China Nonferrous Gold Share Discussion Threads

[mattjos] 06/7/2021 08:18

Tiny spread

[ironstorm] 06/7/2021 07:54

Hi Joey not missed out out on Aaz - been holding since 30p. Got all those juicy divis.

I am gonna have a look at selling something else that has promised loads and not delivered.

[wanobi] 06/7/2021 07:41

Good morning all,,,, great posts/debate here yesterday, many thanx guys, very much appreciate by me and many others I'm sure, cheers Wan :-)

[mattjos] 06/7/2021 07:16

Gold back over 1800 this am

[joey wilson] 05/7/2021 21:43

It looks like you missed out once with AAZ...Do you want to miss out again??Looks like a similar story to me. Maybe more risky, due to the amount of debt, but may just be more explosive, over time than AAZ.Below 14p seems ridiculous to me.8.5p OMG. Yes please..JW

[ironstorm] 05/7/2021 21:31

I made a small turn on this last year.

With Aaz I traded on the ups and downs. Though have not done so since 30p.

I understand the fomo comment. My palms are getting itchy.

[joey wilson] 05/7/2021 20:48

The problem with this share price Ironstorm is when it goes it moves up quickly. The FOMO has encouraged me to jump back in over the last month or so. I think you have to have the faith. As far as I am aware Hari is still an investor, he is just trying to add balance to unanswered questions. CNG has always been poor at updating the market and I think you need to read between the lines. I think you should trust some of the research put forward here. I've been in and out of this share and made good money. More by luck than judgement but this time I'm here for the longer term. I truly believe there is a larger AAZ thing happening here. The last 2 years have been painful but the same happened at AAZ.

I think if I had one wish it would be that CNG were more open with its investors and more regular updates.

However due to the latest RNS (turned positive for the first time in the company's history), the lowly price and FOMO I'm back in

I also take great comfort in the well respected AAZ contributors on this bb, that are also invested.

JW

[mattjos] 05/7/2021 20:22

I personally don't 'do' short term Hari .. I know there are lots of folk who can & are very good at it but, not me. It's always long term for me or, I just don't do it at all.
But, i do believe there is a more than fair chance we'll see this move into at least the 20 - 30p region this year.

I can't remember off-hand exactly (need to dig out my notes) but, am quite sure that current prices are well below CNMIM's average 12p'ish buy-in price for their total equity in CNG. If they did not value the listing then, I'm sure they'd have already bought up the rest of the equity & gone private.
I have specifically asked that very question via the NOMAD/Broker who did confirm that the company does value the London listing & I don't think it should take much reasoning as to why.

Anyway, it remains cheap as chips, afaic & I will keep doing my bit to further restrict the free float because i find it irresistible.
Good thing is, there is virtually no one else here right now. No rabid herd urging it on every minute (usually a reliable sign to get out of dodge), just a few of us having a decent discussion as to its +'s and -'s

[hari] 05/7/2021 19:58

I agree sub 10p it is a time to accumulate, but it is a long term view of course .I need more on what cash flow will be, when and how debt pay down will be and the AISC gold price.Co is a producer and the AISC for phase I should be known and stating what is doing to reduce it .AAZ is a great example . Until it's debt was visibly being seen reducing , the share price starting to rise but only when it almost paid off , did it move much higher .I have no qualms to why the Co has debt , it is expected in mining producers . It just the size of the debt and to service it and also pay it down is what I need to see .Phase II production and a higher gold price would be the big positives that will transform the share price .Shame the Co is not more transparent in other ways and provide quarterly updates .

[mattjos] 05/7/2021 19:13

Maybe think about it this way IronStorm.

What would you do right now, if you were CNMIM ? you've just got the FY20 Results in and can see how this is now beginning to deliver financially

[ironstorm] 05/7/2021 19:03

The debate between matt and hari is an echo of what is going on in my head. I am aching to buy but . . . .

Keep up the debate guys.

[mattjos] 05/7/2021 19:00

This visualisation of some key metrics, to me, confirm this is not a time to sell but to buy:

[mattjos] 05/7/2021 18:52

CNMIM is not a charity and neither does it have unlimited Capital … it will not wish to have this quantum of its corporate financial 'firepower' tied up with supporting CNG ad infinitum because that will likely be limiting it achieving other strategic objectives elsewhere in the world.

Ensuring CNG is able to stand and walk & prosper, unassisted, will be one of CNMIM's objectives here. The most obvious way to achieve that is to reach Phase II as soon as they are able. Phase I has been achieved and is at steady-state of production and is throwing off more cash at $1,780 price of Gold than was originally anticipated. It reasonably and logically follows that Phase II implementation will throw off yet more cash & the cost of Phase II is a much smaller cost than was Phase I.

My instinct is that the CNMIM CEO and now CNG CEO is here to deliver that step change & his personal career resume shows he has the necessary knowledge and experience to deliver.

I don't see CNMIM dropping this or selling this or doing anything other than delivering Phase II as soon as they are able & then we'll all see just how a gold price 50% above that forecast (the single biggest single lever affecting profitability of the mine, as stated by SRK) influences the fundamentals.

And all this is long before they touch Eastern Pakrut, Rufigar or Sulfidnoye.

I do believe we are seeing a giant in the making

[mattjos] 05/7/2021 18:22

Hari, in 2015 AAZ was valued by the market at under £6m, when it had $50m of debt on the books and was up against it on all fronts. Were it not for the CEO personally lending the company an additional $4m, they would have been forced into a hugely dilutive equity raise as they were breaching their banking covenants at the time.
In the case of AAZ, the debt is all now paid off and the market Cap is now 28x higher now than it was then.

In exactly the same way, very few would touch the equity in AAZ during 2015 as it was 'in the Stans' and loaded with debt.

don't get me wrong, I do not like to see debt but, if the debt is there for a specific and obvious 'productive' purpose then, that is entirely different from the presence of debt which is, in effect, masking poor management performance.

The reason for the debt in CNG is perfectly obvious & it is very much for a productive purpose .. to build the mine to planned capacity & if there is one thing the Chinese are pretty damn good at and that is discipline and focus on achieving targets. The Phase II target is in the public domain and i expect them to achieve it. you might call that speculation but, I would not characterise it that way.
Ultimately, does not matter if you and I may interpret this differently. I'm a buyer at these levels & you are not.... that's how the market works and exactly how it should work.

[joey wilson] 05/7/2021 18:19

Any amount of proper buying into this stock and the share price just flies. Obviously due to being so undervalued. This has always been the case with CNG. After reading the last RNS I can only see this going one way. I would like to thank all the regular posters here for their continued debate and analysis. Especially Mattjos as I have learnt to have great faith in your considered opinions and analysis. They say don't believe what you read on a bb. I disagree, especially on the right bb's with the right contributors.

My abilities are very limited, I accept that, but CNG is now a large free ride for me, based on

other trading results.

I am hoping CNG becomes the next AAZ, which has always been my view. Although the reporting here is very frustrating the analysis of people in this bb has been very helpful over the last few years. The oldest investors here to my knowledge, being Mattjos and eke. Still kept the faith where I jumped off and now back on.

Thankyou for all contributions on this bb.

JW

[hari] 05/7/2021 18:00

Each to their own . Indeed But let's gave a balanced debate on the debt , which is holding it back in my opinion . I do not get why you discount by how much it weighs down the valuation here .You have had a bull case narrative from 3p to 20p , and then down again to 7p. It is has been a short term view Gold has been going up yet the share price has been falling over the last year. This did not make sense until the Co announced an increase in debt, so in know have been selling and the market started moving it down.This tells you how much the huge debt ways on the share price /market cap.Tell me how much cash flow will the Co make this year at current prices ?Will be more than $50m to cover interest and capital expenditure ?The problem is you are speculating on progress and phase 2 expansion So far the Co has been poor to share this important information and upto now has continued to keep the market guessing . The Co is not transparent with progress reporting , just talks about gold production and debt figures.I feel it is further down the line yet , and Covid has taken its toll on the speed of progress . The weather risks are evident every year , hence the increase in insurance to mitigate these risks .Climate change is already creating big changes in weather behaviour so I am sure it is a relief every time the 'risky' period passes .Be interesting to see if you know valuations of gold producers with huge debt and compared those who do not have any or very little .Btw yes debt is better than dilution , but it does not mean it should ignored

[mattjos] 05/7/2021 15:15

There has been a persistent pattern with a lot of these AT Trades for quite some time here. Very small volume parcels at the Bid price to keep it pegged back & then a little flurry of much larger size Buy Trades as/when the Offer price comes down and the spread tightens.
House Broker now at 8.1p after months & months showing absolutely zero interest in the shares whatsoever.

[mattjos] 05/7/2021 15:09

If Gold was Actually at $1,250 per the mine plan then, it would be different but, with a $1,000 / oz at the Operational level, reduced interest costs and the crew responsible for the construction/development work for Phase II specifically flown in from China last August & the CEO of CNMIM now i/c Pakrut, I believe they will be well on with the work

[mattjos] 05/7/2021 15:04

each to their own Hari .. I've had another 50

[joey wilson] 05/7/2021 14:55

Just added. I have a nice little holding now. Would just like to see it move up from here...JW

[hari] 05/7/2021 14:55

Edit typo * Just continue cost saving enhancements to improve AISC I assume but again no figures .

[hari] 05/7/2021 14:53

Thanks for the positive analysis I was reading the final results.So please correct my figures The working capital and debt interest was approx $55-60m. Now I expect that to be a little lower next time around but by how much I do not know . Still a big chunk .Also there is no indication that phase Ii upgrade is in progress . Just done cost saving enhancements to improve AUSC I assume but again no figures .Without phase II upgrade , I cannot see any debt being paid down this year either .Hold for the long haul .I do not buy this is cheaper to be honest .You find Gold producers tend to move a lot higher once debt has been paid off .Obviously grades and life of mine and gold prices have to be considered .

[mattjos] 03/7/2021 13:07

This a classic 'Mining Cycle' share really.

Elevated valuations at the discovery and exploration stage, followed by a long decline in valuation as the 'reality' of building a mine and getting it working then, a euphoric rise in valuation as Production is finally achieved, followed by another period of decline as initial production is followed by optimisation and working through the early stage teething problems .. finally the valuation starts rising on a more steady, less volatile and durable upward curve as the mine consistently delivers.
In our case, we also have the added near-term 'kicker' that there is an additional 100% rise in production yet to feed through … we don't have to start casting around for an acquisition to increase production from here (fraught with a whole set of new risks) + after that is achieved we have additional known neighbouring resources to then develop.

It really has been a helluva roller-coaster for Kryso/CNG since it first listed but, we're here now and the future looks much, much rosier than the past.

[mattjos] 03/7/2021 12:52

This company has a lot of leverage influencing the financials.

There is (at Gold price of $1,780/oz) circa $1,000/oz of Operational Leverage, which is double the $500/oz projected in the SRK Mine Plan.

In addition there is the obvious Financial Leverage effect of the Debt. Enterprise Value (what A N Other entity might have to pay to acquire the company) is the sum of:

(Mkt Cap + Total Debt) - (Cash + Cash Equivalents)

Operating Cashflow is now highest it has ever been for the company, Free Cash Flow has now gone +ve for the first time in the history of the company & Closing Cash Balance was highest in the company history so, the Cash & Cash Equivalents figure in the calculation is bigger now then ever before & should continue in the trajectory now the company has achieved steady-state production.

Since Enterprise Value is what A N Other entity might pay for the company, that is quite reasonably not going to reduce from here, arguably its quite sensibly going to increase.

For the Calculation to work, Mkt Cap has to rise from here, imo.

At some point Phase II is going to come online and that both should double production and (as a consequence of the resulting economies of scale) lower the unit cost of production (Cost/oz).
So that is going to act as a further +ve ratchet on the metrics that underpin the business model.

I remain persuaded that Mkt Cap (price per share) is going to increase quicker and to a higher level than most people seem yet to appreciate.

Using current £:$ exchange rates:

The Enterprise Value is £293.7m or $406m

There are 382,392,292 shares in issuance

That gives an EV value per share of $1.06 or 76.7p / share

June 2019, this was priced for the knackers yard … it had all that debt and was only just getting into regular production. Since that time, the mine has continued in operation and has now achieved the steady state production that management had targeted from Phase I & so that gives a stable footing from which to now bring online Phase II.

Current Mkt Cap is just too low for a business at this stage of its evolution, imo & I expect market interest to return & to continue into the future .. that should result in a trend of rising trading volumes and, as a consequence, some much tighter spreads than has been the case before.

Not a time to be selling down the shares, imo