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My own ignorance but why has AAZ bothered to inform UN, the US State Dept, the UK Foreign Office and the EU? I assume they're working closely with Az Government to get matter resolved and would have thought Az Government would make these representations, not AAZ directly...

Hi Mike - got answer to few of my queries but not on the Forex one, as I guess it's quite technical from accountancy point of view and something Ilja can't answer immediately. As it's a non-cash item that hasn't impacted NPAT or Net Cash metrics I'm not overly concerned, but would be good to get clarification. I do think if USD weakens (and in general this appears to be the trend now, although don't want to jinx it!) I would assume this would reverse.

If Polymetal in a heavily sanctioned high-risk political jurisdiction like Russia can find a new auditor after Deloitte resigned, you would think Altyn shouldn't have a problem. They should look up Polymetal's new auditor MHA MacIntyre Hudson, considering both miners work in Kazakhstan, there would be some large synergies for MHA MacIntyre Hudson.

Relooking at the FY 2021 and FY 2022, I think the confusion has come in that last year's dividend payout was a bumper one at 9c based on EPS of 37.4c which is an NPAT of 24%. I don't know how THS get to their own figure of this being 18.5% of NPAT.

Likewise for FY 2022, they're paying 7c of adjusted EPS of 41.1c, which is 17% NPAT in line with dividend policy. Minor difference but like 2021, I don't quite understand how THS get to 17.7% of NPAT.

THS has been capital intensive for last few years. They have successfully transitioned from a contractor mining model to owned operated model, they've increased open pit mine life to 19yrs from circa 12yrs, increased production from circa 140k PGMs and 1.4MT chrome to 180k and 1.8MT respectively and now developing Karo, all done with boosting Net Cash to $80m, when in 2020 had a Net Debt position and was looking at financing/loan options for Project Vulcan, which in end was funded organically! I don't think any of this is fairly represented in current market cap, which explains I guess why many of us are here invested, seeing the long-term value. Karo despite pure geopolitical risk, from a "political tax/ finance" risk, is very low being in a Special Economic Zone (SEZ) with tax incentives and technically should be relatively straight forward being open pit, which is THS' bread and butter. 18 months will go by very quickly. In anticipation I would like to see a more progressive dividend policy, which of course can come in to effect only post-Karo completion, but could be flagged well in advance. THS have done sterling work to date at growing company, but this still isn't reflected in the market cap. Perhaps only a progressive dividend policy will allow this revaluation along with a steady climb the closer Karo gets to completion. I'm thinking a policy much like one ATYM has and can still be subject to Capex, Net Debt ratios etc. ATYM Policy: "Dividend Policy that will make an annual payout of between 30% and 50% of free cash flow generated during the applicable financial year". Now the BEE Trust has been subsumed in to the overall THS structure too and don't receive their "non-controlling interest income", I'm sure they too will require a steady and commensurate income through dividends, otherwise they will start to question the benefit of being subsumed and politically could backfire if a more long-term generous dividend policy to shareholders is not put in place.

Ignore my query, my broker has now answered confirming 10% WHT is applied and that such details would all be included in annual tax certificate they produce, which I can use in any UK Tax Return if my shares aren't held in an ISA or SIPP.

Can anyone confirm if SEPL dividends are subject to Nigerian WHT at 10% before being paid to shareholders? And if so, what the process is of receiving a WHT certificate if anyone has been through this process?

The THS presentation had a 1hr hard-stop as management had additional meetings, so they didn't get round to my questions in Q&A, but did say they will be responding to all Q's not answered. In summary mine were broadly:

1) $79m Capex for Tharisa Mine (Excl. Karo): does this cover sustaining & expansionary capex, or just the former?

2) Project Vulcan/ Chrome: with FY 2023 target of 1.8MT, does THS still forecast long-term production of 2MT? Has Vulcan managed to provide the efficiencies as intended to reach 2MT?

3) Explanation for the -$70m on the Foreign currency translation reserve hitting the Comprehensive Income

4) With Adjusted EPS of 41.1c (excl Karo acquisition), which is higher than FY 2021 EPS of 37.4c, why has the dividend decreased from 9c to 7c? Is it to provide liquidity/ buffer/ rainy day for Karo and other growth areas?

Infor - agree this update should have included a Net Cash update, the statement on UK legislation changes should have been much stronger (even just adding an "extremely" infront of challenging!).

The PR from SQZ, all other North Sea O&G operators and their representative trade/ PR bodies has been woeful. Before the Autumn Statement all groups should have been extremely vocal through media, RNS' etc., direct open letters to the Government of the huge impact the 65% EPL had already had, let alone now 75%! Including positive items of how many people employed, all indirect and direct taxes paid to HMRC etc. etc.

Instead when the Government were leaking 75% through the press before the Annoucements, it was deafening silence. Speaking up now is better than nothing, but too little too late, the damage is being done. The North Sea O&G sector has already had a long-term windfall tax with the supplementary tax pushing corp tax to 40%, then 65% and now 75%. It's absurd. North Sea is marginal hence why bigger operators were slowly divesting out of many fields leaving it to more efficient smaller operators like SQZ.

Specific to SQZ I think a lot of shareholders are incredibly frustrated with the Board post KIST M&A which can't be simply explained by our inept government. When a share price is this undervalued in terms of its Net Cash position, extremely low Forward PE even with 75% EPL, they should be instigating buybacks, increasing dividends and shouting to the Government that it is impossible now to invest further in new NS fields outside of its existing ones.

I think if SQZ got another lowball M&A at £4+, this time a lot of PIs and IIs may think much differently than last time... I know I would.

Luciano - most who are sticking with SQZ will be because of their Net Cash position is nearing the market cap!!! So downside very limited. To describe SQZ as an "oiler" when it's 85% Gas and Gas price has exploded with this current cold snap (currently £3.30/therm), is off the mark and another reason to hold.

As frustrated, annoyed and disappointed that I am with UK politicians on all fronts, their economic ignorance, North Sea O&G operators in general with terrible PR not fighting their own corner adequately and SQZ Board included in this, I'm a buyer on days like these where you have large drops. My wife's entire ISA allowance for the year has gone in to SQZ today at £2.88.

Your post completely misses the investment case of SQZ... IMO.

Mike - on page 27 & 28 of the THS Annual Report presentation, it's explained in detail and when stripping out Karo, the adjusted EPS is ultimately 41.1c, which is what the dividend is based on. They've just gone through it in investor call and it's in line with last week's "Release of FY2022 results" RNS so I'm happy with that explanation.

For me the Foreign Currency Adjustment of -$70m is separate accounting issue that needs a separate detailed explanation. They may have covered it but i've been multi-tasking on other things so may have missed it!

Spike - agree, massive news and as you say great terms on interest rates which vary 3-7%. For me it's a very clear RNS and with the Assaubayev family owning 65.5% their interests should align with all other shareholders in terms of both increasing shareholder value of company in both capital and dividends as CEO Aidar Assaubayev summarised at end of RNS:

“Securing the development funding at attractive terms, indicates our partners’ confidence in the prospects of AltynGold. We are now in a position to implement the expansion plan towards 1mtpa production within two years in line with our strategic growth plan. Achieving this milestone will significantly increase shareholders value and set the stage for a sustainable dividend policy.”

At 1mtpa run rate, 82% gold recovery and 2g/t, I calculate gold production increase to 53k oz p.a. However a 2.5g/t would provide 66k oz p.a. and 3g/t 79k oz p.a.

Sotolo - Net Profit for the year was $167m compared to 2021 being $132m, however there has been a very large Forex of $70m in 2022, bringing "Comprehensive Income" for year down to $97m, whereas in 2021 they had a $20m Forex gain, meaning income was $152m.

I'm sure this is explained somewhere in results, but be good for a detailed explanation of this huge Forex swing in today's investor call too, as I don't fully understand it:

"Foreign currency translation reserve
The foreign currency translation reserve comprises all foreign currency differences arising from the translation of the financial statements of foreign operations with a functional currency other than US$ and foreign currency differences relating to translation of intergroup loans and funding arrangements which are considered to be part of the Company’s net investment in a foreign operation"

I know tomorrow is going to be busy with THS results + investor call (sign up with Investor Meet, I just registered for the call), but thought I would post NorNickel's Market Review which came out 30-Nov but only just saw it over the wkend. There's bit more I haven't copied and pasted if you follow the link.

"Palladium

Even though the automotive sector, the top consumer of palladium, is recovering faster than we had anticipated, the growing battery electric vehicles market and moderate but persistent substitution of palladium with platinum restrains the use of palladium. Moreover, demand from electronics and medical industries is also likely to shrink this year. We therefore expect the global palladium demand to fall by 4% year-on-year to 9.5 million ounces in 2022.

However, primary and secondary supply cuts offset the potential drop in demand. We expect the global supply to lose 10% this year leading to a deeper market deficit in 2022. We have revised the 2022 palladium market deficit from 0.1 million ounces in our previous estimate to 0.6 million ounces and expect the deficit to expand to 0.8 million ounces in 2023.

Platinum

We still expect the automotive sector’s demand for platinum to stagnate this year on the back of the weak demand for diesel-powered vehicles in Europe. On top of that, other industrial demand is also expected to fall with glass industry experiencing the most significant fall as last year’s buying for capacity expansion in China has now dried up. Hydrogen economy is yet to play a role as a platinum saviour, and the demand generated by this sector is expected to remain marginal in the mid-term.

We expect platinum surplus to shrink down to balance in 2022 in comparison with our previous estimate of a 0.9 million ounces surplus on the back of mining disruptions in South Africa and lower secondary supply. In 2023, we expect platinum market to return to a moderate surplus of 0.3 million ounces as South African operations are expected to stabilise."

https://www.nornickel.com/news-and-media/press-releases-and-news/nornickel-presents-metals-market-review-301122/

So AEP have Net Cash of $253m, inventories full to brim (probably another $30-40m, in Interims it was $40m), so GBP terms circa £246m.

Market Cap of £313m. Normalised for Net Cash + Inventories, AEP is valued at £67m?!!

Hi feynzz, long time no speak, think last crossed paths on SLP or THS. Still in THS, but no longer in SLP.

On SEPL, thanks for that, that reconciles it! Bit lazy of me, relatively new to SEPL so didn't look through the entire 2021 Accounts or realize SEPL's "cash generation" is similar to EBITDA and have to take in to account all the items you listed.

So even taking that all into account, their organic normalised "free cashflow generation" is circa $133m for the 9 months, which is very impressive when you consider market cap of only £600m and one more quarter to go.

Can anyone clarify / reconcile the Net Debt evolution for last 9 months?

- 2021 ended with Net Debt of $426m
- Q3 2022 ended with Net Debt $452m
- In the last 9 months SEPL have stated cash generation of $368m, so can't resolve how Net Debt is relatively unchanged.
- Outgoings we've had Capex of $110m, dividends paid out of $44m and $128m deposit for Exxon Assets ($282m total). Incomings they've then received $13m of the Ubima Divestment Agreement, so that's $269m explained. With Net Debt increasing to $26m, that's some $125m I can't reconcile between the $368m cash generation versus all changes listed herein.

Very sad news - condolences to all his family, friends and colleagues

Production was a known quantity from the PetroPeru data. However cash has increased by $16m and Trade Receivables by a huge $35.7m (with trade payables the same from last Q2), so an increase in Net Cash position of $51.7m (annualised $207m p.a.). So overall Net Cash could now be circa $130m, but need to wait for full Q3 Finance update.

That's based on 12k bopd. We're significantly undervalued based on this free cashflow at 12k bopd, let alone the increase in production we should expect going forward.

All this for a £344m market cap?!

Amazing results and confirmation as of 23-Sep, more than 50% of SQZ's undervalued market cap is Net Cash!

Whilst it's good news interim dividend of 8p is above the original estimated 6p, this is still a derisory figure to shareholders in comparison to Net Profit and Net free cashflow and we need an actual dividend policy. This 8p dividend amounts to only 19% of Net Profit in 1H 2022. A dividend policy of 30-50% of Net Profit (or Net Free Cashflow) gives the Board scope within % boundaries, provides certainty to shareholders and is more than enough for growth and M&A, as we have a huge cash pile that will continue to grow.

Rhodium remains at $14k, Chrome pushed up to $210/tn, GBP at 1.07 and ZAR at 18. All great metrics for THS whose revenues and profits are in USD, majority of costs in ZAR and market cap valued in GBP and dividend converted from USD profits to GBP.

When the general noise, global market fear / sell-offs dies down, THS should be looking pretty, with its FY coming to an end Sept, FY Q4 results 11-Oct and Annual Report 05-Dec.

I really hope we get a detailed Karo update in the Q4 results. There's been no word on financing and be good to get an update on this. When THS is not the only entity, but Leto too, THS should not be funding Karo alone from its own cashflow, but both entities need to fund their own share. I assume this is the case.