Polymetal Share Discussion Threads

[xxxxxy] 06/2/2024 10:37

Made in Russia. LiesMade in Russia. TerrorismMade in Russia. MurderMade in Russia. TortureMade in Russia. MenaceMade in Russia. WAR CRIMESThe list goes on, and isn't over until Putin and his Gangsters are in the Hague Court.

[loganair] 03/2/2024 08:53

1knocker - I agree with you, most pundits who come on the media are only self promoting themselves. By far the worse is Jim Cramer and yet so many viewers hang on every word he says.

[loganair] 03/2/2024 08:48

Nicky Shiels - Head of metals at MKS - the floor for gold in 2024 is $2,000, when ever the price of gold falls below this the buyers will come. She also said that she could see the price of gold $2,300 some time during 2024 as sees the average price for the year of $2,050 to $2,100 which is some $100 to $150 higher then 2023.

Even my own forecast for 2024 which I made late Autumn 2023 was to see the price of gold reach somewhere between $2,300 and $2,500 which at the time I said was reasonable therefore Nomi Prinns $2,400 sometime during 2024 seems reasonable to me.

[1knocker] 02/2/2024 22:37

I don't think Nomi Prinns is anyone to pay much attention to, logan. She was banging the drum for Chargepoint as the safest and most lucrative company to invest in to ride the EV wave immediately before it fell 85%, drowning in debt ! She is great at self promotion, but not much else.

[k1ssxofxdeath] 02/2/2024 20:26

What about the Oman investors? They arent doing it for love. Their investment must be predicated on some kind of return, unless you are suggesting its just a complex loan agreement or something?

Even then, that also assumes that there is no discount on the current price caused by the political risk. So even on the most cynical view that this is just a savage buyout by people connected to management, the value of the Kazakh assets on their own is substantially greater than the current share price Once the political risk evaporates, and investors who were forced to sell can return, there may be a rerating just on the Kazakh assets with net cash.

All this assumes the CEO was being disingenuous this week when he said that the Russian assets would sell for "much more" than Net Debt and the fact that he previously said the value would be a percentage less not multiples less. He was less optimistic in the last call but a chasm separates a percentage discount of a business previously worth $5bn+ and $500m plus debt. The CEO has never talked about EV either so suddenly using warm words about Enterprise Value at $2.5bn on an equity plus debt basis aint going to cut it either.

But we must wait and see as ever.

KoD

[loganair] 02/2/2024 20:09

ICT sold its 23.9% - The stake is worth $554 million based on the last trading price on the Astana Stock Exchange.

Then it seems reasonable to say that ICT come back in with the circa $550mln to buy Polymetal Russian assets plus take on the debt of the Russian side of the business.

Kazak debt of the business is $170mln. Polymetal use some of the $550mln to pay off this debt leaving them with $380mln to be used for further expansion.

[k1ssxofxdeath] 02/2/2024 19:57

Hi loganair,

Hmm - where are you getting £550m from? And if its only the Russian debt that is being paid, not Kazakh then that means the Russian sale is barely more than the global Net Debt. The CEO specifically denied that the Russian assets were being sold for the value of the net debt - he sounded almost scornful in the earnings call when answering a question that put that exact point to him. I wrote that question as it happens.

Now of course he may just have been answering the question in a way that gives nothing away, but if you are right and Kazakh Poly is left effectively with its own assets and a tiny bit of cash, that still puts them in the $5-6 range in my view, on a very conservative view of their revenue from $475 koz per year. So the base case, on a terrible deal, is 50% above current levels.

Any kind of premium over Net Debt, which I remind you was very specifically asserted to be in prospect according to the CEO *a week ago*, and you can add more dollars per share to that base case, in my view.

But I appreciate that we are all operating in the dark here. On the other hand, the gold extraction business is about as basic as it gets. Its the political risk that is hopefully about to evaporate and then one hopes we are left with just the standard business problems of inflation, currency risk, gold risk and other costs. That would be nice wouldn't it.

KoD

[loganair] 02/2/2024 19:17

As I also posted before it seems reasonable to me that the Russian assets will be sold for $550mln plus the debt of the Russian business.

Once the Kazak debt is paid will leave circa $200mln to be invested in the Kazak business.

[urai58] 02/2/2024 18:10

Thank you @k1ssxofxdeath for your alternative calculation. The problem is that the world will be different after February 2022: sanctions, inflation, higher energy prices, stronger tenge, problems with supply chains, problems with distribution. And this means massively higher AISC. It should also be noted that POLY usually requires a POX for processing. This is in Russia. Higher cost.

The basis for an assessment is not the past. But the current EBITDA margin and net earnings are tough. The price of gold has simply not risen enough - compared to inflation.

We are still getting off very well with Polymetal International. Shareholders from Petropavlovsk lost all. EVRAZ blocked for a long time. Polyus, Nornickel, Gazprom etc. ADR/GDR programs terminated. In some cases everything was lost.

[jl5006] 02/2/2024 17:29

Just patience needed. And mine are held in HL ISA - wait for the evolving processes.
Those that bought on the highs and did not buy additional shares at rock bottom may have concerns. I am happy to sit this out.
And given the farce of printing money- gold is likely to rise in price.

[loganair] 02/2/2024 15:44

In the past 24 hours, Nomi Prims says she can see gold at $2,400 sometime during 2024 and that's without any extra geopolitical risk.

[k1ssxofxdeath] 02/2/2024 15:39

"Realistically one can assume the following parameters (for residual POLY in Kazakhstan):

- 475koz AuEq p.a.
- Gold price $2,000/oz
- Revenue 950m USD
- EBITDA margin 40%
- EBITDA 380m USD
- Net earnings 190m USD
- Dividend 95m USD, with 475m shares: 0.20 USD.
- With a dividend yield of 5%, that gives a share price of $4 - and that's exactly where we are plus/minus today."

Further to the above valuation, here is a basic attempt at a different valuation.

475koz pa is about 40% of Poly pre Feb 22 operations.

Poly was trading around (at least) $15 at that point. If you add $2.5bn net debt then EV was $20 per share.

If Poly get $3bn (per your post)_for Russian assets then that is $6 a share for $12 of historic EV value - half price basically.

But that should still leave 40% of the old EV on the table which is $8 a share. If its net cash that EV should all be reflected in the equity valuation so the political risk is arguably depressing the price from $8 to $4 based on Kazakh assets alone.

In other words the market is pricing in complete expropriation of Russian assets for nothing and Poly saddled with $2.5bn of debt ($5 a share). If the sale unwinds that discount then the price could double.

Thoughts?

KoD

[k1ssxofxdeath] 01/2/2024 14:14

Ah Urai58 thank you.

That makes a lot of sense and explains the strange transaction this week.

Many thanks.

KoD

[xxxxxy] 01/2/2024 14:00

Made in Russia. LiesMade in Russia. TerrorismMade in Russia. MurderMade in Russia. TortureMade in Russia. MenaceMade in Russia. WAR CRIMESThe list goes on, and isn't over until Putin and his Gangsters are in the Hague Court.

[xxxxxy] 01/2/2024 13:59

12:02PMCourt extends detention of American-Russian journalistA Russian court on Thursday extended the pre-trial detention of American-Russian journalist Alsu Kurmasheva until April 5.She faces a maximum sentence of 15 years in prison for allegedly violating censorship law.Russian authorities have charged Kurmasheva, a Radio Free Europe/Radio Liberty journalist, with failing to register as a "foreign agent" and spreading "false information" about Russia's military campaign in Ukraine... Daily Telegraph

[urai58] 01/2/2024 12:27

The fog about possible future developments is slowly clearing. But as always, that takes far too long. In the meantime, Polymetal International's business and options are continually (massively) restricted. The reason is clear: Western sanctions - Russian counter-sanctions - and POLY in between.

What is important now is the sale of the Russian assets. But you shouldn't expect too much. That leaves 1 potential (and likely) buyer. We know: It is a Russian buyer - and the buyer is not (currently) subject to any Western sanctions. Unfortunately, Polyus is almost certainly no longer there. What remains? @goldbugsy wrote it: ICT, the founder of Polymetal International and brother of the CEO: Alexander Nesis.

At first I thought the Oman fund might have paid a premium. I don't assume that anymore. So the transaction is likely to be worth around USD 550 million. And with this 550 million USD, the Russian assets (of course including the 2 billion USD debt) could be taken over by ICT (Alexander Nesis). At the end, Polymetal International should be debt-free (currently USD 170 million). Plus an estimated $200 million in cash for 2024 investments (especially the $60 million for the POX). Plus cash to ensure ongoing operations. And perhaps there is still $100 million available for a possible dividend in 2024 (from the 2023 deal and sale): $0.20 per share.

Now about possible future dividends (from financial year 2024, paid from 2025):

The dividend policy will definitely be adjusted downwards. The reason is simple: Polymetall has to and wants to develop its business further. This includes possible acquisitions in Kazakhstan as well as in other Asian countries ending in (...)stan. The future profits should be used for this as a priority. Oman doesn't want dividends (now) - Oman definitely wants Polymetall to develop and expand its business in the medium term (3 to 4 years).

Realistically one can assume the following parameters (for residual POLY in Kazakhstan):

- 475koz AuEq p.a.
- Gold price $2,000/oz
- Revenue 950m USD
- EBITDA margin 40%
- EBITDA 380m USD
- Net earnings 190m USD
- Dividend 95m USD, with 475m shares: 0.20 USD.
- With a dividend yield of 5%, that gives a share price of $4 - and that's exactly where we are plus/minus today.

urai58

[k1ssxofxdeath] 01/2/2024 08:50

That is true. I'm one of them. But if I have to register on the company's own portal and sell my shares through that, then so be it. The political risk is extreme but it seems to me the valuation gap is also extreme. Its white knuckle stuff.

KoD

[loganair] 01/2/2024 08:43

Polymetal has 1,000s of UK share holders who are now holding their Polymetal shares in certificate form waiting for the company to relist on the LSE.

[k1ssxofxdeath] 01/2/2024 08:29

Well the CEO is also on record as strongly supporting the AIX exchange which really came to the rescue of the company when it wanted to delist from the LSE. So it would be slightly ungrateful to rush back to LSE the moment the Russia assets were sold. Of course there could be a dual listing. I imagine that the situation remains pretty fluid to be honest.

I was concerned that the CEO's brother sold weeks before the completion of the Russia sale (at which point one would hope there might be a rerating of the SP). The CEO said that the pressure on his brother came from being a Russian businessman, owning Russian assets but not living in Russia. I guess so,. The share price tanked yesterday (light volume obv) but is recovering today. Who knows.

On valuation, if the Russia business is sold for "much more" than Net Debt and the Kazakh business post sale will be "net cash", that implies a sale value of at an absolute minimum $2.5bn. Even if its only another billion thats $3.5bn. Thats $7 a share plus the value of the Kazakh gold mining operation which is a third of the old business. What I dont understand is why this thing isnt over $10 or why the brother just sold. Perhaps its just a function of the political risk which is obviously extreme. Hence the desire to see the company relist on the LSE I guess.

KoD

[meanreverter] 31/1/2024 18:45

Regarding “The CEO said that the post Russian residual business would be unlikely to be large enough to list on the LSE”: There are plenty of gold-mining companies listed in London that produce less — some much less — than 475m oz p.a. A few that I can think of, for example: CEY, RSG, ALTN, HUM, SHG, CMCL, SRB, AAU.

[loganair] 31/1/2024 13:24

After all the CEO was saying several times last year, that once the Russian business was sold that Polymetal would relist on the LSE.