China Nonferrous Gold Share Discussion Threads

[mattjos] 20/3/2022 21:31

Assuming Phase II does not come on stream at any point this year, here's the HY Financials and F/Cast for this year.

Key Performance Metrics are all going in the right direction & this year is an inflection point as we move into sustaining profit.

If I were a member of the Board, I'd now be voting to move ahead with Phase II development work soon as the weather improves this year.
Costs are under control and the overall efficiency of the mining & refining processes are at/slightly above those in the mine plan.
Even with higher debt than anticipated, the company is profitable & interest on that debt is now sharply lower than was the case at the time the mine first started production in early 2019.

It's a good cornerstone to build on. Keep the management controls in place and double production .. that's going to be quite something:

[wanobi] 20/3/2022 21:20

many thanx Mj,,,,, low, yes, undeserved is down to Mr Market & some stocks just carry on being unloved for ever it seems, grrr :-),,, the war will not be helping here at all,, so we'll have to sit on our hands till that resolves,,,, hopefully soon!!! Cheers Wan

"The region was later conquered by the Russian Empire and subsequently by the Soviet Union. Within the Soviet Union, the country's modern borders were drawn when it was part of Uzbekistan as an autonomous republic before becoming a full-fledged Soviet republic in 1929.[18]

On 9 September 1991, Tajikistan became an independent sovereign nation as the Soviet Union disintegrated. A civil war was fought almost immediately after independence, lasting from 1992 to 1997. Since the end of the war, newly established political stability and foreign aid have allowed the country's economy to grow. The country has been led by President Emomali Rahmon since 1994 who rules an authoritarian regime, as there is extensive corruption and widespread violations of human rights, including torture, arbitrary imprisonment, worsening political repression, and a lack of religious freedom and other civil liberties !!!"

[hari] 20/3/2022 18:18

Yes definitely

[mattjos] 20/3/2022 18:05

Anyway, for all the concerns and worries and mithering about the debt … Can we all at least agree that the current Mkt Cap is exceptionally low and undeserved?

[mattjos] 20/3/2022 18:02

H1 2021, the company sold 17,288oz at an average price of $1,785/oz for Revs of $30,865,000

Costs were $14,595,000

Gross Profit/oz of Gold = $941
Gross Profit Margin = 52.7%

Local currency has recently devalued 12% (cost of wages/local Goods & Services) as compared to the US$ & Gold is running at $100+/oz more YonY.

Should be at a little over 55% Gross Profit Margin this Half. Have a look round an see how many others are achieving this type of profit margin.

[mattjos] 20/3/2022 17:50

Yup, they match perfectly.

Interest is payable Quarterly on the debts but, the company has no obligation to repay any the capital sums until Nov this year at the earliest.

[hari] 20/3/2022 16:59

Mattjos,

Do these figures add up to yours?

24th Jan 2022
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).


this week gone ( approx 2 months later)

Summary of Current Financial Position

The Company has total debt facilities (including banking facilities) of c. US$319m at this current time (unaudited).

[mattjos] 20/3/2022 16:30

Maybe but, I don't see either of Russia or China having any interest whatsoever in Tajikistan right now.The market cannot keep ignoring the metrics here for ever.The shares are so thinly traded with none of the major equity holders ever having sold any. The price gets pushed about on the tiny volumes of the marginal & highly emotional PIs.

[eke] 20/3/2022 13:35

Hi MatJust a few thoughts. Agree with everything you have written and can only conclude that its just "pure ignorance and stupidity" by the markets.The main worry is how long will they continue to act this way. The country was linked to Russia in the past but is now fully Independent and it does boarder with China, both Countries are under the spotlight. for many reasons which could be playing ,having,a negative roll on the share price The facts and figures speak for themselves but until we see some positive news from this region of the world the markets will always fear the worst.The smart ones, those of us on the BB are already "in" and awaiting the day when this MADNESS is finally over.

[mattjos] 20/3/2022 12:24

The company has paid back $69m of its debt since Dec 2020 ie. over the intervening 15 months.During that time Gold has averaged around $1,800/oz.Gold now trading circa 12% higher but, Mkt Cap has continued falling.Debt is reducing by circa $4.6m/monthMkt Cap is circa $31m$4.6m x 12 = $55m .. that's how much debt the company is capable of paying back (whilst simultaneously servicing the interest costs on the o/s debt) ..... & the company is valued at $31m.That is ridiculous. It's generating Cash at a rate virtually twice its current valuation.Please, can anyone point me in the direction of anything else that I can buy with same attributes?If you believe that the price of Gold is going to hang around these levels or go higher, this company is surely going to be a huge beneficiary.

[mattjos] 18/3/2022 19:32

Just because the 'Chinese' way does not involve 'spoon feeding' investors the opportunity offered, that should not prevent the market/investors taking the information given and doing the maths for themselves. It's not difficult. Just takes a bit of effort.

There is a glaring valuation anomaly here. The price is down here on nothing more than boredom & a general lack of understanding.

It is not going to take many people to do the maths and conclude it's a Buy before we see this correct 150-200%, imho.

[mattjos] 18/3/2022 19:26

The H1 2021 Results were issued on 29th Sept 2021 & the share price closed at 10.8p on that day.

There are exactly the same number of shares in issuance today as there were on 29th Sept 2021.

Today we are told "total debt facilities of c. $319m at this current time"

Shares closed today at 6.5p

So Debt has reduced $40m between these two updates … arguably that should switch over to an equivalent increase in MKt Cap (for EV to remain constant) but, in fact the share price (Mkt Cap) has actually fallen.

It seems illogical.

+ What we do not know is the NET Debt position as at today … we are not told how much Cash/Receivables/Gold in circuit there are to offset the total debt figure.

So let's look at the Gold price .. maybe that helps explain the seeming anomaly.

Gold price (when results announced 29.9.21): $1,725

Ave Gold price achieved for H1 2021 Gold Sales: $1,785

Gold price today: $1,920

Still makes very little sense for the Mkt Cap today to be lower than it was six months ago.

I would have reasonably expected Mkt Cap to now be more like the equivalent of 18p / share

[bazboa] 18/3/2022 19:16

Good spot mj!!

[mattjos] 18/3/2022 19:04

From the H1 2021 Results:



From today's RNS:

[mattjos] 18/3/2022 16:27

"...including in particular around the use of proceeds for the new loan..."

Finance for the purposes of Phase II expansion (CAPEX purposes) is different from loans for, say, the purposes of Working Capital.

At first blush, this appears to be the something around the root of this RNS

[mattjos] 18/3/2022 16:16

sleep Friday and no one watching the newsflow. So easy to miss news here as they so often put news out during the day.

Yes wanobi .. that is the part of the statement that has caught my eye. For 99.9% of folk, it has no meaning whatsoever but, for a few here it is of interest.

[wanobi] 18/3/2022 16:14

who knows what they've been doing or what they plan to do Hari, not me, Cheers Wan

[hari] 18/3/2022 16:06

ok guys I see it now

So you alluding that a new loan MAY be used for expansion?

But that does mean the debt going back in the short term.

I wonder how long phase II expansion will eventually take

[wanobi] 18/3/2022 16:00

agreed Mj, why phrase that way,,, one to read between the lines of me thinks,,, but, who knows what it means,,, the "use of proceeds for the new loan" could mean anything!!!! Cheers Wan :-)

[hari] 18/3/2022 15:51

Mattrjos,

You mean this?

The Company continues to engage with commercial banking partners to explore a wider refinancing of the business and further updates will be provided in due course.


Summary of Current Financial Position

The Company has total debt facilities (including banking facilities) of c. US$319m at this current time (unaudited).


Does that mean debt is the same as January?.
I am so disappointed with this COs inability to provide quarterly updates though.
Obviously no interest in the shareholders. Only the debt holders matter

[mattjos] 18/3/2022 15:44

interesting wording in the that RNS

[beeks of arabia] 18/3/2022 15:14

That small 20k purchase was mine, just before the loan extension announcement.

[hari] 18/3/2022 11:00

Mattjos,

I agree with the view, debt is preferred than to dilution. I do not dispute that, and it was necessary at the time.

It is more the valuations suffers until the debt is paid or being paid down.
But we should see the share price react positively as it reduces now, as said before.

For phase II, a staggered increase might the way to go, investment and debt reduction can work side by side.

Also if we have a long term Gold price above $2000, then any concerns I have will be removed.

[mattjos] 17/3/2022 19:56

Hari, maybe try to have a look at the broader macro-economic climate.

Every rate rise by the FED from here, is like a tippy-toe towards the cliff edge & we're damn near the edge as it is.
I think the higher they raise rates, the higher Gold is going to go as it simply gets us closer to the next QE parachute.
If you thought previous rounds of QE were big, wait until the next one arrives .. & the Gold price action is like a front-running indicator of what is coming.
Between now and then, Real Interest Rates continue to plough deeper and deeper into negative territory.

CNG is a 40koz producer at 50% Gross Margin. The market will find it at some point during this Gold Bull. I keep tucking them away but, not so easy last few days as no obvious seller :-(

[mattjos] 17/3/2022 18:00

Hari, there are always negatives & possible negatives with every single investment, always. No such thing as a dead-cert in business.

£23.5m Mkt Cap here … fgsake, we are a 40koz producer & not some penniless explorer.

I do not have a problem with debt that is for productive purposes.

Can you imagine what sort of a mess this would be in were the original IPO management team still in charge?
There'd be about 10Bn share in issuance and I very much doubt the mine would even be constructed yet, let alone in production.

With CNIM's backing, we've built a significant Gold mine with good LOM and plenty more resources right on our doorstep.
The interest costs on the debt are a fraction of the profit margins from the operation, when gold was much lower.

We're pretty much now running the mine per the mine plan & the KPI's outlined in that mine plan.

For me, this is now the time to move ahead with Phase II but, I'd be looking for ways to achieve it incrementally using organic cashflow whilst keeping the KPI's per the mine plan.

More like 40koz --> 60koz --> 80koz over a 24 month timeframe rather than trying to go from 40koz to 80koz in one big leap.
Stagger the CAPEX according to the cash generation of the mine.
Yes, it's a bit more of a conservative approach but, it should not require CNIM's backing as has been the case to date and is the sort of approach that lenders are going to like.

Having said all that … CNG might just as easily RNS Phase II Go-Live out of the blue, any day & take everyone by surprise.
It has to be done at some point because even with the long LOM, current rate of extraction/production is inadequate to achieve payback in that LOM.

Meantime, Gold price will have its inevitable impact on the mkt cap soon enough.