Member Info for Visitor

Explanation on Karo valuation is in the AGM RNS as Ilja mentionned:

https://www.overend.co.za/download/sens-rns-results-of-agm-and-dividend-conversion-rates-22feb24-final-updated.pdf

"Tharisa’s investment in the Karo Platinum Project

The total investment by the Company in acquiring its current 75% shareholding in Karo Mining Holdings is US$135.3 million, imputing an entry valuation of US$180.4 million. Karo Mining Holdings has an indirect shareholding of 85% in Karo Platinum and therefore the entry valuation for Karo Platinum is US$212.3 million. Karo Platinum is a multi-generational asset and the valuation is for phase one of the project only. In valuing a long-life asset, the longer-term sustainable commodity prices are used and not the spot commodity prices, and it was at the higher longer term analyst price forecasts that were used in valuing the project.

The recent rights offer undertaken by Karo Mining Holdings raised US$65.0 million. The Company’s shareholding in Karo Mining Holdings was 70%. To follow its rights and maintain its shareholding required the Company to invest US$45.5 million. The minority shareholder did not follow its rights and renounced its rights to the Company. The Company followed these rights and, in so doing, increased its shareholding in Karo Mining Holdings by a further 5% to 75%, at a cost of US$19.5 million.

Applying the rights offer subscription for the additional 5% shareholding imputes a value of US$390.0 million to Karo Mining Holdings and thus US$457.8 million for Karo Platinum.

There are 96 million inferred PGM ounces (on a 6E basis) deriving a value of US$4.8/oz, which compares favourably to comparable transactions."

If JSE can deliver on the contracted gas volumes for Akatara, that one asset alone will be transformational in comparison to the current market cap of £135M, but completely agree with others "the market" needs to see it in the balance sheet and change in Net Debt/ Cash. The best place to see the potential positive impact is pg.11 of 12 March 2024

Shares Investor Evening presentation, where there will be circa $100m net free cashflow per annum for next 2yrs just from Akatara whilst JSE recover all costs.

https://www.jadestone-energy.com/wp-content/uploads/2024/03/20240312-Jadestone-Energy-Shares-Investor-Evening-vF.pdf

Of course we then have all our other producing assets and huge potential in Vietnam. I would prefer JSE to concentrate on rebuilding the balance sheet, progressing Vietnam (Nam Du / U Minh Gas Sales Agreement and Field Development Plan) and start to pay dividends again, rather than any more M&A, unless it really is an absolute bargain.

I would be very surprised if there is a cash call, they have ample liquidity, before you take into account the significant cashflow from Akatara once they get through the teething commissioning problems (standard in all complex EPC workscopes):

"Net debt of US$69.1 million at 30 June 2024 reflects c.US$130.9 million of consolidated Group cash balances and US$200.0 million of debt drawn under the Group's reserves-based lending ("RBL") facility. As at 31 August 2024, net debt was US$94.6 million, based on consolidated Group cash balances of US$105.4 million and US$200.0 million of debt drawn under the RBL facility. The Group expects to receive c.US$57 million of proceeds in September relating to August liftings. The Group's US$31.9 million working capital facility was undrawn at the end of the period."

JSE is at rock bottom because shareholders been burned so many times now, the market needs to see the proof now to the balance sheet itself, which is fair enough, rather than taking it for granted. I think we will start to see strong improvements to balance sheet (moving from Net Debt to Net Cash, normalising for any M&A that may occur) in 2025 so is a great time to jump on board or "double down", but of course with everything, there always exists a risk, which I feel is amply reflected in existing sp.

Does anyone know if the JSE infrastructure (incl 17km pipeline) and separate regional gas trunkline (outside JSE control) could handle more than the 25 mmscf/d required by Gas Sales Agreement and if they maintain a higher flowrate above 25 mmscf/d, if they can sell more of this at same rates agreed in the GSA, or perhaps even better, at a separate re-negotiated rate outside the GSA that may be higher?

Shares in Treasury do not receive dividends

TRIN produces 2,600-2,700 bopd, its Net Cash position is $9.7m when taking in to account the $5.1m VAT receipts due.

It's share price is bargain basement due to the poor performance of management, it should be many multiples higher. Obviously once acquired you remove that downside of poor management. There's then the sizeable tax losses Ab mentions and the shallow water Galeota development, which is in middle of a revised concept study and was working to FID in 2024. The original concept was for "Echo phase 1" to produce 4,000bopd and Foxtrot/Golf Phase 2 to produce combined 7,000bopd.

Combined 2P Reserves and 2C Resources end of 2023 at 51.58mmstb.

As much of a kick in the teeth this notional price is to TRIN holders, based on its current share price it's very good deal for both parties.

No matter the disappointment on Jacobin, TRIN is at a £15m market cap, when it has USD 9.1m Net Cash (incl VAT receipts) or GBP 7.3m. When EBITDA is USD4m per Quarter, taking in to account Net Cash position and 2,600-2,700 bopd, TRIN is on a PE of less than 1.

That's not taking even taking in to account the value of Galeota.

Lostinthedark1 - good timing with ALTN releasing very positive update with detail today:

https://www.londonstockexchange.com/news-article/ALTN/update-on-expansion-of-processing-plant/16425717

ALTN is significantly undervalued purely on its current annualized gold production of 38k oz (Q4 2023 9,600 oz poured), let alone processing 1mt ore processed p.a., which dependent on grade (2.2 - 3 g/t) and recovery (82%), would be looking at range of 58 - 79k oz p.a.

You then of course have separate Teren-sai open pit potential and long-term goal of Sekisovskoye 2mt ore processing p.a. After few quarters / year at 1mt, I wonder though if ALTN would look to instigate a dividend as prior presentations alluded to? A 10% dividend at these levels would only cost £3m. At 58-79k oz, AISC $1,000 - 1,300 (economies of scale will mitigate the inflation experienced in last couple of years) and gold price of $2,300, you could have Net Free cashflow of USD 58 - 103m (excl Capex, Tax, Interest payments etc.).

Agree very good move and will go part of the way to correct chronic undervaluation. With the restructuring last year of BEE portion and simplification of ownership, with this continued undervaluation in comparison to Net Profit After Tax (NPAT) and Free Cashflow (FCF), they really need to look further at the Dividend Policy.

I know they routinely pay 17-18% of NPAT, but a 15% NPAT dividend policy should be updated to be more attractive to investors. CAML and ATYM both have 30-50% FCF dividends. BHP has 50% payout of Underlying attributable profit at every reporting period. Without deep diving CAML and ATYM's respective definitions of "FCF", this is bit more flexible than NPAT, so THS could always have a say 20-30% NPAT or 30-50% of FCF, caveating that this is subject to M&A, capex opportunities etc.

What nonsense - when there are statements on bulletin boards erroneously stating corruption and getting valuations / accounting wrong by multiples of 4/5, I would expect a company to protect its interests and that of its shareholders.

Discussions on the viability of Karo is fair game, with Mike and others posing some key concerns, but not the former issues. It clearly caused many PIs to sell as they attested to themselves on LSE and ADVFN.

IR is key for any company - people constantly and rightly moan about most AIM companies not performing any IR or PR. I personally think it has performed and continues to perform a valuable service in offering clarifications when posters inadvertently or maliciously post incorrect details, or simply respond to clarifications. I for one hope THS/ Ilja continues their ad-hoc posts. I'm sure it did not help that the THS team likely were at Indaba Mining Conference when the whole sorry affair occurred on here.

PB - thanks yep think you're right. Jan or end Q1 2024 will probably see that peak Net Debt figure then, otherwise the low Net Debt figure would have been mentioned.

Let's hope based on 2024 production guidance, Akatara progress and oil prices they can meet or beat the Net Debt/ Cash profile and be near to Net Cash neutral as possible end of 2024, with view to re-starting dividends sometime in 2025 (unless organic growth + acquisitions offer better value for money, but they should really be achieving both dividend + growth in 2025).

Unless I missed it, there has been no mention of why Net Debt is so low at $5m (which is a good thing), unless there is a delay with working capital / trade payables etc. only mention is in the RNS "The end-2023 net debt position benefitted from timing of liftings and optimization of working capital into the year-end"

Originally in 12 July 2023 presentation, they were forecasting a Net Debt range of $70-100m (dependent on oil prices) as peak net debt level, before reversing throughout 2024 to end Debt/Cash neutral (again dependent on oil prices).

This is a substantial improvement on forecast, unless there is some delay and we will see peak Net Debt in 2024 due to timing of liftings, before it reverses.

Morning Mike - no worries. To clarify the $40m is separate capex cost to replace yellow fleet, but that is required anyway for open pit. But $54m just for UG mine capex was lot less than I expected too. Of course this was verbal unaudited confirmation in the InvestorMeet only, but it didn't sound like an "off the cuff" statement and likely close to the reality, albeit would have to take in to account inflation going forward and not sure if that number included the usual THS contingency

Mike et al - happy new year and as ever, thank you for your detailed analysis.

On the THS underground mine development capex, it may not be as much as you would originally expect, considering THS runs the mine with a high spec yellow fleet already. In the last InvestorMeet THS stated the UG mine development capex would be 1bn Rand ($54m capex) over 24 months. Circa $40m replace yellow fleet required for open pit in any event.

SOFR + 3.9% margin. At present that represents a financing cost of 8.21%... sigh. The whole point of a bigger entity is you have more leverage to negotiate better deals, yet RBL margin has gone from 3.1% to 3.9%. Another slow clap after the over-priced TAIL acquisition.

They'll no doubt enter into hedges at reduced prices in Jan 2024 too for years to come...

The only upside I can possibly see is you would not execute this unless in parallel you're already reaching final stages of major M&As... just hope it's not in North Sea again

Interesting note from Tamesis today on THS - they put my long-term bullishness to shame, with target price of £3.

They do refer to PGM cost curve graph courtesy of SLP, which can be found in below SLP presentation on very last page:

https://www.sylvaniaplatinum.com/all-categories?task=download.send&id=703:fy2023-presentation&catid=93

Some quotes from Tamesis:

"Most cost curves imply that at least 50% of the industry is loss making and we expect further cuts in guidance with Anglo Platinum leading the way last week" [Sibanye are doing same, particularly in US]

"History tells us that for most commodities the bottom of the price range is at the 50% percentile of the cost curve. Global interest rates in 2024 are certain to come down in the face of the poor economic performance"

"Money will return to institutional investors where redemptions this year have caused indiscriminate selling particularly in the small mid cap sector. It is also likely to result in the buying of commodity ETFs again. We also suspect above ground inventories are depleted [...]"

"More controversially perhaps we sense a certain ennui creeping into ESG and particularly the enforcement of EV adoption. As we have seen with oil this year and thermal coal for a longer period – prices can go up despite its ultimate demise as a fuel"

"The valuation metrics suggest that worse is to come for Tharisa which we find hard to believe. The share price is trading on an PE multiple of 2.7x and 2.2x FY24 and 25 and an EV/EBITDA of 0.8x and 0.6x using a static net cash figure. These are based on essentially spot PGM and Chrome price so believe are conservative"

Obviously goes without saying been extremely difficult year and this is highlighted in share price and market cap of £183m. in perspective of this market cap, THS have Net Cash of $129.4m (£104m). So normalised THS is valued at £79m, for a company with a main mine of 13yr open pit, 60yr underground, and forward PE of 1 normalised for net cash (excl Karo capex though), it's a crazy valuation.

However I do think THS management and team as a whole have done good job in navigating this difficult period. The FYE presentation this morning was transparent and all my queries were answered (can't talk for others who may have submitted queries of course). And yes I do share other's concerns on Karo, but I got impression from Q&A they would continue to defer project in a weak PGM market and look to optimise too. However if market turns, they would look to expedite again.

On the Q&A, a few snippets:

1) On request for bit more clarity on production forward guidance, within 2yrs, THS do still think it's feasible to achieve Vision of 200k PGM oz and 2mt chrome. My own interpretation/ hope for PGMs is that they get back to 2022 rates (180k oz) by Sep 2024 - Sep 2025 FY and year after the fabled 200k oz mark. On chrome, they're already guiding at the 1.7- 1.8mt this FY, so year after this could be in the 2mt ballpark.

2) For UG mine extension, you're only looking at 1bn rand ($54m) capex over 24 months (of course scoping study only to date, THS continuing with more detailed feasibility studies).

They've covered my concerns so I will vote for the re-dom. On corp taxes, there is no real impact. From webinar it is my understanding profits seen to be arising from Spain are subject to Spainish Corp Tax anyway.

On WHT, I hold my shares in normal stock account, so like other shares I own outside of ISA or SIPP wrappers which are subject to WHT, I declare it on my UK tax return and effectively recover the amount by reducing my UK tax accordingly (e.g. no double taxation), so no issues. That doesn't of course help those who hold their shares in ISA, SIPP or don't submit a UK Tax Return / return in another jurisdiction. If you are EU resident, WHT doesn't apply, but I bet if you hold your shares through a UK based shares brokerage may be bit bureaucratic to ensure WHT is not applied.

Needs to be a proper prospectus to explain the pros and cons of re-dom from Cyprus to Spain, otherwise I'll be voting "No" too.

Seems only positive is that ATYM will be eligible for "FTSE UK Index Series". However there are major tax impacts which will negatively impact Net Profit, net cashflow and therefore dividends available to shareholders (WHT on dividends, Corp Tax increasing from 12.5% to 25%). I know Corp tax is more nuanced than a simple 12.5% v 25%, hence why prospectus would be needed to change my mind.

In comparison to the share price of 63.5p, it's a very good result. However THS have missed their revised guidance which was 10% less than original guidance of PGMs 175-185k oz and Chrome 1.75 - 1.85mt, which would be 157.5k PGMs and 1.575mt chrome. so they've hit the lower chrome guidance, but not PGM.

FYE Sept 2024 production guidance for chrome is great at 1.7 - 1.8mt, however would like to understand the revised guidance of PGMs 145-155k oz, in comparison to last year's original guidance and the "Vision 2025" post Vulcan Fine Chrome project of 200k oz PGMs and 2mt Chrome.

On Karo, whilst prudent to extend and felt this is what most PIs here wanted:

1) Does it not merely also increase capex costs by extending the project by a year, with more standby costs, labour costs, plant rental/contractor costs, inflation, interest on loans etc. etc. over 24 months.

2) Are the Zim Government on board with the extension? Karo is in a Special Economic Zone (SEZ) with a number of significant tax benefits and exemptions, but I seem to remember some were time limited by a certain date. Does this date also get pushed back by 12 months?

This is still all in the context of a 63.5p share price which is just crazy for this size PGM + Chrome producer and the THS asset + open pit LoM, notwithstanding the current depressed PGM prices.