China Nonferrous Gold Share Discussion Threads

[celeritas] 27/1/2022 12:54

I'm expecting a huge push to gold, the fed are talking nonsense. Interest rates have next to no room to maneuver, long gone are the days of 6% when the world is swimming in debt.

[hari] 27/1/2022 09:46

Well someone spooked with a small drop in Gold this morning ?I am reading Gold to go higher this year I think the Fed is making a mistake with its actions , time will tell

[mattjos] 26/1/2022 11:46

someone had to pay over for just £8k line of stock an hour ago because whatever is offered at 10p seems to be being snapped up

[jailbird] 25/1/2022 21:19

Hari,

As discussed

I have just seen this on Horneblower, HB's thread( maybe some of you follow him too)

post 7635 posted today



He feels a significant rise is coming in Gold

[mattjos] 25/1/2022 16:32

back again with 1 share MKT order for the closing auction to try and close it down for the day again

[mattjos] 25/1/2022 16:24

suspect Gold will go higher, cel

[celeritas] 25/1/2022 15:47

Gold prices are certainly helping. Currently $1845

[fozzie] 24/1/2022 19:33

My only blue share today out of 34 stocks held 😳

[hari] 24/1/2022 16:11

So I make that £297m EV after that RNS with 1.355 dollar rate

[hari] 24/1/2022 12:20

RNS

Mon, 24th Jan 2022 11:53



China Nonferrous Gold Limited 中国377;色黄金有&480;公司

(“CNG” or the “Company”;)

Execution of Bridging Loan Agreement

Update on COVID 19

China Nonferrous Gold Limited 中国377;色黄金有&480;公司 (AIM: CNG), the mineral exploration and mining company currently mining the Pakrut gold project in the Republic of Tajikistan, is pleased to provide the following update:

Bridging Loan from CNMC Trade Company Limited

The Company has today executed a loan agreement with CNMC Trade Company Limited (“CNMC Trade”) for a loan of up to USD $34.55 million (the “CNMC Loan”). This CNMC Loan will be used to repay the existing China CITIC Bank Corporation Limited (“CITIC”) bank facilities of USD $34.55m (being USD20m advanced in January 2021 (“First Loan”) and USD14.55m advanced in March 2021 (“Second Loan”), as set out in the announcements dated 22 January 2021 and 8 March 2021). It has been agreed that as soon as the facilities are repaid CITIC will enter into a new loan with the Company, and a further announcement will be made in due course to confirm the same.

The total amount of the CNMC Loan is USD 34.55m with 3% fixed annual interest rate. The maturity date of this loan is the 30th day after the actual drawdown date. There are no other fees payable to CNMC Trade under this CNMC Loan.

Approximately US$20m of the CNMC Loan will be drawn down today and repaid to CITIC bank to repay the First Loan and a further US$14.55m will be drawn down shortly to repay the Second Loan.

The Company will repay the total amount of the CNMC Loan as soon as the new CITIC loan is entered into. The Directors advise that the requirement to repay an existing loan before a new loan is taken out is not an unusual condition of Chinese commercial banking.

Additional Information

Whilst the Pakrut Gold Mine Project continues to progress well but the Company still needs to service the outstanding loans, expand operations and work on efficiencies at site.

Summary of Current Financial Position

At the current time, excluding the new CNMC Loan, loans drawn down by the Company amount to c. USD$319 million, this includes US$99.55m of banking facilities (unaudited).

COVID 19 (Omicron) Update

The Company confirms that they have taken appropriate steps to ensure that staff at protected at site, and that to date operations at the mine site at Pakrut continue as normal. Further updates will be provided if the situation changes.

Related Party Transaction

The Company’s major shareholder is China Nonferrous Metals International Mining Co., ltd (“CNMIM”), which holds 38% of the issued share capital of the Company and China Non-ferrous Mining Corporation (“CNMC”) is the major shareholder of CNMIM and CNMC Trade. Accordingly, CNMC Trade is deemed to be a related party under the AIM Rules.

The directors of the Company with the exception of (i) Yu Lixian who is the chairman of the board of CNMIM and; (ii) Zhang Hui who is CEO of CNMIM, and (iii) Wang Xiaohua who is the director of Finance Department of CNMIM, consider that having consulted with WH Ireland, the Company’s nominated adviser, the terms of the CNMC Loan agreement are fair and reasonable insofar as the Company’s shareholders are concerned.

[hari] 24/1/2022 07:18

Thanks that is fantastic Mr Chips's EV of $412m is probably correct at the time if asking , so reducing daily at the rate your mentioned Do you know what the EV/EBITDA ratio is ? I read under 10 is the ideal figure to reach .

[mattjos] 23/1/2022 21:50

current exchange rate is GB£1 : US$1.355 therefore EV is £301.1m or US$407.99.

[mattjos] 23/1/2022 21:38

Chaps, am on different laptop right now and stupidly did not upload my CNG spreadsheet to the server for sharing.
Will show my findings as to how EV has changed over time during the week.

For those with access, you can use Stockopedia to produce a report and circa three prior years of reports are also accessible .. each one shows MKT Cap, EV & Net Debt (albeit Net Debt only tends to change when company publishes financial statements.
Bit frustratingly, MKT cap is reported in GB£ whilst EV & Net Debt are reported in US$ but, easy enough to square the values up.

I'd welcome any other valuation methodology but, when the debt repayment cycle commences, I am firm believer that the interplay between Mkt Cap & Net Debt which gives the EV is the most reliable method to value a business.
It's also a decent guide as to at the company would make in the event of a takeover.

[jailbird] 23/1/2022 21:27

HariIf I use Mattjos' forecast that another $30m debt will be paid this H1 ending Dec 2021 then EV at today's price will become $364mDo you concur Mattjos?

[jailbird] 23/1/2022 21:21

Using the interims accounts ending June I make EV = approx $394m (using today's Mkt cap though )

[wanobi] 23/1/2022 12:08

yep, all good for much, much higher Gold prices, 2% won't scratch the surface of the rising inflation we are about to see,,,,, but what do I know, things always seem to do the opposite of what they should do, or should I say, what I think they should do :-) LOL :-),,,,, so, all I can say really,,, is that, I've put my money where my mouth is Hari :-) GLA LTH's....

Cheers
Wan :-)

[hari] 23/1/2022 12:07

Mattjos,

What is your EV value, I just read CHIP's thread and see the table of stocks.
He has CNG EV at $412m( Ev $m ~ Enterprise Value (MC+Net Debt)

His valuation calculations are all over my head to be honest

[hari] 23/1/2022 12:02

I not sure what you guys think Gold will run to, but maybe reach the previous high of $2060 is possible but i do not see silly figures banded about.
I think $1860 is the break out price?

Just listened to a podcast and how politcis is all about short term decisions. I see Fed raising rates no more than upto say 2% over the year, Biden wants Def to tackle inflation as he has mid-term election to win at the end of year. They cannot raise rates any more than that as the trillions in debt will become too expensive in interest to pay back...they have run out of tools now..it will then go back to dropping rates and print money to stimulate growth again

[celeritas] 23/1/2022 11:12

Debt paid down should slide across to the mkt cap. I think you understate the potential here mattjos especially if gold goes on a run. The transfer to mkt cap/sp would be huge.

[wanobi] 23/1/2022 09:24

thanx Mj, cheers Wan :-)

[mattjos] 22/1/2022 17:29

Have spent hours today going over my research and stats.

Even though I believe I am likely a bit more familiar with the company than many others, it has not been at all easy to value this company for quite a considerable time & it's share price has tended to move about according to the waxing and waning of investor sentiment rather than any one particular valuation methodology.

As I commented on Chip's thread back in Jan 2020;

"During the period, the company served official Notice that the Pakrut mine was now fully Operational & it was therefore obliged to make some significant changes on its balance sheet.
$389m was Transferred in to 'Producing Mines' & that figures is only now subject to Depreciation (previously this sum was constantly rolling up according to mine development expenditure and not being depreciated).

Therefore, this is the first set of accounts according to the new 'In Production' Phase of the project.
We are further advised that the depreciation rate for the mine will be based on the unit of production method & that this resulted in a $5m depn. charge for the first 6 months of production.

The Accounts were therefore whacked with their first Depn. charge on the Mine & furthermore, we are told that this rate of Depreciation is now, and henceforth, calculated on a per unit rate ie. the more the mine actually produces in the Accounting period, the greater the Depn. charge is going to be in said period.
Clearly different from a simple straight line methodology

Therefore, I actually want to see this figure get much bigger even if it appears to negatively skew the headline figures:

$389m value of Producing Mine
$5m Depreciation Charge for the 6 months period
389 / 5 = 77.8 periods of deprecation remaining at that rate of utilisation.
That is 77.8 Half Years or 38.9 Full Years

(BFS LOM is 19 years so, they will clearly be ramping up production as current financial utilisation rate shows them not even managing to recover their pre-production mine CAPEX over the LOM).

Therefore, i certainly expect to see the Depn. charges grow & the headline figures to appear a bit goofy for at least another 2 HY periods until the reporting timeframes are compared L-for-L.

Until then, I believe it makes more sense to concentrate on the cash generation from the operation and certain other operating metrics.."


For many potential investors, the lack of Quarterly reporting, lack of AISC figures, Debt loading, concentrated equity ownership by CNIM & the rather 'unique' metrics used to report on the Pakrut operation are all considerations that mean the vast majority just don't look any further & quickly move on and I completely get all that but, I don't believe it means one should not at least have a stab at valuing the business - after all, it is a significant gold mine that has been constructed & now in operation .. it's value is somewhere between Zero and Infinity.

Once again, I come back to the simple Enterprise Value metric - simple metric that takes into account the Debt, the Cash & Cash Equivalent & the Market Capitalisation .. ie. what would it be worth were it 'For Sale'.

Reviewing all the EV values placed on the company (fortnightly) over the last 30 months and the P&L's + Balance Sheets since Pakrut commenced production, I believe the equity should have been valued at 15.5p / share as at end of 2021 & that the Mkt Cap element, of the Enterprise Valuation sum, was rising at the monthly equivalent of 0.96p / share / month.
That should rise to just over 1p / share / month during the course of 2022 as Interest on the Debt outstanding reduces.

(Assumes 382,392,292 shares in issue | GB£1 : US$1.36 | $1,780 /oz Gold | $60m per annum Debt repayment).

As per the BFS, the Gold Price is single biggest 'lever' on the business model and is followed by the overall Recovery Rate (which has been consistently improving since the mine went live) & Grade.

Unless anyone else can construct a more logical valuation methodology or, pick holes in mine then, that's where I'm at right now & why I believe this is currently undervalued.
The longer the Mkt Cap consolidates around 'the 10p barrier', the more undervalued it gets with every passing month.

[mattjos] 21/1/2022 23:27

could be fozzie. Whoever it is, has been patiently & cunningly accumulating stock here for quite some time now, from what i have observed.