Capital Share Discussion Threads

[yasx] 06/7/2022 14:17

DS,

I agree it is illogical not to attribute anything to these investments when they were rising but to fsctor them when they are on the decline - but, that is what often happens. Had they sold a fair chunk of them the cash would most certainly be recognised now. Having a plethora of nascent juniors was always bound to be heavily discounted since it is often difficult to sell them except when sentiment is extremely positive and because almost invariably most retreat and end up as failed investments.

But, at least the order book is strong at CAPD as noted recently by the Co. Hope that is reflected in the price at some point.

[dangersimpson2] 06/7/2022 14:09

They were selling down FFX, but if they had sold more they would have missed out on the Leo Lithium stake. Their LLL stake is worth more than the FFX stake was when they started selling down so don't think we can be too critical here.

The PDI stake they clearly are getting lots of explo/infill drilling contracts out of, and probably hope that by holding they will get long-term production contracts in the future.

The market never marked these stakes to market on the way up due to their strategic nature so logically they shouldn't on the way down. This isn't exactly a logical market though!

[yasx] 06/7/2022 14:02

Quite why they never offloaded more of these investments at a time when sentiment was extremely strong baffles me - it was inevitable that this would happen sooner or later as I oft repeated on here. Had they done that, they would now have cash at their disposal to use if required.

[dangersimpson2] 06/7/2022 13:53

Yes, FireFinch have struggled with cost increases and the ECOWAS sanctions. Sanctions were lifted this week so we can expect some return to normality in the medium term.

This has placed pressure on Firefinch's working capital, hence they have sold all the Leo Lithium that isn't subject to lock up. FFX will remain suspended until they can raise fresh capital from the market - not easy in the current markets so expect a big discount.

In terms of direct impact on CAPD - Exploration has been put on hold at Morila so that will be a small negative impact on CAPD in the short term. Although developing a new mine plan may well drive some incremental infill drilling work.

The other impact is, of course, the valuation of their stake in FFX. Before suspension, it was worth just over $2m and we can assume it will be worth quite a bit less going forward - at least until they sort these issues out. The interesting thing will be if CAPD helps bail them out. If they do, I'd expect them to demand extended drilling contracts or something similar in return as well as getting a potential low price on any fresh capital injected.

Overall probably about $2m short-term impact for CAPD out of a forward EBITDA of around $80m. The medium-term impact could be a few $m more, but with the potential to be a net positive if/when there is a recovery. So not really material compared to the current daily moves that are simply market noise.

[podgyted] 06/7/2022 13:17

Missed these 2 so it does look like Firefinch has (hopefully) a temporary problem.

[podgyted] 06/7/2022 13:02

Firefinch seems to be struggling or am I misreading this?

[dangersimpson2] 04/7/2022 10:02

Moving up on lots of small buys. Suggests the forced seller may have been cleared.

[rivaldo] 01/7/2022 12:58

Berenberg have today raised their target price slightly to 156p (from 154p) and say Buy:

[rimau1] 30/6/2022 14:10

Good day to top up sundance! Imagine the rise if markets were not imploding?

[sundance 13] 30/6/2022 11:55

Bad day for good news unfortunately, at least it's up!!

[hpcg] 30/6/2022 10:14

Adam - for me it's the duration of the contract at that size that is more consequential than any incremental improvement. Fekola is new territory and offers the possibility of further growth.

yasX - it is a 98% down day in London, based on the current state of the FTSE100 so the response is excellent. As you have said before this doesn't get a high rating, so I am not expecting much when the market is under pressure. There are plenty of small cap investors that won't touch mining services in Africa; they'd rather cluster in quality compounders like asset managers, Best Of The Best, Games Workshop and the like. To be fair I'm going to buy GHE once markets turn, and I'd like to buy GAW at a reasonable price, but right now there are much better sterling cash returns coming out of CAPD. A low price plus surplus cash generation is fertile ground for an effectively run buy back program, so I hope we see that.

[yasx] 30/6/2022 09:09

Subdued reaction to a very good announcement in fairness....

[adamb1978] 30/6/2022 07:41

Very nice update! Would have been more interesting to understand how much of the $150m is genuinely new so that the impact could have bee more accurately assessed, but positive nonetheless

[rivaldo] 30/6/2022 06:34

Great news as regards (1) the statement about "very strong demand", (2) the securing of $150m of revenues from Anglogold and (3) the new customer and contract win from B2Gold plus the MSALabs extension.

The revenue visibility going forward for CAPD is now extremely large following the Anglogold contract win. The markets should respond well to this.

[hpcg] 30/6/2022 06:31

Its the Fekola contract which is genuinely new.

[livewireplus] 30/6/2022 06:28

So the trading update for the six months to 30 June will be on 19 July. Look forward to it :-)

[chillpill] 30/6/2022 06:24

Has been harshly sold off with the rest of the market. Looks like still going gangbusters.

[sundance 13] 30/6/2022 06:11

CAPD - new contract award with Anglogold Ashanti:"It is anticipated to generate $150 million over the three year contract term, making it the second largest award of new business in the Company's history.""Capital will be announcing its trading update for the six months to 30 June on 19 July. Jamie Boyton, Executive Chairman, said:" We continue to see very strong demand across the market and today's announcement is testament to that."Nice hint that we can expected a positive update next month!!

[phillis] 29/6/2022 12:56

Of course it won’t

[indiestu] 28/6/2022 20:03

I guess it depends on whether Switzerland are willing or able to prove that their refined product is not Russian base in origin. If nobody is prepared or able to buy Swiss refined gold due to uncertainties of provenance then the market is likely to collapse.

[kaizenkid] 28/6/2022 09:32

Goldenrim resources +30% in Australia - sold an asset which will provide funds for exploration. "With the sale funds from these projects, we can accelerate our activities at Kada and ensure aggressive drilling and exploration to build our resource base without further dilutionary capital raising for the foreseeable future. This is a great outcome for our company and shareholders, and we are excited to
deliver it.”

[podgyted] 26/6/2022 21:11

?? So presumably the price of non-Russian gold will rise.

[indiestu] 26/6/2022 20:39

Gold is now a dirty word. It's a long gold bear ahead.

[indiestu] 26/6/2022 20:38

https://www.cnbc.com/2022/06/26/g-7-nations-to-announce-import-ban-on-russian-gold.html?