.a. Polyus would have the potential and for Polymetal International there would be a (very) good price.
2. An old "acquaintance" could also be a potential buyer (possibly for parts): Vladislav Sviblov. Keywords acquisitions of Highland Gold, Trans-Siberian Gold and Amur Minerals (Nickel Project). Plus the Russian ex-Kinross mines.
wikitia.com/wiki/Vladislav_Sviblov
With the purchase of Polymetal JSC, Sviblov could become the undisputed number 2 in Russia. Since this is also about a strategic dimension, a good price would also be possible here (for us).
3. There is another potential buyer: Ural Mining & Metallurgical Co. UMMC. A billion company. This company had 2022 Petropavlovsk PLC POG accepted. The shareholders got nothing. If UMMC could realize synergies with exPOG, that would also be a strategic approach that could lead to a good price.
4. It is also possible that Polymetall JSC could be split up and sold to various interested parties. The individual parts might then be worth more than the sum as a whole.
We should know more in 6 to 9 months. Good luck to all (patient) POLY investors.
urai5
We know that there is no alternative: Polymetal International must and will sell the assets in Russia. The question arises: what can be solved and what value will the assets in Kazakhstan have. There are (as is well known) various methods for the valuation: e.g. asset value, earnings value, cash flow.
The simplest is the net asset value method. This is based on the balance sheet of the last annual statement(s). This method does not include future prospects. In addition, the reserves and resources of a miner must be capitalized.
In the case of Polymetal International, the sanctions penalty must also be taken into account for the assets from Russia. And then a buyer is not willing to pay the full value. Times are bad. That's why I'm assuming an estimated 50%.
According to the 2022 financial statements, the key figures in USD are as follows:
Net equity: 2.2 billion
This is the assets minus debts = net equity. I didn't find a breakdown in the quick review to Russia and Kazakhstan. The debts are mainly in Russia. It is also unclear how the (unfinished) POX-2 was evaluated in Russia. I'll assume a ratio of 1 (Russia) to 3 (Kazakhstan):
Russia: 550M
Kazakhstan: 1.65 billion
Reserves and Resources: 27moz P&P and 26moz M+I+Inf. Total 53moz AuEq.
I leave out PGM and Cu. fluctuation reserve. Would also be a few more moz AuEq.
Now the big question is always: How much is an ounce of AuEq valued. I assume (from experience) $100 for reserves and $20 for resources. The breakdown between Russia and Kazakhstan is as follows:
Russia:
16moz P&P: 1.6 billion
22.5moz M+I+Inf: 500M
Kazakhstan:
11.3moz P&P: 1.1bn
3.3moz M+I+Inf: 66M
Company value Russia. Total: 3.3 billion
Of which 50%: 1.65 billion. Of this, 1 billion must be reserved for development in Kazakhstan. The new POX (autoclave) to be built alone costs many hundreds of millions of USD. That leaves 650M or just over $1 per share for a dividend.
Company value Kazakhstan. Total: 2.8 billion
These assets are the ones that make up the market capitalization. That would be around $6 per share (474M) plus $2 from the proceeds from the Russian assets for the investments. Total $8. But the market value will also be based on future profitability and the ability to pay dividends. Without Russian assets, I see POLY-K's business positively. So a medium-term price target of USD 10 could be assumed.
Conclusion:
The current fair value of an integrated Polymetal International without sanctions penalty would be around 6.1 billion. $13 per share, respectively.
Under the circumstances, it looks like this: $1 exRussia dividend and a fair value of $8 per share. $10 price target in one year; If everything goes well.
urai5
PS This is my personal rudimentary calculation. It does not claim to be fulfilled. But for us DACHlers (Germany, Austria, Switzerland) our hands are tied anyway, either with Taby's app or with a collective certificate in the vault of the custodian bank.
"And as for the fantasy $10 valuation, based on what assets?" Of course @big-blue - your objection is justified:
Here is the hypothetical (but realistic) calculation for a $10 price target after selling the Russian asset:
The following assumptions for Kazakhstan:
- Debt free
- Net cash sufficient to finance POX with attractive credits
- >500koz AuEq p.a.
- Au Price $2,000/oz
- EBITDA margin 70%
- EBITDA 700m$
- 474m shares
- EBITDA per share $1.50
- Net income $1
- P/E 10 for a growth company
- Price target $10
- Dividend $0.50
- Yield 5%
In a year we will see whether these assumptions are confirmed or not. But it doesn't matter to me and many shareholders from DACH: We have not been able to trade Polymetal International since the end of February 2022. The re-domiciliation and the prospect of dividends is already much better than the past 1.5 years.
Sorry, I forgot: Current price 4.50 USD
https://www.polymetalinternational.com/en/investors-and-media/shareholder-centre/stock-chart/#accordion-aix
Very well recognized @big-blue.
500koz AuEq p.a. and debt free in Kazakhstan without sanctions with great exploration potential and capable of paying dividends is extremely attractive. Price target after selling Russian assets 10 USD. More after the (new) listing on the LSE.
@profitissanity
Thanks for your feedback.
I don't know the tax legislation in Romania. Of course, no profit tax has to be paid if there is no profit. In the case of the miners, however, the state royalty must be paid in any case - even in the event of a loss.
PS
Of course, I recognize the potential and low valuation of Vast Resources. However, I got out again a few weeks ago after the return of the diamonds was (had) been massively delayed.