Capital Share Discussion Threads

[shanklin] 15/7/2020 07:28

Now all we need are some share buybacks.

[shanklin] 15/7/2020 07:28

rivaldo,

Just a nudge? I had assumed you wrote that section of the RNS :-)

[rivaldo] 15/7/2020 07:24

Cracking stuff indeed :o))

As well as the very good numbers, the rather bullish outlook statement gives you an indication of how rosy things are looking going forward.

And CAPD have taken note of my nudge in including an entire paragraph on the rise in listed/unlisted investment values :o))

The listed investments have increased by $5.2m in H1 alone, bringing the total investment value to $17.7m - around 17% of the m/cap.

Great to see non-drilling revenues doubling year on year and now 11% in total.

On a single-digit P/E - even before taking the huge asset backing/net cash into account - there should be significant upside from here imho.

[qs99] 15/7/2020 07:12

Boom, cracking update

[rivaldo] 13/7/2020 10:30

Adam, I've updated the thread header post for CAPD's holdings in Mali Lithium and Tanga Resources, cheers. I've always deliberately excluded the holding in MSA Mineral Services as it's a private company and it's already accounted for as an associate.

You asked about the latest forecasts. The most recent note I've seen from Tamesis in March, with specific numbers and a 100p target price, had:

- 9c EPS, i.e around 7.2p EPS
- $134.1m revenues

CAP's downside is imo relatively well protected against many other PLCs, as it has substantial tangible asset backing against its £85m m/cap at 62.5p (as at 31st December 2019):

- $4.4m and rising net cash ($13.4m expected at the end of 2020)
- $12.5m of investments, split roughly evenly between publicly quoted and private companies
- $52.9m of property, plant and equipment, mostly drilling rigs

[rivaldo] 13/7/2020 07:42

Good news for CAPD from their large client CEY's Q2 update this morning - gold production was above forecast, they're on track to meet guidance, and projects progress is as planned:

[deanowls] 12/7/2020 12:24

Different models and rewards I guess. If I were doing the procurement for services I would 100% want to ensure that the company are making a profit, I would want visibility on what it was but I wouldn’t want them skimping when they are drilling and blasting rock. Africa is also a pretty big place and difficult to do business in, approvals, tax, local hires, etc. it isn’t as easy as rocking up and sticking a drill bit in the ground.

[adamb1978] 11/7/2020 20:42

Hello

I'd welcome the opportunity to pick the brains of someone who knows this space well. I've looked back at KPIs and the financials going back to 2012. Utilisation rate seems to closely track the gold price....which makes sense, and over 2013-2019 the utilisation rate has been around 50% when the gold price has been somewhere around $1300.

- How come a price war doesnt erupt given that CAPD and others have their drill/kit sitting idle somewhere? Why don't CAPD and other undercut rivals to win business even when the gold price is low-ish given that they have already spent the capex and winning that business is therefore relatively low cost (as capex has been incurred already)?

- ...or is it just that when the gold price is say $1300, demand from gold companies for drilling drops such that its not possible to win more business than is implied by the c.50% utilisation rate which CAPD have recently operated at?

- perhaps linked to the above, how long are typical contracts which CAPD sign? i.e. do they not want to commit to customers when the gold price is low given that terms might be significantly worse than when the price was high?

-...so given the price is now $1800, should we expect utilisation rates to ramp up to say 75%-80% as seen in 2012? What are people expecting for turnover and EPS this year?

A couple other details for the header:
- Tanga Resources: they own 13.3m shares
- Mali Lithium: they own 9.5m shares

Feels like this has a lot of downside potential - just trying to work out what the upside potential is.
Thanks

Adam

[adamb1978] 11/7/2020 19:15

Hello all

Had this on the watchlist for a while and finally getting around to going through the numbers properly. (So I reserve the right to post some idiot level questions in due course!!)

One investment which looks like its missing from the header and is somewhat material is mentioned in note 9 of the FY19 interims:

"During the six months ended 30 June 2019, the Group maintained its 38.76% interest in MSA Mineral Services Analytical (Canada) Inc. ("MSA")...the consideration for the acquisition was $2.9 million including transaction costs"

Its accounted for as an associate, so is part of the relevant line in the P&L.
Cheers

Adam

[miti 1000] 10/7/2020 13:10

The former.

[rivaldo] 10/7/2020 12:24

Nice one miti1000 - is that £200,000's worth or 200,000 shares if you don't mind the question?

[dangersimpson2] 09/7/2020 14:00

If you've just spent over £30k on shares you'd hope that you'd know the bull case pretty well already, but here are a few ideas:

- You need to look further back than the last 4 years for your historical context. Last time gold was above $1800/oz in 2011/12 the rig utilisation was in the 75-82% range, I don't expect it to get close to that in the near-term but with the move of rigs into West Africa this should grow from the current 58%.

- At the end of 2011 they had $14.6m net debt. Now have $4.4m net cash and a listed securities portfolio worth $12m at current market prices, having spent $8m on growth capex last year, to support new contracts and the new load & haul operations. There are enough growth opportunities without needing M&A.

Regardless of any significant growth they currently trade on a forward EV/EBITDA of around 3 which I'd argue was potentially undervalued even if in a no-growth scenario. Their presentations often contain an analysis of competitors for whom the mean EV/EBITDA is 6. Capital also has one of the youngest and best-maintained fleets.

[shanklin] 09/7/2020 13:51

The difficulty is that the seller appears to have no interest in what CAPD is worth. They seem to just want to dribble their shares out at around current levels.

[gleach23] 09/7/2020 13:45

Seems a bit odd to claim you bought 50k when you haven't even read the report to realise this. No wonder you have deleted your post.

Another 50k buy reported from this morning and the underlying Bid continues to creep up slowly...now @ 60.33p

[miti 1000] 09/7/2020 13:15

Good idea, will do. Thanks.

[catsick] 09/7/2020 13:06

Utilisation rates are still very low, read the annual report ! they have loads of drills not in service, with the gold price rising there will be huge demand and rates and utilisation will both rise...

[rivaldo] 09/7/2020 12:29

After that 50,000 buy at 62.2p, the maximum amount available to buy has now dropped to 30,000 at 62.2p.

[catsick] 09/7/2020 11:18

They ramped up the drill for equity at exactly the right time !

[qs99] 09/7/2020 10:05

nice thanks Riv. I don't think the market fully understands the holdings it has or indeed the upside potential as gold miners start making some serious hay!!! DYOR

[rivaldo] 09/7/2020 08:43

Online has improved again. Now you can buy a maximum of 50k shares at 62.5p, whilst you can sell 35k at 60.26p.

The gold price is now up to $1,810.

And CAPD's holding in Mali Lithium has surged - the share price is now AUD0.013, against the 0.008 cost price, so CAPD's $900k investment is now worth $1.46m, or £808,000.

[gleach23] 08/7/2020 12:16

A tick up to 60-66 and one could buy @ 61.9. Just as I was mulling over a trading top up a buy of 20k came in and nudged up the underlying Offer as the market quote moved to 60-63.

Prior to the 20k trade one could buy over 225k but now it's around 55k. Can sell plenty so going in right direction stock availability wise (for the moment).

Unless there's a Covid delay, based on previous years we should expect a TU any day now. Last 5 years the TU has been 8th, 7th, 10th, 10th, 17th.

[rivaldo] 08/7/2020 10:51

Yeo, gold is up to around $1,800 now.....and we have a tick up here.