Member Info for workingstiff

will be cautious. I need to start wearing my reading glasses. Share price back up again.

8.05 as I write. I suppose this is to be expected. Potential investors will cautious - at least until they know what the new debt is intended for. I'm hoping that - if it happens - the new bond issue will be non transferable and the new money will be used to - - Pay off the $500m bank debt. There are onerous non financial strings attached to these loans which Hambro alluded to in the past. - Create a reserve fund to be used to buy up the old bonds on the open market as and when the price is favourable, and/or hold as a provision against the possible failure of IRC. I also hope POG are in discussion with ICBC as to how, in the event of IRC failing, the guarantee might be met in a way that doesn't bring the company down. Then we'll be able to say - "With a single bound Jack was free!". At least until the due dates for the new bonds approach.

"I know Hambro and Pavel were talking about the 'profitable ounce' over a year ago...." That is my recollection also. After the fall in the gold price in 2015 they decided to cut production and therefore cut operating costs. I think the thing to watch for in the next update is progress is underground mining. A couple of years ago they claimed some high grade results from exploratory drilling in preparation for this. The mining started in Q3 and in the production update they said they had extracted 32,500 tonnes of ore was at an average grade of 4.5 g/t - or about 5000 oz. If we get a Q4 production update and that figure has more than doubled then I think this will be positive for the share price.

A good summary. Most gold miners hedge. Highland Gold is an exception. I think it is still the case that they have a policy of selling at the market price.

" I did read that China had found massive reserves" That is interesting. A piece I read recently suggested that Chinese gold miners were looking to expand their operations internationally. It crossed my mind that POG might be a possible take over target, and that the increase in volume we have recently seen might be a predator starting to take a position. They might even see the IRC link as positive, since IRC exports all its ore to China. It would have to be a cash offer though, since I can't see the predator listing on the LSE.

Istabraq - when the POX hub is running a full capacity, do you know if that capacity is sufficient for them to provide pressure oxidisation as a service to other miners in addition to refining their own gold?

Gold On the downside - We are heading into a difficult period for gold. After Diwali (19th Oct) demand for gold tends to slacken off before picking up again in January towards the Chinese new year. Added to that there is the prospect of an interest rate rise in the US in December, and the start of the Fed's "unwinding of its balance sheet" in October. On the Upside - I think gold finished the week of the September Fed meeting (often difficult) reasonably well. This suggests that North Korea may have put a floor under it. Also, if N. Korean is the "floor", I think the bloated US stock market may be the "ceiling". This is not yet showing the hysterical symptoms of the last gasp bull market, but the December interest rate rise (if it comes) could force a correction - remember December 2015. Lastly, I think Donald Trump is a friend of gold. I say this because every time he opens his mouth the dollar seems to tank. So, keep it coming Don! Miners There is little evidence that mining investors bought into the gold sp rise in August and September. This suggests they remain to be convinced that this isn't a flash in the pan. If gold could stay north of $1250 in the run up to the FOMC meeting outcome on 13th December then I think confidence will grow.

"After the failed summit with President Trump, and in a climate of increasing tension between the two countries, Chinese leader Xi Jinping has raised the stakes further by announcing today that the Peoples Bank of China intends to issue a gold backed digital currency. Initially seeded with 8 million ounces of the central bank’s gold reserves, on the 24th October the PBOC will issue over 220 million units of Bitgold. Each unit will be backed by one hundredth of a gram of gold, redeemable in multiples of 1 ounce, and fully convertible into Renminbi. The proceeds from the issue will be used to fund the purchase more gold to add to the reserve, which will in turn fund the next issue of Bitgold, and so on. To finance the scheme, the issue will be at premium of 10% above the average cost of the gold reserves which back the issue, including shipping costs, or 10% above the current London Fix on the date of issue, whichever is the higher. In taking the unusual step of announcing this initiative himself, Mr Jinping said “When we took the decision to close the Bitcoin exchanges in our country, we recognised that this caused difficulties for some of our people. We thought we should offer a safer, more secure alternative”. He went on to say that while Bitgold was initially intended as a “savings or reserve” instrument for “Individuals, companies, banks and perhaps even countries”, he said the Chinese authorities would “not stand in the way” of it being used to purchase goods and services. Reaction to the news has been mixed. Russian Finance Minister Anton Siluanov praised the move, and said he would consult with his colleagues in the Central Bank of the Russian Federation to “Assess the viability of mirroring the scheme”. The reaction from India, Brazil and several Middle Eastern countries was also positive. British Chancellor Phillip Hammond, however, dismissed it as a “Ponzi Scheme”; and when French Finance Minister Bruno Le Maire was asked for a reaction, he smiled and said “I don’t like the smell of it”. By contrast, Italy’s Pier Carlo Padoan described the idea as “interesting”. In Germany, according to a spokesman, Wolfgang Shauble was unavailable for comment. In the US, the reaction has been unequivocally hostile. The normally composed Fed chief Janet Yellen condemned the scheme as “a blatant attempt to undermine the dollar”. An unnamed member of the Fed was quoted earlier as having said “We’ll kill this thing with interest rates if we have to”, although this was later denied when the Dow fell 4% in response." I love fake news :-)

Contrarian - intractable problems require original solutions. 1 If you propose to buy back and cancel the bonds the banks will see cash that could have insured repayment of their debts disappearing into the pockets of other creditors. 2 If you propose to buy back and hold the bonds with a commitment to sell back into the market to meet bank debt if necessary the banks might (just possibly) view this more favourably. Particularly if your trading outlook continues to improve. In the first case debt reduces but net debt remains the same. In the second case debt reduces and net debt could potentially reduce by the market value of the bonds held in treasury. For myself I think net dept means little in the real world, but the investment community revere it with almost religious fervour. There may be legal constraints prohibiting this approach. and it would be a hard sell to the banks, but if not illegal its worth a look. Gold is off its peak for the year but still seems firm at the moment. I think POG will rise towards the conversion price in the coming days / weeks.

Uncertain - good post. I feel better already. Contrarian - paying off debt is net debt neutral as your assets reduce with your liabilities. The reason I liked the idea of taking bonds into treasury is that I think this could be made to count as an asset against outstanding debt (ie: bank debt). As we all know it is net debt to EBITDA or Equity that share pickers look at.

In the past I wondered if POG couldn't deal with the Bond issue by buying bonds and holding them in treasury with a commitment to the banks to sell them in the market in the event of any problems in meeting debt repayments. The problem is that the main beneficiaries would be the shareholders, cash would be tied up which might be used elsewhere. And, although the company finances would also improve to the tune of saved coupon payments in some round about way; I think it would be hard to sell this to the banks.

".... but I think it may mean that the value of the share exceeds 50% above the conversion rate (for 20 out of 30 days) the issuer can redeem (really would like someone to corroborate this with more legal or finance experience ) which would be 12.39p...." From memory I think you are right. A cheaper way for a company to "redeem" bonds is to buy them on the open market to cancel or hold in treasury. But I believe POG's current arrangements with its banks precludes this.

Lawrence - when you mentioned interest criteria in your "dissolve" post I took that to mean that you thought the 9% coupon paid each year would apply to the principal of the bond. If I misunderstood you I'm sorry. Kenj - I didn't say I thought conversion of the bonds was a bad thing for the company. If I were on the POG management team (and didn't have a significant shareholding) I would be delighted to see the debt reduced, and the burden of interest payments removed. I said I thought the risk of dilution would suppress the share price. I hope I am wrong.

Read the post I was responding to. I expect better from you

4 If the banks released their constraint on the company buying bonds, POG could deal with the issue.

1 The bonds do not "dissolve". They have to be repaid in full or replaced by new bonds at the end of the term. 2 I think most people intending to make a significant investment in a company will do some research first. 3 I can't remenber the exact number but if all bondholders converted (which they wouldn't) it would add well over 1bn shares.

"Why would the bondholders even think of converting when they are sitting on their nice coupon?" Because they didn't want the bonds. They wanted their money but were forced into taking the new bonds as part of the settlement.

"I'm never sure or understand how the share price is being controlled". I think the answer is that it isn't being controlled. The problem POG now has is that as it becomes more secure as a going concern, the greater the temptation for the bond holders to convert their bonds to shares with a view to taking profit, as they aren't exactly willing investors. This would have the effect of diluting share value. The lending banks have previously stipulated that POG cannot use spare cash to buy back and cancel bonds, so we are stuck in a situation where the share price is being suppressed by the risk of dilution. Such are the knots that Hambro tied us up in when he made the decision to raise cash through bonds all those years ago. On a more positive note - if IRC's fortunes improve, there may be a possibility that General Nice and Minmetals Cheerglory might finally honour the commitment they made in 2013 and take up their last tranche of IRC shares, in which case they become co-guarantors for IRC's debt.

The TA's would say that Gold has a minefield of resistance to overcome to get from $1350 to $1400. This rise will not effect POG's revenue since at the last announcement they said they had hedged 500K oz at around $1250. However, if gold does continue to rise - and it might - it may trigger a revaluation of the stuff in the ground.

Back down to 6.87. Heh-ho, time to get on with my day.