Serabi Gold Share Discussion Threads

[ironstorm] 03/6/2020 07:22

I cannot believe with a mine throwing off cash, debt repaid, that we cannot get a loan to fund Coringa On much more favourable terms.

This should be what they are focused on rather than a cosy deal.

[tightfist] 02/6/2020 22:53

Hi Ironstorm, Bomber,.I agree, the less Greenstone CLN's the better - at least on the face of it. The longer this delay goes on, the more organic cash will hopefully be generated..However, SRB require an additional $25m for Coringa M&E equipment - and more exploration drilling funding. Can this be funded on-time by organic cash? .(Regarding raising fresh debt (originally planned for Q4) have we seen how this can be executed, alongside the security package to be transferred from Sprott to Greenstone from 1st July?).Cheers, tightfist

[loganair] 02/6/2020 20:02

The coronavirus pandemic has driven the gold price towards all-time highs, but some investors are arguing the best is still to come for companies which mine the precious metal.

Evy Hambro manager of theBlackRock Gold and General fund said while gold had benefited from a flight to safety amid the coronavirus pandemic, longer term trends were behind the momentum for the precious metal.

‘It hasn’t just been the last year. It’s been on pretty much an upwards trend now for several years,’ he said.

‘The things that have been correlating with the strong performance of gold have mostly been related to the decline in interest rates, principally in the US, and the vast amounts of “money printing”.

‘The thing that has always been the enemy of gold has been the opportunity cost, with gold not paying you any interest.’

Citing the Bank of England’s recent issue of negative-yielding bonds for the first time, Hambro argued that with real interest rates negative in much of the world and ‘dramatically bigger’ rounds of financial easing now taking place than previously, gold had become more attractive.

‘It’s an environment that makes gold unbelievably competitive. It’s an opportunity carry rather than an opportunity cost,’ he said.

Miners better placed to benefit:

George Cheveley manager of the Ninety One Global Gold fund, agreed the ‘amount of money being printed’ meant the argument for gold as a store of value and hedge against inflation remained as sound as it had ever been.

But more important, he argued, that miners were in a better position to capitalise than when gold previously hit highs.

‘I think it’s unlikely it’s going to fall in the next year or two and on that basis I’m happy to own the equities because I think they can generate very good profits and increasingly pay high dividends, which I think will attract a broader investor base,’ he said.

‘I don’t need gold to go any higher from today’s price. In fact, even if it fell back by $100 from here, these companies are still very, very profitable.’

In April, Newmont , the world’s biggest gold miner, increased its quarterly dividend by 79%, illustrating the potential for higher income in the sector.

The manager said the sector was in the best shape for 20 years, in contrast to 2011, the last peak for gold, when companies made some ‘crazy’ decisions in terms of acquisitions.

‘We sit here today with these companies with low debt levels, the highest margins we’ve seen in years and increasing returns to shareholders. Particularly this year, you compare that to any other sector and that’s pretty remarkable,’ he said.

‘We’ve got strong management teams. Costs have been brought under control,’ he added.

Additionally, less than a tenth of annual production around the world was hedged, Cheveley estimated, meaning increases in gold’s price go ‘straight to the bottom line’ of miners. The low oil price, reducing fuel costs, is another positive.

Hambro also emphasised the improved profitability of gold miners in contrast to their position in 2011, when ‘ you saw rapidly rising gold prices but at the same time you saw gold shares underperforming̵7;.

‘That is because costs in the sector were rising as fast if not faster than the price of gold was rising. In today’s environment what we’re seeing is a completely different situation.’

[borisjohnsonshair] 02/6/2020 18:14

Re 5) Q2 will have exceptional costs. Staff quarantine and rotation.

[borisjohnsonshair] 02/6/2020 17:55

Why not do rights issue to add retail & liquidity. Dilution but cash for Coringa. Better than CL

[borisjohnsonshair] 02/6/2020 17:54

Wow - great message.

[ironstorm] 02/6/2020 17:29

I am hoping we don’t draw down the expensive facility from Greenstone.

We don’t need this cosY deal.

And can look for a better and non-related party deal in due course. No rush with pog this high and cv still impacting.

Possibly wishful thinking.

[bomber13] 02/6/2020 16:50

We are again flirting with resistance at 90p , a level that has successfully rebuffed our exuberance about 10 times since September 2019 .

One or two factors make me much more hopeful of a break-out above 90p this time -

1) There is little or no stock around despite the share price reaching the level that prompted our third largest shareholder , River & Mercantile , to sell down from 10.5% to 9.8% in early May .

2) The recent option award at 85p gives our CEO and FD a lot more skin in the game . Their current shareholdings in Serabi are only 22066 and 38332 shares respectively , but the two option awards outstanding now give Mike Hodgson and Clive Line rights to 900/- shares ( 400/- @ 75p & 500/- @ 85p ) and 650/- shares ( 300/- @ 75p & 350/-@ 85p ) respectively .

3) The Coringa permit is due any day , but probably delayed by the Coronavirus crisis in Brazil .

4) Exploration results in and around the Palito complex have been stunning so far with Serabi drowning in untested anomalies , some big enough to attract the attention of majors like Anglos and Rio Tinto .

5) If Q2 stays unaffected by coronavirus , it could be a remarkably good quarter . So far in Q2 , the Real is nearly 25% lower against the US$ compared to Q1 , and the gold price is 10% higher than the gold price Serabi received in Q1 . Q1 had exceptional costs owing to factors outside management control , and the ore sorter was only in full swing for March alone . Moreover , gold sales in Q1 were 8120 oz versus production of 9020 oz . Assuming 10000 oz of production/sales in Q2 , a US$1700 gold price , and more normal localised costs , EBITDA could be around the US$10m mark for Q2 against only US$3.2m in Q1 .

6) Serabi will be debt free by the end of this month having paid off their Sprott debt of US$3.45m . Its outstanding commitment to paying the US$12m balance of the cost of Coringa will be matched by drawing down the equivalent in convertible by Serabi's second largest shareholder , Greenstone Resources , if need be .

7) New cases of coronavirus in Brazil have fallen by 2/3rds in the last 2 days , which is a huge improvement , and , hopefully , the first signs of a developing peak .

[tightfist] 02/6/2020 14:04

Hi PPVN,.IIRC Mike briefly alludes to a potential Open Pit towards the end of the latest (full length?) CRUX interview. As you say, Majors don't seem to be interested in the scale/expertise of Narrow Vein Mining?.Cheers, tightfist

[ppvn] 02/6/2020 11:11

Don't you think that's why the majors have been taking a look? The central anomaly that's several KM long and wide that Mike says is a bit beyond their ability to mine?

Certainly looks and sounds good to me. The type of deposits (I.e. sulphides) as well as the pits that have been found in the nearby area certainly suggest that's what it is to me.

[borisjohnsonshair] 02/6/2020 11:03

Big league

[borisjohnsonshair] 02/6/2020 11:03

Open pit mining?

[ppvn] 02/6/2020 11:00

The geology indicates there may be a pit to me Bojo...

[borisjohnsonshair] 02/6/2020 10:13

It's there - look at the grades, veins, proven PITG at each end, geology. When, not if.

[ppvn] 02/6/2020 09:51

If they find what they are looking for I don't disagree.

I think the chances of them finding it are good, hence I'm here!

[borisjohnsonshair] 02/6/2020 09:38

Yes I agree. It's held back. The field is huge though. This company is worth £500M

[ppvn] 02/6/2020 09:31

Who do you use Boris? When I speak to HL they are usually pretty good at telling me what's available in the market to buy. Their online platform for this share is bad though, often shows nothing available but once I've spoken to them it frees up.

I'm not short of patience here, as we've discussed quite often I'm here for the exploration really as I think they are going to have a lot of success and i think it'll be a game changer for them. If it was a little easier to buy and sell though it would probably move the share price a bit more though!

[borisjohnsonshair] 02/6/2020 09:19

Can't buy 1,000 for 87.

[ppvn] 02/6/2020 09:08

I've had to call my broker a couple of times. Max size available to buy is 2k shares at 87p.

Can never usually buy size in this share. Pity really as at this price it's only reflecting the current working operations - Coringa and the exploration side come free.

[borisjohnsonshair] 02/6/2020 08:35

Has Brazil peaked. 2 down days. No purchases possible. I've got spare funds but can't buy.

[kennyp52] 01/6/2020 21:26

Totally agree Sherry

[sherry35] 01/6/2020 21:06

kenneyp52 - Good points. Just to add SRB needs to prove up ounces in the ground to determine the over all value of the permitted areas. Turn key operations and value in the ground will determine SRB's worth.

DRILL THE PERMITS!!!