So
Kirkland Lake Gold (KGI)) have concluded the "Strategic Review" and
the conclusion is: While the Company received several expressions of
interest, a transaction did not materialize. Well
I am no mining analyst merely a trading perspective but lets face it, if you
“cannot find a buyer for exceptional value at low cost” there are only so many
reasons why:
- The market is suffering a depression and not valuing opportunities.
- There is better out there in terms of assets.
- It was not marketed in a way that parties did not see the benefits.
- The acquirers (potential) wasted the time of the management.
- The asset is not worth anywhere near what shareholders would expect.
- Its going nowhere…
- Another reason?
Admittedly, I haven’t looked at this company for some time so I'm making a number of assumptions about costs. Yes things are improving but I cannot help but wonder if "small scale mining is outdated".
What has been shown is they are able to reduce their costs, but that's based on a headwind of consistent grades and achieving their forecasts. Something that potentially interested parties do not have a belief they will be achieved or a sale/merger would be ensuing now.
The stock has travelled up significantly, but for me it's time to face facts after today. KGI is significantly ahead on any potential it has, and most certainly ahead of any likely dividend payouts. So when will the market re-rate? I believe today's RNS on the strategic review will be the start of it, but it will need momentum before this is confirmed.
EMED, Leggie et al, will be waiting for the market to recognise the value of
the final permit . One can hope there leggie, however if you look at the
volumes, it looks to me as though parties are selling down those cheap shares “whilst
there is support.” The timing of such an announcement didn't assist things either...people looked, thought "this is good news" and then went to the pub!
What
surprises me is the obvious shorts appear missed by most. What was difficult to
work out with Intu Properties Plc Publication of Prospectus for Rights Issue. Firstly there was
Barclays, where to quote one chap, "I'm bloody daft and I'll lose the
shirt off my back" when discussing Barclays as a short.
Now we have INTU Properties with 2 for 7 shares at 180 pence coming to market. It's not rocket science in terms of parties flipping is it? No wonder its underwritten at that price...Well it would appear so, especially as the Rights Issue is so heavily discounted. yes the companies progressing but forget all the fundamentals and just look at the SP, when it was announced it hit £3 ish, so its on-going and guess what it hits today? 282 ish. So is it "based purely on probability going up or down? Common-sense prevails.
Now we have INTU Properties with 2 for 7 shares at 180 pence coming to market. It's not rocket science in terms of parties flipping is it? No wonder its underwritten at that price...Well it would appear so, especially as the Rights Issue is so heavily discounted. yes the companies progressing but forget all the fundamentals and just look at the SP, when it was announced it hit £3 ish, so its on-going and guess what it hits today? 282 ish. So is it "based purely on probability going up or down? Common-sense prevails.
Similarly
Royal Sun Alliance have done what? Just a thought, sometimes trading negatively
is no more than common sense. Just as I’m typing this, a decent shorter
comes out the woodwork GuevouraFund Limited Short-Selling Disclosure has a small position, I assume it’s a
hedge but either way will make significantly post Rights Issue. Would you be
long? I certainly wouldn't at the moment without a 3 for 8 or similar hedge.
i.e. the best of both worlds :-).
The final thought of the FT Article Glencore closer to iron ore ambition By Katrina Manson in Nouakchott and Javier Blas in Geneva. Common sense prevails here, there’s a startling over-supply growing
and as such this does not bode well for this African Project.
GLEN may well know Africa well, however just look at the issues Rio Tinto and Vale have had in Guinea albeit the transport won’t be as “bad a problem” as Rio and Vale suffered. With the quality of the ore, GLEN are surely looking long beyond the surplus issues? The Glut to market could have significance to all producers as every MT’s surplus must be near 50 cents of Iron Ore? Just a fag packet calculation. Glencore went hard into Coal, Crash, now the same for Iron Ore? Hmmm
GLEN may well know Africa well, however just look at the issues Rio Tinto and Vale have had in Guinea albeit the transport won’t be as “bad a problem” as Rio and Vale suffered. With the quality of the ore, GLEN are surely looking long beyond the surplus issues? The Glut to market could have significance to all producers as every MT’s surplus must be near 50 cents of Iron Ore? Just a fag packet calculation. Glencore went hard into Coal, Crash, now the same for Iron Ore? Hmmm
All
the best, Fraser
As a postscript, I wonder what the issue is with Rurelec's listing? I do wonder if it's easier to sell a bargain basement story at 4p to a market than all in around 10+pence. It will be 2 months post the award whereby Rurelec are left with £10M give or take. Bolivia are likely to be Electioneering soon which won't bode well for prompt payment.
It's always nice to see a company in the throws of being clubbed by the bank, something that GKP needs within 4 weeks was my estimates (cash). I'm trying to remember my commentary on the report into reserves, but it was something along the lines of "why wouldn't you get a well-known firm to do it." Well it would appear they listened and so did the market.
Fraser
ReplyDeleteHi- tech seems ok since FTML so perhaps it was at their end.
Re EMED- Apart from poss top slicing, if the mkt gets too giddy, Im long long here and in for production and the cashflow options here. I know that there will be trading opportunities for the alert and nimble but I prefer my tortoise approach v the trading hare and no doubt I will have to ignore the permits/cash call rollercoaster effect on the share price for the next 2 years. Heaven alone knows what the copper price will be by the time the revenues start rolling in but I have them down as low cost operators and the current price seems fair for where they are now.
Re RUR- not sure what the delay is but perhaps they want to have the Bolivian cash in hand before they list in Santiago, as this will help their rating no doubt. They don't want to list there and find this issue holds back new investors, I presume. Just my distant thoughts, the management seem to be perplexed by the delay in any case.
I must read that iron ore piece now- GLEN have half of ZIOC stock and a DFS due shortly plus a fair sized chunk of DSO too, so I may to look at them again.
Cheers. The Leggie
RE RUR, its funny you say that because I was reckoning a placing at 5p just yesterday.
ReplyDeleteGiven the current news flow (Santiago isn't happening, AIM issues ?, Bolivia (as you rightly pointed out too me months ago) could take up to 6 months to receive funds from, even zero Canchayllo news which was due Q1, then gut feeling screams to me the £1m they had left at the award, is slowly dwindling away... Fund raiser coming me thinks.
On a side note, taking Pendragon (PDG)`s , in my own humble opinion "disappointing" after sales growth, and even not so sterling 7% growth on used car volumes, having had time to digest the year results from Feb ( I know a tad bit late), it shows exactly why their languishing 10% below results.
Take a look at lookers(LOOK) for example, 20% increase in used car volumes and 4% increase in after sales and the opposite results of PDG, looks like someone got it right !
Given Vertu (VTU) are due too announce on 7th May the yearly results and the pre-close update was that used volumes are up 11% and after sales results up 5%, their is potentially some mileage.
Fraser/Olli
ReplyDeleteZOX- an April Fools joke, I hoped..... but alas they have run out of money again and the begging bowl comes around at a 37.5% discount for an immediate £1m, with a poss £4m via an open offer to follow. The process still hasn't been perfected- Im not convinced they have a tech solution, looks like firefighting from that RNS, so more repairs needed- they have always known it involved v high wear and tear on the components and they still haven't cracked this yet, with more repairs necessary and only a few months of prod promised when this is done, so perhaps they need to remodel on prod over 6/9 months a year output and allow for the repair costs and downtime on an ongoing basis. They have targeted 15k tons per month (175ktpa) and have peaked to date at around a fifth of this level. The share price move down to 11p or so looks about right for now, but the tech risk has reared its ugly head again.
Cheers. The Leggie