Pure Gold Mining Share Discussion Threads

[camerongd53] 18/10/2015 19:28

I bought these shares last year at just over 8p (80p on consolidtion). I have sold them at 167p. I am happy to have doubled my money in a year
My view is that if there is a distribution of 145p then the value of the rump (Prescott) is worth approx 25p. I don't think on the basis of the earnings disclosed in the recent accounts that they are worth this. time will tell what they are really worth.
The rump company is probably of a size that is not really viable as a listed company. Could be taken private or taken over. I am surprised that the company did not mention this in their results statement

[puffintickler] 18/10/2015 05:57

That has been my logic ever since the return of cash was first announced. Since then the csh return has increased and the uncertainty diminished. The current share price still has a big "I can't believe it" factor holding it back, perhaps this is not so surprising as the percentage return is modest because of the huge cash element.

[alan@bj] 15/10/2015 16:39

Investors Chronicle have just issued an artice in which they state that "Broker WH Ireland has suspended forecasts, but values Pure Wafer at five times last year's cash profit of $3.3m. That equates to 36p, or a 14-36 per cent premium to the current share price, adjusting for the return of capital."

IC's summary view is:-

Pure Wafer's shares are still trading at a 9 per cent discount to net cash and an 18 per cent discount to net assets. Arbitrage seekers have piled in this year - perhaps following our buy advice - and there will presumably be a big sell-off once the capital is returned. But even at the current price the Arizona operations are being valued very cheaply. The anomaly is still there. Buy.

[hutch_pod] 15/10/2015 16:31

I was a bit surprised at the chunky US tax charge of 890k, but even if that continues, $1.4m PAT / 3p EPS seems plausible for 2016 ($2.3m op profit maintained with no finance costs and .9m tax charge) , alongside c30p /share worth of cash (after 1.42 distribution with max dilution).

[hutch_pod] 15/10/2015 16:06

Seems to be - 3.4m dilution, giving 31.8m (note 7)..

[sharpshare] 15/10/2015 15:47

Look at note 23 in the latest annual report. Percentage warrants for senior management seem to be outstanding for 13.01 percent of the outstanding issued share capital at 20p each.

So could another 28,949,102 x .1301 = 3,766,278 shares be issued before the cash payout?

[sailing john] 15/10/2015 13:51

Blue - there are 29.2m shares in issue plus some options
The 2.2m RBS warrants were cancelled in June at a cost of £2.15m

[blueskyventurer] 15/10/2015 13:02

Yes 4.5p is very likely with some growth, and reduction in management overhead,
but can't see the turkey's voting for Christmas.

[orange1] 15/10/2015 12:50

Prescott made 6.8c earnings in 2014, approx 4.5p. Woudn´t it be reasonable to expect something similar or better in the year to come?

[blueskyventurer] 15/10/2015 12:41

Based on FY16 estimates, after 140p cash return.

Total No Shares: 32.8M
Cash : $20M
Free Cash flow expected to raise to above $2.8M
EPS should above 3.5p per share
After the cash return expect to see a share price of 34p rise to 100p to reach fair value.


Just my estimates. would be interest to understand any other thoughts.

[stegrego] 15/10/2015 12:38

Surprised at weakness. Guess it's better to travel than arrive.

[flyfisher] 15/10/2015 12:01

I thought the warrants were bought back a few months ago.

[sharpshare] 15/10/2015 11:37

How many shares will there be in issue after the percentage warrants are converted?

[kardiff] 15/10/2015 10:33

The Prescott business was purchased for $11.2 (£7.25m) in 2007. It must be worth significantly more now with a very healthy balance sheet (after the proposed cash distribution) and continuing growth prospects. A sale for approx $30m would not be unreasonable, in my view, and this would suggest a potential further return in excess of 65p to share shareholders.

All looking good for moment.

K

[sailing john] 15/10/2015 09:20

By my calculations 145p distribution is $65m at current exchange rate

Leaving a massive $20m cash on the balance sheet and no debt

And a profitable business with a positive outlook

Agree they need a little trimming at the top

True value won't be seen until after cash distribution as new investors unlikely to want to put in so much cash against an uncertain timetable

Existing investors who don't need to sell can sit on their hands to squeeze the pips!

SJ

[puffintickler] 15/10/2015 09:00

...and neither is anyone else by the looks of things.

[puffintickler] 15/10/2015 09:00

I think the cash payout will be at least 145p, probably more to leave Prescott as a normally indebted business.

Still difficult to value Prescott but if you remove exceptional costs and reduce financial costs from last years results you still seem to get of 35p+ per share.

Once all the distribution is out of the way I expect the board to be downsized which will further raise profitability. Either that or there may be a predator who will pay well for Prescott in which case the board will disappear completely!

So overall value could be as high as 190-200p. I am still not selling.

[zoolook] 15/10/2015 08:36

A company doesn't have to be stuffed with cash to attract a buyer. The distribution is exactly the right thing to do in these circumstances

[flyfisher] 15/10/2015 08:33

Yes riddlerone, a geared predator may see PUR as a way to both ease leverage and add a profitable division at the same time.
A remote possibility, but who knows.

[eezymunny] 15/10/2015 08:10

They have c. 180p current assets less all liabs AFAICS with long term assets and all future profits in for free. Rather a hard one to value but somewhere usefully north of 180p IMO unless any funnies come out of the Swansea wind down - which doesn't look likely to me.

[riddlerone] 15/10/2015 08:03

I can really see a buyer coming in for this company now.If I were the CEO and I thought the same I would delay the payment,keep the now oversized board short term and sell the remaining business including the large cash sum after the balance sheet was clean.All IMHO

[flyfisher] 15/10/2015 07:41

I see a nav of 214p, with net cash of 189p.

Why are they only returning 140p - 145p.

[riddlerone] 15/10/2015 07:35

Important for short term growth
"Following the Swansea fire a few customers have proceeded with the qualification of Prescott so that production can be switched. Due to the comprehensive and time consuming nature of qualification processes the incremental volume did not materialise until the end of the year"

[riddlerone] 15/10/2015 07:26

Balance sheet now looks very healthy.Cash at bank approx £55m with a market cap £49m.Profitable business with high value to any potential buyer out there

[alan@bj] 15/10/2015 07:16

So, excellent performance, positive outlook, and 140p-145p special distribution confirmed, but we're going to have to be patient a little while longer.