Capital Share Discussion Threads

[deanowls] 24/8/2017 16:20

Them Tanzanian boys work pretty fast, if only it were like the Egyptian legal system!, I expect they will align with a connected local for a slice of the tans business which if they move fast would actually give them opportunities as first movers if the ban comes in full force.

[valhamos] 24/8/2017 16:13

"particularly as its 2 Tanzania contracts involve drill work on mines unaffected by gov's new rules"

presumably the "new rules" being referred to here is the Tanzania government's ban dated 3 March 2017 on the export of metallic mineral concentrates which affects Acacia's two other mines (not North Mara where CAPD operates which does not export mineral concentrates - AngloGold Ashanti's Geita mine is likewise unaffected).

However these Tanzanian contracts are affected by the legislation in July concerning local Tanzanian shareholding in the mining sector and the exact implications are still being considered.

[rhomboid] 24/8/2017 15:58

The key issue is Acacia apart we don't know what corporate structure they'll need to adopt for Tanzania & what they'll lose in profits as result, until that is clarified c. Half of half the profit is in jeopardy, I sold my last slug at 36.5 so I'm naturally out of step with the market in my risk aversion 🙄It's a good business in a v difficult part of the world.

[gleach23] 24/8/2017 15:52

The article was more balanced than my snippets might suggest - I only picked out what I thought hadn't been discussed on this board previously.

They did also mention that some downgrade in share price was warranted as additional work in Tanzania may be harder to come by in the near future as miners could be cautious about spending until there is a resolution with the gov.

I'm also conscious of rhomboid's comment that Tanzania represents 40% of CAPD's revenue, although the article did echo your comment rivaldo about them plenty of work in the very same 3 countries that you mentioned. Maybe someone at Shares reads this board? :)

[deanroberthunt] 24/8/2017 15:51

target price 0p

[lord gnome] 24/8/2017 15:28

Yes, delighted to read that gleach23. Can now look forward to a recovery in the share price. 5-6x EV/EBITDA would equal a share price in the range of 100 - 120 which makes Finncap's target of 109 look right on the money. Still too much in my view, but who am I to argue with experts? WTFDIK?

[rivaldo] 24/8/2017 15:03

Cheers gleach23, that's good to hear. I hadn't realised that their Tanzanian contracts are unaffected by the new rules. That's even more reason for this share being well undervalued.

[gleach23] 24/8/2017 10:35

As I began to suspect, today's buying explained by a Shares mag write up - in fact it's a full page write up. It is after all one of their Top 10 tips for this year but happens to be over 20% down for them to date.

Interesting snippets for me -

- severity of downgrade in share price has been an overreaction, particularly as its 2 Tanzania contracts involve drill work on mines unaffected by gov's new rules
- if share price remains this low CAPD will soon become a potential target for an opportunistic takeover
- Broker Tamesis says CAPD now trading on 2.1x EV/EBITDA, significantly below the 5-6x at which established service companies should be trading

[lord gnome] 21/8/2017 19:10

I would certainly hope so rivaldo. Finncap's target of 109p looks a bit optimistic to say the very least. That would put CAPD on a PE of 20. Not very likely. I'd settle for half that.

[rivaldo] 21/8/2017 12:30

Finncap have retained their 109p target price and forecast $23.9m EBITDA this year rising to $28.4m EBITDA next year (equating to 5.5p EPS), against a £53m m/cap.

They also see a $3.78m cash pile at the end of this year, rising to $8m at the end of next year.

The key point here is that despite the Tanzanian situation and therefore reduced revenues estimates, CAPD stated that they expect to achieve existing profit expectations.

IMO the share price will continue to bounce, especially given the excellent tangible asset backing and generally optimistic and solid environment now around copper and gold. Plus the variety of new contracts won by CAPD in H1 in the likes of Mauritania, Mali, Egypt etc.

[pugugly] 17/8/2017 10:25

Caution - finnCap House Broker - usually rose tinted glasses. (imo)

rhomboid - Excellent point re Tanzania at 40% of revenue - had not spotted it was such a large %age - Agreed watch only

[mfhmfh] 17/8/2017 10:03

finnCap tp re-iterated at 109p

[mfhmfh] 17/8/2017 10:02

hxxp://www.capdrill.com/media/investors/Presentations/CAPD-H1-2017-Results-Presentation_Final-20170817.pdf

[rhomboid] 17/8/2017 09:37

Agreed very upbeat ... but Tanzania as a whole is 40% of revenue and until the local partnership structure is clear we can't see what the loss of profits will be and there remains the possibility of asset confiscation by Tanzania govt of Acacia assets. I wouldn't rule out issues emerging around repatriation of funds or drilling rigs from Tanzania either.

Still it goes back on my watchlist

[darlocst] 17/8/2017 09:25

Listening to the conference call. Extremely bullish management commentary, highly supportive environment and business has been very positive in last 3 months. Margins are improving. Drilling opportunities opening up beyond just gold sector now.

Optimistic that production mining at North Mara site won't be affected in Tanzania - this is not the site affected by concentrate dispute. Makes up circa 10% of revenues.

Dividend been set conservatively due to Tanzania uncertainty but actual cash generation would support a much higher payout.

Been listening to these calls for last few years, most positive I've heard in all that time.

[rhomboid] 17/8/2017 08:29

Resilient numbers given Tanzania backdrop, not enough to tempt me back in though as I'd like some clarity on Tanzania first, which will no doubt see the shares move sharply higher if it's positive

[mfhmfh] 17/8/2017 08:25

increased revenue guidance in Q1 update from May of $120 - $130 million retained although will be at the lower end. previous guidance was of $105 - $112 million.

[pugugly] 17/8/2017 07:57

Better than I expected - but agreed with gleach23 PLUS general pressure on exploration budgets and downward pressure on contact pricing.

[gleach23] 17/8/2017 07:54

Yes such a shame about Tanzania. Given the situation there and ongoing uncertainty, the outlook statement is about as good as we could have expected. Looks like being marked down from the bell though.

[sleveen] 17/8/2017 07:14

Great results, Tanz still the fly in the ointment.

[mfhmfh] 16/8/2017 17:12

half year results tomorrow...

[thepopeofchillitown] 31/7/2017 08:36

Next step is to nationalise all foreign companies

[thepopeofchillitown] 31/7/2017 08:33

Good question gleach. I believe the board should have issued a statement detailing their exposure in Tanzania and what impact it would have. If it was upto me I'd a just pull out of Tanzania entirely removing the uncertainty and taking the hit on the chin. It's down nearly 50% in the last few months. Let them find the minerals with a bucket and spade. Africa as a continent has learnt nothing in the last 50 years. Still cannot see past their noses.

[gleach23] 25/7/2017 23:25

So it was some of your sells I was following on Fri :)

Thanks for being open about your trades. It'll be interesting to see where we go from here but I'm keeping the faith with the remainder I have...at least until the interims and/or news on Tanzania, which as you say feels rather uncomfortable just now.