Member Info for Zarro

Forgive my ignorance but why would someone pay nearly 13p for 426k of shares (after hours?) when the offer was under 12p? Is it a worked order / negotiated trade - for large volume?

High risk for sure but for this to fail in the short term they have to be unable to meet their commitments (i.e. creditors as they fall due). Having listened to the call this week there was no imminent question of any lack of liquidity (cash and/or bank facility headroom) or threat of covenant breach. So, on what basis would it fail in the next 3-6 months. Also the $150+ FCF was a net / net figure (i.e. after everything - including the rescheduled $50m of repayments to repay the BEE debt providers).

Assuming EBITDA came in at around $175m for the last 12 months then this is trading on an EV/EBITDA of c4x (appx Mkt Cap $175m + Debt $550m). The lowish backward looking multiple is probably fair for the time being given the risk involved. If diamond prices hold and they can deliver say $175m free cashflow for debt reduction over the next 3 years then all that moves from the debt to the Mkt Cap i.e. it doubles the current figure - which points to the 32p that GS have attributed - with possible upside from (1) large finds and (b) a higher multiple for a de-risked financial profile. I am still realistically hoping for say 5 x $200m 18 months or so from now which would value the equity at say $500m i.e. around 45p per share (a figure I have posted before). GLA

Trek - that is my quick read also - i.e. steady; perhaps not great BUT no material downside suprises. Debt appears under control and should start to see some meaningful reductions unless market prices fall off a cliff. Did they also reveal a new 100ct+ find post 30 Jun or is this one that they had already announced?

Can't see how the trading update deserved a 10% whack in 2 days. Has anyone got access to the UBS broker report / or can provide a brief summary? Would be much appreciated.

A simplistic view of potential M/Cap would be:

1 - Take the POST-TAX NPV of the two projects i.e. $1,072m ($802m + $270m) less say $72m to buy out Solarworld in administration (actually contractually $30m) i.e. $1000m net.
2 - Assume maximum dilution to 500m shares (being the amount authorised to the BOD i.e. plus c 300m shares from here ) as part of delivering a fully funded financing package.

That gives a worst case conservative view of $2 per share (say £1.50) - and potentially considerably more .

$1bn valuation supported/underpinned by projected EBITDA of $287m (being $229m + $58m). i.e. only 3.5x EBITDA.

So £1.50 is my downside case - IMO more likely £2.25-£2.50.

I have been adding like a one man 'Algo/Bot' today.........

Thx Col D. Think I will reach for another Bud..........

Wonder if anyone in South Africa has knowledge of how firm/soft prices were at Auction this last week or so.....

Good weekend all.

For the benefit of the uninitiated like me can someone explain what are all these little <£1k trades designated 'A' all about? Is it just computers keeping themselves amused?

so one can argue that this is currently trading at an effective £4.37 - which is an all time low other than one day in late May.......?

One of the other chat boards is stating that brokers (?) have reduced EPS to 12p for 2019 and 13.2p for 2020. Can anyone confirm? Clearly brokers can be wrong as often as they are right.

GS - Fair shouts. I am not yet convinced about attraction of valuation ....although I like the amount of cash the business appears capable of throwing off at the moment - so maybe I should be. GLA

Its very quiet round this board.......or were the published year end figures so unexciting that there is nothing to say.

At least they changed their dividend policy back to a sensible 2x cover (yeah!).....which puts the yield on 2.5% (oh dear) ....and they might do some share buybacks with all that cash flow (yeah!) because they can't think of anything productive to do to grow the business (oh dear). The business should be in a great sector with exciting opportunities and prospects.

Not exactly a scintillating story to light a fire under the share price........although I am often wrong (here's hoping). zzzz zzzz zzzz.

I am not a trader. Can anyone explain how this share price and its movements are underpinned. I see good news, very little volume and a lot of small 'A' trades. Is this just an algorithm/bot (or whatever) driven drift?

Make that 5! And thanks to those who posted. I have been tracking this for 6 months or so but confess that I am not invested .....yet.

In terms of a bounce - I guess it depends on what is meant by "materially below....". I take it to be at least 10% and the MM's appear to have thrown a dart at 37.5% assuming constant what until yesterday seemed to be subdued metrics are preserved. My observation is that whatever ones view of the % involved that can be applied to the Adj EPS (16p) and Statutory EPS (13p) to provide some sort of starting point for a substantiated view. So taking, say 25% below would point me to around 12p adj EPS and 10p (statutory), Board has also said it wants a higher Dividend cover from the current 1.6x (DPS is 10p) and I have taken that to mean 2x. Pulling all that together and applying the PE of 10x (only ...until they can address the challenges and get back to growth) and Div yield of 5% with 2 x cover (implying a dividend cut to 5-6p) I get to a value in the region of 100p - 120p. If the 'materially' is only 10-15% then my view of the range would go up accordingly.

Anyone got any views?......other than wondering how this BOD invested into a region that they now recognise is a material problem whilst at the same time letting us know that there are a few firecrackers going off in most of the other businesses as well - notably employee instability looks a real problem and this is a people business through and through!

£1 might be a reasonable guess at fair value - but who knows. IMO far too much uncertainty to assess whether they can deal with the fires and therefore what a stable share price base might be.

Col D - just to correct a typo in the opening line of your post..... "I would view RBC note as bullshi*....".

I have a solution for our log-rollin cousins. If they put their TP back to the 40p which they only recently guessed at (and which they now appear to be fessing-up they got wrong by some margin) that would sort out their problem with the debt to market cap ratio.......

If they succeed then I will be averaging in further accordingly. Also agree that the debt / market cap ratio comment was ill-based nonsense......especially when you are using an EV:EBITDA multiple valuation approach.

You have to laugh at the way the brokers catch up after the event. You either take the view that (a) they are usually no better at looking forward than anyone else OR (b) we already had a range from 25p - 32p from 2 other brokers so this does not change much. My own back of a fag packet numbers for Jun 2020 (which will be equally vulnerable) is for EBITDA of $200m, debt around $500m and an EV : EBITDA multiple of 5x which gives a SP of c45p. (RBC appear to be using $186m / $553m / 4.5x). The EBITDA difference is one or two good finds. The key in the upcoming results is to gain confidence that capex will fall substantially and be able to reduce debt by $50m+ in next 12 months.

Yes - happy days at BCN where I have waited a long time (and averaged down a long way!). Similar experience here at PDL. I also think the debt challenge is overstated at PDL now that the covenants have been relaxed....... provided that (a) market prices do not soften too much more (b) synthetics do not substitute for the real thing (c) bulk of capex is behind them (d) Political risk does not worsen. If so then in next 12 months my broad estimate is for $200m EBITDA less $50m interest, less $50m capex leaving $100m of cashflow for debt service. Debt ratios look fine on that basis.