Serabi Gold Share Discussion Threads

[loganair] 17/8/2020 09:04

The way I see it when it comes to the AISC which I hope isn't too over simplified - Serabi themselves say 85% of their costs are in local BRLs:

If it cost 5,000BRLs per oz to mine 1oz of gold and the exchange rate is 1BRLs to the USD then the AISC = $5,000

If the exchange rate is 5BRLs to the USD then the AISC = $1,000


Even Serabi themselves say if they had mined a full 20,000oz of gold 1H their AISC would still have been $1,107 which is still well above the sub $1,000 they said early last year it would be by now.

[kennyp52] 17/8/2020 08:58

Simple equation guys ... you need to produce more to spread costs and increase margin . So we now need increased production in H2 and this will be reflected at some stage in profit / share price IMO. Add in increased POG and you will get a triple positive . Add new license then you have a seriously undervalued share .

[borisjohnsonshair] 17/8/2020 08:57

This can now, at last, shift gear and smash 100p

[borisjohnsonshair] 17/8/2020 08:57

Seller is finished.

[cotton4] 17/8/2020 08:55

Thats ok. Must have a pint sometime at agm or egm.

[tiger60] 17/8/2020 08:54

Sorry mistook your meaning. In terms of currency movements the gains from a weak Real will be reflected in our cost base reducing as we report in USD but majority of costs in local currency

[cotton4] 17/8/2020 08:50

I don't accept that the movement in the REAL affects revenue for the simple reason that SRB report in dollars. On the other hand the Real exchange rate does affect cos.
Wages measured in Real are affected when we report in dollars.

[tiger60] 17/8/2020 08:45

The real effect is higher revenue equates to a higher gross profit with a lot of the gains going straight to the bottom line - profit after tax. As a relatively high cost producer the increases in the gold price are accentuated and should eventually lead to a rerating of the share price if they hold up.

If we could knock costs down as well which should be achievable based on qtr 2 including logistical expenses related to Covid we should be in a sweet spot but from a technical perspective we need to break 95p.

[cotton4] 16/8/2020 22:09

The Real effect?

[tiger60] 16/8/2020 17:19

We didn’t increase ounces produced but got a higher price per ounce. Same costs just increased revenue based on increased gold price.

The analogy to handbags is not relevant as the costs there are related to more of the products being produced. But if they charged an extra13% to the sale price based on the same production levels, costs would remain as is as per the situation here

Sales on a pnl statement is interchangeable with turnover or revenue

Also there isn’t a 100% correlation between turnover and cos. Cos can decrease based on innovative manufacturing techniques for example that is completely independent of turnover.

[cotton4] 16/8/2020 16:40

So we increased our sales ounces by 13% but cos remained the same?

If we were selling handbags and we sold 13% more, we would expect our cos to be 13% higher and if the cos had reduced by 12% then I would presume that the cost of each handbag had reduced on average by 12%.

Sorry to disagree tiger

[tiger60] 16/8/2020 16:06

Cotton in both quarters CoS was consistent at around 8m.. the difference in gross profit or cost of sales as a % of turnover/sales was purely down to increased revenue for quarter 2 and that is simply down to the increase in gold per ounce. No mystery, no magical cut in cost of sales

[cotton4] 16/8/2020 12:02

Additional costs in qtr2 arising from Covid19 were hardship payments and salaries for those being quarantined before commencing work. These may have been substantial but without doubt worthwhile keeping their relationship with the workforce strong.

I would also expect the cost of additional accommodation to have been capitalised.
Its a pity they don't publish a qtr balance sheet.

[kennyp52] 16/8/2020 09:07

If production is lower then fixed costs written off to cost of sales will bring the reported gross profit margin down . With increased production in H2 then margin increases as costs a spread ; AISC falls ; sales revenue increased .. and if POG holds then the reported profits will be quite spectacular IMO . Good luck

[cotton4] 16/8/2020 08:30

I've had a review of the financials for the first 2 quarters and it would appear that there is one metric thats seems to have been overlooked, namely cost of sales.

For year 2019, cos was approx 62%

For the first qtr, this increased to almost 63% but we know there was breakdown for some weeks.

For the 2nd qtr the cos dropped to 50% without the benefit of the ore sorter and imo that is huge. Sales in qtr2 increased by ~$3.3m and gross profit increased by ~$3.3m.
Increased sales without a corresponding increase in cost. Not bad.

For qtr3 the pog has fluctuated from just under $1800 to over $2000 averaging around $1900. Now if we apply these metrics to financial year 2019, revenue would have been $16m higher (40,000 ounces at $400 per ounce) and cos would have been lower by $4m ($37.2 @ 12%). That would have been effective an improvement of $20m.

But of course the pog was not $1900 in 2019 and the cos of sales was not 50%.

But they are now. So once we return to even 2019 production levels without the benefit of the ore sorter we should expect to improve by at least the $20m.

As for 2020 I am expecting sales ounces to be approx 36,000. 17000 for first 2 qtrs,8500 for qtr3 and a ramp up to 10500 qtr4 once there is a full compliment producing and we have the benefit of the ore sorter. Based obviously on covid19 being under control.

I am projecting profit of $17m for the year with an average pog of $1750.This would equate to an share price closer to 200p as other on this board have alluded to.

And if we can achieve the 46000 in 2021 we are probably looking at 250 - 280.

I conclude that there is no urgency to get Coringa on stream. Sit back and accumulate cash and get these greedy financiers off our backs.

Obviously I await my observations being taken to shreds.

[borisjohnsonshair] 14/8/2020 19:38

Nope, sub US$1000 was associated with Coringa coming on line. Low 900s.

[loganair] 14/8/2020 19:04

Serabi say if 40,000 oz mined their AISC would still of been $1,107 way above the sub $1,000 they said last year it would be by now. Typical Serabi always promising much more then they are able to deliver.

[kennyp52] 14/8/2020 18:03

Anyway ... one point I would say from the H2 ... the figures look Ok only due to POG . AISC at $1263 is relative to lower production which highlights the absolute need to get back to expected production and then on to the next phase to increase and absorb the costs bringing down the overall AISC .

The loan situations are very pleasing .

Need more news now to liven up the share price

[tightfist] 14/8/2020 15:55

I agree that MH is prudent with forecasts, but timescales adherence is not his strongest point - in the past he has acknowledged that. But this time it is truly Force Majeur!

[borisjohnsonshair] 14/8/2020 14:31

Cruised back into the 90s. Great year with the headwinds.

[ppvn] 14/8/2020 13:45

Obviously they should have built a global pandemic into their mine plan ;-)