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What a disgraceful offer when SQZ had end of May Net Cash of circa £396 million! As others have said this is what happens when you rest on your laurels and rest on the shareholders money being eaten away by inflation. A proper dividend to shareholders would mean a far higher share price and then only proper M&A action on the table, not this opportunistic nonsense from Kistos.

Having said all that, the ridiculous KIST offer is a ploy to stop SQZ takeover of KIST and to push the SQZ offer price of KIST up no doubt. It's clear from the full RNS and KIST can't afford SQZ, whereas SQZ could afford KIST, at the right price for us SQZ shareholders.

Purely for crude comparison as CAML Q results out today too, THS net cash build is better than CAML's (and in 1H 2022 THS dividend payments of $14m + $8,8m higher than CAML's of £12m, so nomalised THS net cash build even better ), THS Net Cash position ever so slightly better than CAML's (CAML Net Cash $45.6m), mine life far better and growth options of Karo, Zim Chrome + PGM vertical refinement better too.

CAML's industrial metals of copper, zinc and lead also been hit far harder than THS PGM basket and chrome ore price, the latter actually strengthened since last quarter. Div yields of circa 7% probably both roughly same across companies too.

Yet CAML has market cap is £380m compared to THS at £310m. Serious disconnect in my eyes that can not be explained by region as CAML main cash cow copper operations in Kazakhstan.

Normalised for $8.8m dividend, free cashflow this Q was $31m, or annualized $124m (£103m), against THS low market cap of £310, it's on a very low FCF ratio of 3x, lower even still when normalising for growing Net Cash position of $48m (FCF ratio x2.6). I'm sure this is despite logistical issues delaying product getting to clients and therefore cash to THS.

This final Q4 to End Sept, the PGM basket reduction to $2,380oz (compared to $2,677) should be more than offset by Chrome price increase to $290tn (compared to $247tn). Karo also making good progress with LLI orders placed.

Where in the prospectus does it say the bondholders / loan note holders can veto any return to shareholders?

If PDL are within the restrictive / distribution covenants, then its within the companies means a dividend to shareholders can be made. Considering PDL are getting close to going from Net Debt to Net Cash, they could start thinking about paying a dividend in calendar year 2023. I think for 2022 they may want to build up a significant Net Cash 1st to be well within covenants and protection for their stress test scenarios, organically fund expansion projects etc.

If you look at page 61 of the Interims Investor Day Presentation back 22-Feb-2022, capital allocation strategy is all laid out. But buy backs are lowest priority. Before that would be Dividend, Special Dividends, however before both of these there are also other priorities first too (Approved expansion projects at Cullinan and Finsch, Further growth projects, Early debt redemption (1L then 2L)).

https://www.petradiamonds.com/wp-content/uploads/22-02-22-Petra-Investor-Day-Presentation-FINAL-22.02.2022-correction.pdf

Sotolo - I was responding to your erroneous statement "Also with Rh the main constituent of our PGM basket down 40% since start of March I expect our forward PE might be rather higher than you suggest".

You were implying that PE was rather higher than I suggested based on CURRENT PGM and Chrome prices, not forecast. The fact you thought PE was "rather higher" than 3-4 now and I showed it to be circa 2 is quite telling in terms of how you may view THS. It will also means your forward assumptions based on potential reduced PGM and Chrome prices will also be completely wrong.

Let's see if your pessimism on PGM and Chrome rings true this time - it didn't when you were predicting Rhodium back in the low 1000s about 1yr ago. However this time the global markets are looking more ominous and I do agree and think prices will reduce, however will not have the impact on PE of 8x + you have forecast as your initial assumptions are incorrect.

With markets so so bearish, already in a recession (imo) and S&P500 back at 3,700, when will the US Fed do a complete 180 and start reversing interest rate rises and QT (S&P < 3,000?)? Perhaps sooner than we all think and there's no way the markets and economy as a whole will handle another 75bps interest rate hike by FED. Laughable that Powell keeps stating the US Economy is in a strong position - a far bigger lie than his "inflation is transitory" statement! I still tend to think in USD terms we're heading for a stagflationary recession and when the Fed pivots, it can't stop a deep recession, but it will weaken the USD and support commodity prices in USD.

No doubt there is short-term profitable trading to be had and if FTSE and S&P500 collapse before a Fed pivot, you can sell out and buy in, for now though until I return to UK and have more time to keep an eye day-to-day on news and investments, I'll be lazy and hold. Not great strategy for today!

Hi Mike - thanks for updated calcs and yes I agree with them.

I should have clarified my numbers are "annualised" from today to work out a 12 month EBITDA + profit based on today's PGM basket and chrome price for illustrative purposes to counter some assumptions on impacts of a reduced PGM basket. So agree Profit will be less for actual FYE Sept 2022 on basis we of course already know 1H 2022 Interims of $102m Profit after tax.

On THS' actual PGM realised price compared to "spot" basket, I would also agree on your circa 20% discount rate, now I've also calculated and compared the JM PGM Prices averages for 1H 2022, rather than using basket price reported in THS Interims.

Sotolo - how the hell are you working out your PE calcs?! Could you please back them up rather than shooting from the hip. Everything is being pummeled at the moment except oil price (not oil stocks though, which have also declined irrespective of oil price). Unless someone sold their THS and put it in cash (doubt it), it's been a zero sum game at losing 10-20% in other similar stocks.

On THS specifically and using the last 1H 2022 March Interims:

Chrome AISC is circa $110/tn at ZAR 15.3
Chrome is currently at $295/tn, with discount of 12% applied to THS realised price = $260/tn
Chrome Margin of $260tn - $110tn x 1.8m tns = $270m EBITDA

PGM AISC is circa $1,200oz at ZAR 15.3
PGM Basket currently $2,380oz, with discount of circa 14% applied to THS realised price = $2,050oz
PGM Margin of $2,050 - $1,200 x 170,000oz = $145m EBITDA

So overall based on today's prices, that's $415m EBITDA, after D&A and tax etc. perhaps $300m. Considering 1H 2022 6 months Interims had Profit after tax of $102m with far lower Chrome ($175tn) and PGM basket only circa 10% more than now, $300m even though "back of packet" calculation shouldn't be too far off. Now since March there has been more inflation, but there has also been a depreciation in both the ZAR and GBP reducing THS costs. But conservatively let's lop another 15% off Profit for inflation, so $255m.

THS current market cap is £370m ($444m). Based on $255m Profit after tax, THS is on a Forward PE of less than 2, not taking into account the $20m+ cash in bank and the extensive open pit expansion in Zimbabwe that will double PGM production in 2yrs. Pretty ridiculous PE when open pit mine life is 20yrs+

I've been extraordinarily lucky to have most my assets in oil and gas stocks (BP, I3E, JSE, SQZ, GKP and SLE, although latter not so lucky as suspended for nearly 1yr awaiting RTO!) , but am very comfortable riding the THS ups and downs (I know everyone's timelines are different though). At some point eventually I will look to reduce my oil exposure into increasing my gold, precious metals and copper stocks and THS remains top of my list. However do want to see if there's any cash build this Q3 June 2022 and if not, explicit reasons why not (expansionary capex etc. etc.).

Sotolo - are you only looking at THS?! The whole market is collapsing today! FTSE by 1.7%, FTSE 250 2% and S&P500 2.5%.

You also keep mentioning chrome prices going down, they haven't! They're at a very high 295/tn as posted by THS today on twitter. I don't mind negativity to be prudent and protect investments, but at least be accurate.

If one was to actually calculate a Forward PE of circa 3-4, THS is still incredibly undervalued not overvalued, even with current PGM prices. For me the one area holding me back from adding anymore is the cash build has not matched my expectations. However I expect this will correct over 2H or at least explained through expansionary capex spend.

It's definitely a time to be prudent though in all investments and if not on sidelines, chose shares with low forward PEs and strong cashbuild (even still when stress testing for lower commodity prices). I still mainly remain in oil and other commodity plays like THS, as to be on sidelines in cash with 10% inflation is a hard pill to swallow, but may pay off for those if there is a massive market collapse!

In terms of Chrome, I don't understand why some are under-estimating the impact of chrome prices so drastically. At $294/tn and 1.8mt p.a., rising to 2mt, chrome is far far more than 1/3 of profit, it will be over 1/2.

In these Interims Chrome was $175tn, they're now at $294tn. That's a difference in additional EBITDA of some $200m+.

Based on these results THS has PE of 3, however on a Forward PE, it will be far lower due to current chrome price. It's funny years ago how long it took the market to understand THS Rhodium exposure and even when Rhodium was exploding in price, THS stock price took a long time to catch up. THS PGM Basket Price is still extremely robust, yet Chrome price has absolutely exploded and feels like the market hasn't quite understood this yet.

It really shouldn't be hard getting a Tier 2 or 3 Auditor if the usual big boy suspects aren't interested. PWC stepped away from POG way back in 2020 and their new Auditor MHA MacIntyre Hudson must still be with them, as there has been no such RNS announcement from POG regarding loss of Auditor.

So POLY could easily just hire MHA MacIntyre Hudson if they're any good, or any other Auditor. No doubt though with POLY still having a FTSE100 mentality and being a huge company, they will be choosey at 1st.

Semantics perhaps Tharisa/ Ilja, but dilution is issuing new shares, I agree it's overall value accretive though and I'm not disputing the calculated value of $27m is a good deal. In summary there are 2 ways of funding organic growth as you know:

a) Cash, Debt or mixture of two (i.e. no dilution of shares in issue) - THS is in a great position this option is open to it.
b) Issuing new shares (whether it's value accretive or not, you still "dilute" the original shares in issue by adding more shares)

My question effectively boils down to why could we not have paid $27m in cash for the Karo Option to Leto, instead of the equivalent $27m in THS shares? As a direct example, THS bought Salene Chrome from Leto for a cash consideration of $3m, not by $3m by issue of shares. If Leto as part of the Option Agreement dating back to circa 2018 always wanted payment in THS shares as they wanted continued exposure to Karo, fair enough. If I was to put a "Leto" hat on, then I would want to continue having exposure to Karo and if they were paid in cash not shares, the "fair" price to pay in cash would be far greater than $27m and not at such a steep discount to NPV? Based on your explanation and having time to consider it further, I assume "Leto" wanting continued exposure is main reason why THS shares issued instead of cash consideration like Salene Chrome, a cash price would have been calculated higher and I'm comfortable with this now had time to digest.

It's great news and always been very excited by Karo, however being a substantial holder of THS I'm not overjoyed by the dilution of THS, particularly as we have cash + loan facilties to pay for the Karo Option and THS management/ majority THS shareholders + Leto is a related party with significant conflicts of interest in any such deal.

I'm on the move so maybe I'm being unfair as haven't read RNS in minute detail as to what independent safeguards were in place on this transaction to safeguard THS shareholders interests outside of the family. But this needs to be covered in detail on the investor call.

Biker that is not correct, that is merely how revenues are allocated internally by region, particularly as EVR have a Swiss Trading Arm and Pipe Mills in North America (not with great margins), the former will be able to do no trading whatsoever. If you look at Revenues by Business Segment (where revenue originated), that shows the true picture that 12.4bn of 14bn revenues originates from the Russia Steel and Coal segments (pg 37 of EVR 2021 Annual Report).

The Steel North America business segment is tiny, it's only $300m EBITDA. Vanadium facilities in Czech and other assets in EU are also defunct as they rely on metals from EVR's Russia mining operations.

The Russian Steel and Coal EVR segments represent $4.7bn EBITDA of the Group (94%!) (again refer to pg.37 of EVR 2021 Annual Report). Steel production of the Group > 87% is Russia (pg.16-17 of EVR's 2021 Annual Report). With sanctions, trade and logistics cut-off, all assets are dead in the water unless there is a change in current situation. With complex supply chains and sanctions in place, with bulky products such as steel it will be incredibly tough to pivot to new clients in China or India, perhaps impossible. Even if they did, they would demand an eye-watering discounts and EVR would be lucky to break-even.

We can only hope with the war going so badly for Putin, at some point there must surely be some rapprochement. However it could be a long nail-biting wait.

EVR themselves said "in a worst-case scenario it will have to reduce spending by US$500mln a year and go to the market to raise capital for 2023 and 2024". What is occurring now is far worse than any worse case scenario the Board might of thought possible on 25-Feb. It would be madness to pay dividend until the dust settles.

https://www.proactiveinvestors.co.uk/companies/news/975159/evraz-said-it-is-preparing-for-the-severe-downside-scenario-975159.html

In such a scenario, POLY can walk away from the debt and call Force Majeure. Both POLY and its banks who own the debt will join in a criminal and civil action against Russian state to reclaim monies due to them. It would be a long drawn out process lasting many years and they would no doubt be recompensed through Russian frozen assets abroad. This has happened before many times in International Court (Tanzania springs to mind), but could take decade or so!

Like most multi-national entities, a company structures subsidiaries and affiliates by country, region and project depending on national, regional laws, JVs, ring-fencing etc. From POLY's Accounts, it appears that Kazakhstan entity is "Polymetal Eurasia LLP / LLC" and in a worst case scenario, could easily be ring fenced.

Now re-looking at the Kazakhstan assets in more detail (even before today's update of replenishment of resources) they are more than a 1/3 of POLY in everything: annual production (500k p.a.), EBITDA, Reserves (10m+ ) and mine life for Kyzyl is 30yrs, Varvara up to 2036, but sure through RNS' like today's can be consistently rolled over and extended. POLY would be left with Polymetal Eurasia LLC / LLP as the entity managing its Kazakh assets at the "asset" level.

I tend to think Kazakhstan entities on their own are worth more than £2.50. So the risk-reward for those brave enough to buy, is looking pretty good. But don't invest if you need money anytime soon as you need to take into account in worst case scenario any break-up, de-merger etc. could take a long time.

As others have said though, whether Russia does seizes and then nationalizes mines without compensation is a different story. At present the West have seized and frozen assets, they haven't yet "expropriated" (nationalised/ stolen, however you want to phrase it) them for sale. There is still a small chance if our "Dear Leaders" see sense and peace talks prevail after this terrible war, assets will be "unfrozen". Russia obviously has to remove all troops and agree to a peace treaty with Ukraine where they will never invade again, but NATO, US and Ukraine have to agree Ukraine will not join NATO. The EU also has to agree Ukraine can trade freely with Russia irrespective of any rigid EU trade rules in event Ukraine becomes more closely aligned to EU. As disgusting as Putin's actions have been, US, UK and EU have led us to the brink too and have lacked any diplomacy whatsoever. Why NATO membership was allowed to be discussed so flippantly is beyond belief or why UN and EU leaders did nothing to try and resolve breaches of Minsk II Agreements or put more focus on this area to ensure peace. Now it is incredibly hard for either side to de-escalate and views will become more entrenched.

I think next step in financial tit for tat will be for Russia to apply capital controls and or asset freezes in retaliation so companies can still operate but not remove any monies from Russia, but not wholesale asset seizur

1) Putin can only confiscate Russian mines, not Kazakhstan portion of operations (1/3 production).
2) It's not a Russian company, it's a UK company registered office in Jersey and its office in Cyprus, listed in UK and Russia. But of course yes most of its production and operations are in Russia.
3) POLY's debt I believe is mainly denominated in USD and EUR (based on 2020 Accounts), not RUB, so will not be subject to 20% Interest Rates which is for RUB. POLY also has mix of fixed and floating interest rates . POLY's sales are of course in USD (Gold), so paying debt in USD and EUR is no issue, if the banks POLY uses are not subject to SWIFT restrictions. If they are, POLY can simply call Force Majeure. If any debts are in RUB, POLY are winning as this debt in USD terms has just significantly reduced, while its sales are still in USD.
4) Logistical issues: as long as POLY aren't included in any sanctions it should be minimal. Materials and Equipment should be easy to come by via China. They can even do inter-company logistical transfers with their Kazakhstan entities.

Agree though your 1) is the biggest risk - confiscation of russian mining assets.

Sorry ignore my previous post regarding 99% mining in Russia, wrong board. As Torny said and my earlier post 1/3 production in Kazakhstan

This is misleading and hides the fact 99% mining is out of Russia!

Slater - how can you end up with zero when 1/3 production and EBITDA is in Kazakhstan, out of Russian control?

If Russia take nuclear option to nationalise mines without compensation, POLY walk away from their debts to Russian banks, call FM on other debts too, kick out the 25% Russian ICT shareholder and carve out the Kazakh assets.

How much would a 500k oz p.a. with 12yr+ mine life and low AISC be worth? Centamin is worth £1.1bn with 400k oz p.a., much higher AiSC and really due to unfavourable PSC, 50% of CEY's production goes direct to state.

This is a London listed company and whilst we can't control what happens to mines in Russia, we can control what happens to the company as an entity, block 25% shareholder from any say if working against company interest. But we're not even at that stage... yet

For some it's worth the risk when you have a 25%+ div yield, what now must be 20-25% of market cap in Net Cash and $90 oil + increased production to 55k/bopd making these eye watering % even better over the months.

If you read all the article, the longterm downside is IOCs dealing with Iraq's Federal Ministry of Oil (FMO). Whether Ahmed Mousa Jiyad is simply a mouthpiece for Iraq Government in this complex scenario where he does nothing to dive in or counter KRG's position:

"The KRG has accused the court of drawing "precedents from the centralised laws of the former Ba'ath regime" of Saddam Hussain. "Article 112 of the Constitution also stipulates that oil and gas is not within the exclusive authority of the federal government. This same article also preserves the right of the Kurdistan Region to produce and develop the region's oil and gas," it said."

Short term downside of course need to be factored in, but GKP has already lost >10% of its market cap even after the normal decline ex-div.

https://www.zerohedge.com/markets/toyota-targets-record-11-million-vehicles-produced-its-fiscal-year-2022

Wonder how this will impact Rhodium and PGM demand if all autos follow suit and now with Omicron, feels like the worst of COVID is behind us and world will slowly get back to normal... Normal as in worry about everything else other than COVID! Of course they'll be Ukraine, US FED, inflation, Taiwan etc. etc.