Shaft Sink Share Discussion Threads

[hedgehog 100] 19/6/2013 17:54

muckshifter 30 Oct'12 - 13:18 - 1606 of 2070
"Exactly, WylieCoyote,
but I have a feeling that this will be down below 10p within the next six months.
Hope not, for the sake of holders.
Regards."



This is an examination exactly what that 'prediction' would have required to have succeeded -


Well, SHFT has 47,500,000 shares in issue, so 10p equates to a market cap. of just £4.75M.

In comparison:
SHFT made £3.4M. of pre-tax profit in 2012, and is forecast to make £6M. of pre-tax profit this year.
SHFT had revenues of £192.5M. in 2012, and is forecast to have revenues of £193M. in 2013.
SHFT's net tangible asset value per share: 83.94p.
SHFT's net asset value per share: 92.06p.

I.e. a SHFT fall to sub 10p would have required a fall to a market cap. equating to no more than about:
1.4 times 2012 pre-tax profit, and substantially less than forecast 2013 pre-tax profit.
2.5% of either 2012 revenues or 2013 forecast revenues.
12% of latest published tangible NAV.

[Compare to CAPD: 134,592,800 in issue, so 10p equates to a market cap. of £13.46M.]


Assuming that Muckshifter was posting honestly, then he was apparently expecting something dramatically bad (that didn't materialise) in SHFT's final results, although by mid April he seemed to be backtracking slightly -

muckshifter 13 Apr'13 - 22:36 - 519 of 632 0 0
"...Yes, I did say that I had a feeling shft would be badly down in about six months - based on the expected date of the next results announcement, so we'll see what happens, if the results do get announced, without delay, next week...."



I just don't see how such a sub 10p outcome was ever on the cards.

[buywell2] 19/6/2013 13:40

If you check back you will see I called this down chartwise when it was circa 60p

Tried to save Hector some money as he had a mudslide near his house with subsequent value loss.

I try to save those less gifted in TA and Charts in the advfn community cash

But get lambasted more often than not

A cross I have got used to carrying

Don't bother answering I know it hurts

[drewz] 19/6/2013 10:27

Hedgehog seems blinded by deepest hue rose-tinted spectacles.

Muckshifter appears to have an obsessive-compulsive screw loose.

Buywell is a deramping Troll.

No wonder this discussion board has degenerated into an unreadable mess.

[buywell2] 19/6/2013 09:11

HH

It's painfull to keep watching you take a Muckshifter hammering

I am going to tell the ref to throw in the towel

Whilst you still have one brain cell left

[hedgehog 100] 18/6/2013 21:28

muckshifter 18 Jun'13 - 18:04 - 2063 of 2064
"...You know very little about the industry you're invested in..."


I know enough ... whereas you perhaps know TOO much about it. Excessive industry knowledge can mean that you don't see the wood for the trees. A jockey can be the worst judge of a horse.

Aggravated in your case by your apparent obsession with the state of the industry decades ago (remember that your two best investemnts were about forty years ago).

Things have moved on massively since then, e.g. globalisation, technology, the commodities super-cycle, deeper mines ...

Even in just the last eleven years, things have changed massively:

1. Metals prices have risen exponentially.
[The last major bear market for metals and mining (not including the 2008 financial crash) arguably lasted six years, from 1997 to 2002.
(The bear market before that - from 1992 to 1994 - lasted three.)]

2. Mining costs have also increased exponentially (which equates to massively increased turnover for mining services companies).


I also submit that you know next to nothing about business, and business knowledge is generally more important for investment than anything else.

There is no reason why a well-managed company in a non-competitive business should not be able to make good profit margins, and contracturally protect itself against excessive risk.

Say what you want about oligarchs from the former Soviet Union, but they are good businessmen. They have the ability to take a previously sleepy, under-performing business and transform it with better business controls and pursuit of growth.

And one of the attractions of SHFT to me is that it contracturally protects itself to a very impressive extent.


Of course you want to try to make out that it is very risky, and it is very easy to 'scare by association'. Any troll could go onto any company board and highlight companies from that sector that have previously gone bust, sometimes decades ago.

But one thing you never seem to mention is SHFT's lowly rating. If SHFT was on a lofty P/E, it would be different ... but I think that forward P/Es of 3.7 for 2013 and 2.6 for 2014, on forecasts that would mean good earnings growth, mean that any risk is more than in the price.

Nor have you ever mentioned the SightPower shaft scanning technology, in which SHFT has a large stake.


P.S. From an article I posted on the Oil Services thread in early April:
"Twenty-five years on, and some of the executives behind the switch to outsourcing might have come to regret their decision."

Similarly, Anglo American Limited may well come to regret their decision to have sold Shaft Sinkers.

[hedgehog 100] 18/6/2013 17:49

Treble yawn.

Dishonest troll rantings, lies, and hypocrisy ... the evidence is overwhelming that you are bent. But like the best conmen, you try to be as persuasive as possible, and will deny it until you're blue in the face.

'Buyduds2' and 'Muck-smearer' are such 'bessie mates' ... because like attracts like.

[muckshifter] 18/6/2013 08:47

I see you've been reading the prospectus Hedgehog.
"3.8.4 Competitors
Within South Africa, Shaft Sinkers (Pty) is one of the leading shaft sinking companies by depth and diameter of vertical shafts sunk. Its principal competitor is Murray & Roberts Cementation, a division of Murray & Roberts. The Group also competes with Grinaker (part of the Aveng Group). Both Murray & Roberts and Grinaker are primarily civil engineering companies, and provide shaft sinking services through dedicated divisions."

That bit illustrates my point that companies in this business go from small independent, through disaster or near disaster, into the arms of a bigger general contractor, rather than the other way round. Cementation SA were the South African subsidiary of British underground specialist Cementation, both the parent, and the subsidiary, iirc, got into trouble because of various disastrous contracts, at different times and were swallowed up, as I've described several times. The Thyssen "division" was similarly aquired, I believe. Don't know Aveng, but it would almost certainly be the same. In other words the work that shft do is high risk. This means high profits sometimes, poor profits sometimes, and potential disaster, for a single operation independent, if a couple of big jobs go wrong at the same time.

"4.3 Contracting philosophy
4.3.1 Background
The tendering process for contracts varies between clients but will normally involve at least a two-stage process with binding tenders and contracts awarded on the basis of the second tender. A typical shaft sinking contract specifies the depth and diameter of the shaft, the surface infrastructure required, the expected duration of the project, facilities and services provided as well as shaft infrastructure and funding arrangements. The Group's shaft sinking contracts are typically for the full duration of the project.
The nature of the Group's work is inherently unpredictable, depending on ground conditions and other factors beyond the control either of the Group or the client. Where the Group is not confident of such factors, it seeks to ensure that its contracts contain escalation clauses as well as adjustments for unforeseen or abnormal ground conditions or features so as to pass on any unexpected costs to the client. In addition, both sides typically recognise their mutual inter-dependence and the likelihood that discussions may be required at some stage during a project to resolve any issues which arise."

That bit is helpful in explaining a few points too.
It explains the tender process, which is about the same as I've explained from past experience. Pity you didn't read it before you wrote a dozen or so posts claiming that Eurochem had "specified" the grouting method.

I suspect that the key to the arbitration dispute (but not the court action against IMR), can be seen in that passage.

Sorry, I hit the send button accidentally there, resuming:-

A typical shaft sinking contract specifies the depth and diameter of the shaft, the surface infrastructure required, THE EXPECTED DURATION OF THE PROJECT, etc.

Where the Group is not confident of such factors, it seeks to ensure that its contracts contain escalation clauses as well as adjustments for UNFORSEEN OR ABNORMAL GROUND CONDITIONS or features so as to pass on any unexpected costs to the client.

The Eurochem project would be no exception to this philosophy. The expected duration (otherwise known as the contract period) would have been negotiated and agreed. The "unforseen" ground conditions, were not unforseen on this job, that is the crux of shft's problem, imh(lifelong contracting)o.
The fact that such a huge job was let on cost plus, and the fact that three separate difficult water bearing strata were well defined in the site investigation, are not coincidental. Which has frequently been my point in the past. Eurochem, convinced by shft's proposal, agreed a contract where they took the cost risk, but, imho, shft took the time risk. And the need to get out of that "time risk" is what the renegotiations shft tried to engage Eurochem in, were about, imho.

[buywell2] 18/6/2013 07:43

HH you are making yourself look like a complete @rse

Muckshifter is wiping the floor with your amateur ramblings

Take a leaf out of Hector's book

Perhaps if you shut up for 6 months the share price might do better

[hedgehog 100] 17/6/2013 22:21

P.S. The current CAPD and SHFT forecasts from Digital Look:

Year Ending Revenue (£m) Pre-tax (£m) EPS P/E PEG EPS Grth. Div Yield
CAPD:
31-Dec-13 82.81 5.43 3.37p 5.7 n/a -50% n/a 0.0%
31-Dec-14 73.27 4.61 2.74p 7.1 n/a -19% n/a 0.0%
SHFT :
31-Dec-13 193.00 6.00 8.40p 3.8 0.1 +72% 2.80p 8.9%
31-Dec-14 187.00 8.40 11.80p 2.7 0.1 +40% 3.90p 12.4%

Note the opposite 2013-2014 trend in forecasts by the respective companies, the lack of CAPD dividends, and the fact that SHFT's forward P/E for next year is just 38% of CAPD's, despite the fact that SHFT's should be much higher than CAPD's.
(CAPD 19.38p, SHFT 31.75p.)

With a SHFT rating that low, and trading at just 37.8% of its net tangible asset value per share of 83.94p, then the risk is more than in the price.


The time to be selling was about two years ago when the SHFT share price was over 190p, and the EuroChem project problems were becoming more apparent (it is obviously technically very challenging to shaft into the Siberian permafrost) ... not now at 31.75p with an operational recovery underway.

[hedgehog 100] 17/6/2013 21:59

Muckshifter,

It might have been nice if you had actually thanked me for my SHFT AGM report, especially as you seemed to be virtually gagging for news about what they'd said about the EuroChem dispute. It was a lot of hard work ...

I noted near the start of my SHFT AGM report:
"I have generally tried to make the wording as 'verbatim' as possible, but to aid clarity I have sometimes substituted "SHFT" for personal pronouns or otherwise changed personal pronouns.
All the statements in the report are either from SHFT management, or (in respect of some of the discussion after the formal meeting) a SHFT advisor, and all the questions are from outside retail shareholders (these questions have been placed in inverted commas to further distinguish them)."

Thus, the statement that "SHFT's competitors are all subsidiaries of larger companies" was simply a recording of what someone said to me. It would have been wrong to write it differently just because I might have thought that it could be qualified.


This is the relevant extract from SHFT's prospectus:

"3.8.4 Competitors
Within South Africa, Shaft Sinkers (Pty) is one of the leading shaft sinking companies by depth and diameter of vertical shafts sunk. Its principal competitor is Murray & Roberts Cementation, a division of Murray & Roberts. The Group also competes with Grinaker (part of the Aveng Group). Both Murray & Roberts and Grinaker are primarily civil engineering companies, and provide shaft sinking services through dedicated divisions. The limited competition in the vertical shaft sinking market reflects the barriers to entry including the need for a strong operating track record, access to skilled personnel and a pool of specialised equipment.
There is greater competition in the South African decline shaft sinking and underground infrastructure markets from local competitors and large mining companies that have their own in-house divisions/teams than in the South African vertical shaft sinking market.
Outside South Africa, vertical shaft sinking competitors include Murray & Roberts, Redpath, Thyssen Schachtbau and other competitors in individual territories. In its pursuit of geographical diversification, the Group has sought to select countries and regions in which it sees an opportunity to enter the market and gain significant market share without a high level of competition from local operators. As in South Africa, there is greater competition in the decline shaft sinking and underground infrastructure market. METS competes internationally with a number of civil engineering and consulting companies."


Regarding your comment on the CAPD element of my AGM report, i.e.:

muckshifter 17 Jun'13 - 17:09 - 2054 of 2056
"...Apart from SHFT there is only really CAPD, but CAPD are riskier, because of their exposure to exploration.
Muckshifter comment – "Disagree strongly with that. Capd's risk is broadly similar in terms of workload, although they would be a year or two ahead of shft in terms of changes to potential workload, but the risks that capd take in terms of the work they perform is tiny by comparison to shft's."..."


I disagree with your suggestion that SHFT are as risky as CAPD. As you know, they obviously they perform very different types of work (the clue is in the names, i.e. Capital Drilling, Shaft Sinkers), and for the following reasons CAPD are far more exposed to a market downturn:

- CAPD are exposed to exploration.
- CAPD's contracts tend to be short-term.
- CAPD faces more competition from local competitors.
- Many mines do their own drilling.
- CAPD is far more exposed to gold, and we seem to be entering the early stages of a gold bear market

In contrast, SHFT's prospectus says this:
"The long-term nature of the Group's projects provides considerable visibility over the Group's future revenues and a degree of resilience to short-term movements in commodity prices."

This difference was made clear by their respective IMS's on the same day a month ago today. CAPD issued a profit warning, whereas SHFT gave a positive trading update (SHFT's share price rose on the day, and the majority of posters regarded the IMS as positive). See the following extract from SHFT's IMS:

17/05/2013 07:00 UKREG Shaft Sinkers Holdings Plc Interim Management Statement
"Based on current assumptions, results from trading for the 2013 financial year are expected to be in line with market expectations and the Board remains confident in the Group's prospects.This year's results should benefit from the higher margin Hindustan Zinc Limited and Kibali Goldmine contracts."



With regard to potential operational difficulties with SHFT's projects, this extract from SHFT's prospectus is helpful:

"4.3 Contracting philosophy
4.3.1 Background
The tendering process for contracts varies between clients but will normally involve at least a two-stage process with binding tenders and contracts awarded on the basis of the second tender. A typical shaft sinking contract specifies the depth and diameter of the shaft, the surface infrastructure required, the expected duration of the project, facilities and services provided as well as shaft infrastructure and funding arrangements. The Group's shaft sinking contracts are typically for the full duration of the project.
The nature of the Group's work is inherently unpredictable, depending on ground conditions and other factors beyond the control either of the Group or the client. Where the Group is not confident of such factors, it seeks to ensure that its contracts contain escalation clauses as well as adjustments for unforeseen or abnormal ground conditions or features so as to pass on any unexpected costs to the client. In addition, both sides typically recognise their mutual inter-dependence and the likelihood that discussions may be required at some stage during a project to resolve any issues which arise."

[muckshifter] 17/6/2013 18:45

Well, probably the biggest in the world, and the first to successfully overcome the sort of extreme water problem that defeated shft at Eurochem, would be an independent private company, Redpath back in the days when shft were a tiny part of a big mining company. Jim Redpath, company founder, used to write papers about such things years ago.

[hedgehog 100] 17/6/2013 17:46

muckshifter 17 Jun'13 - 17:09 - 2054 of 2054

"...SHFT's competitors are all subsidiaries of larger companies.
Muckshifter comment – "Not true."

It used to be similar in the oil services sector.
The mining sector tends to follow the oil sector a decade or so later, so maybe these companies will be spun-out.
Muckshifter comment – "Disagree. The reason most (but not all) of shft's competition consists of subsidiaries of large diversified companies, ..."


I think it depends how you define a 'competitor' doesn't it.

[muckshifter] 17/6/2013 17:09

MUCKSHIFTER'S TAKE ON:-
HEDGEHOG 100'S 2013 SHFT AGM (7.6.13) REPORT, PART C (from his post 2024)



6. WINNING NEW CONTRACTS

Alon Davidov, SHFT CEO, said: "That's all I live for".
Especially as SHFT needs to continue diversifying away from South Africa.
Muckshifter comment – "might be a bit difficult if you've just bankrupted one of your main operational subsidiaries because you lost a major dispute over very poor performance on a big overseas contract (see shft answer at agm in Item 1 above: Eurochem claim and counterclaim)."

SHFT are awaiting contract news, but it's out of their hands.

There's plenty of work for everyone. There's not too much competition; it's not like construction.


N.B. SECTIONS 7 & 8 ARE REPORTAGE FROM DISCUSSION AFTER THE FORMAL MEETING ITSELF:

7. OPERATIONAL ISSUES WITH PROJECTS

"You often seem to have operational issues with your projects: is this normal?"
Yes. SHFT will drill down a narrow section in advance, but the shaft itself is far wider, therefore until they work downwards they can't be sure what they'll encounter, e.g. an underground stream they may miss. – Which they'd use grouting for.
Muckshifter comment – "Which comes back to the high risk nature of this element of civil contracting that I've been emphasising since my first post on shft. Muckshifting is the same, in that boreholes often do not tell the real story, and then there is usually a big "fight" to get paid for dealing with the consequences."

And SHFT get client variations, e.g. clients may want the shaft deeper or wider.
Last year SHFT had a lot of variations: it's complicated to collect the money.
Muckshifter comment – "Exactly what I've said in many posts here."


8. MINING SERVICES; OPEN-CAST/UNDERGROUND MINING

There is no proper mining services sector in London, unlike Australia.
Muckshifter comment – "Made prescisely that point in a very early post here."

Apart from SHFT there is only really CAPD, but CAPD are riskier, because of their exposure to exploration.
Muckshifter comment – "Disagree strongly with that. Capd's risk is broadly similar in terms of workload, although they would be a year or two ahead of shft in terms of changes to potential workload, but the risks that capd take in terms of the work they perform is tiny by comparison to shft's."

CAPD are also linked to Centamin; Centamin is a good company, but is being hit by legal uncertainties and the gold price.

SHFT's competitors are all subsidiaries of larger companies.
Muckshifter comment – "Not true."

It used to be similar in the oil services sector.
The mining sector tends to follow the oil sector a decade or so later, so maybe these companies will be spun-out.
Muckshifter comment – "Disagree. The reason most (but not all) of shft's competition consists of subsidiaries of large diversified companies, is, as I've pointed out many times, because most of their rivals went bang because of cashflow while carrying out a couple of disastrous jobs concurrently, as independents, and the wreckage was picked up for a song by a big construction company which has the financial clout to keep going when a big contract goes bad, complete the job, and eventually, get paid. Usually, in the case of picking up the wreckage and continuing the work, they end up receiving many times what they paid for the "wreckage" leaving them in pocket and with an extra division."

A Rio Tinto open-cast copper mine in North America collapsed two months ago. You can only go so deep with open-cast mining.
There are opportunities for SHFT in Australia - it's mainly open-cast at the moment.
Muckshifter comment – "Perhaps, eventually, but on a recent visit to Oz in March / April it was apparent that things in the mining industry there are slowing down fast (I believe Oz has a big problem coming up in this respect), and if they can't make money in opencast mines there's no chance they would even consider deep mines. Whenever I go to Oz I buy an Oz mining magazine, which this time (March / April) was full of articles about Oz miners and mining contractors heading for Africa."

[hedgehog 100] 17/6/2013 15:45

LOL -

'Buyduds2', that article is SIX WEEKS out of date!!

Recent news about South Africa is positive, to your apparent disappointment.

And how funny that you don't mention the tick-up today.

Maybe only a quarter penny, but that doesn't stop you when it's a quarter penny move down, even if it isn't a reversal.

Whereas today's move is significant because it marks a reversal.

[buywell2] 17/6/2013 15:19

Have you thought Muckshifter that you might be pushing poor old HH to keep buying SHFT shares

He might be single handed trying to hold the share price up... which might leave him a bit exposed if things go badly in SA.

''70 per cent of mines having operated at a loss last year, the near future of country's platinum sector is looking bleak. With the two-year pay deal for workers ending next month, workers and government will remain tense over the next few weeks over the fate of the industry. ''






S.Africa's platinum industry in an uphill battle to recover losses

6th May 2013

South Africa's platinum industry is in the spotlight following last week's announcements of major job losses, due to low prices and high operating costs.

Top platinum producer Anglo American platinum (Amplats) is under severe pressure after a plea from government to scale back their 14,000 job shedding plans to between 6,000 and 8,000 instead.

"It's interesting that we're having government step in now but they were not doing that during the strikes," labour adviser Michael Bagraim told CNBC Africa

With the mining sector's wage negotiation season now in full bloom, major focus is on the National Mineworkers Union (NUM) and the National Union of Metalworkers South Africa (Numsa) as they attempt to strike a fair wage deal with government.

Amplats restructuring plans also include closing of four mine shafts in Rustenburg to curb the oversupply of platinum.

"This has over time become a costly measure because of low demand for platinum coupled with the current weak platinum prices on the market and last year's intense labour strikes which were a catalyst for Amplat's first deficit in eight years," said Bagraim.

Platinum fell by 10 per cent last year to 620,000 ounces and Amplats has announced a further cut to 400, 000 ounces of production a year in an effort to recover the losses incurred.

Aquarius Platinum, another South African platinum producer, has reduced production in its Marikana, Blue Ridge and Everest mines until the platinum price is strong enough to resume full production.

With approximately 70 per cent of mines having operated at a loss last year, the near future of country's platinum sector is looking bleak. With the two-year pay deal for workers ending next month, workers and government will remain tense over the next few weeks over the fate of the industry.

[muckshifter] 17/6/2013 13:38

MUCKSHIFTER'S TAKE ON:-
HEDGEHOG 100'S 2013 SHFT AGM (7.6.13) REPORT, PART B (in post number 2018)

Muckshifter comment – "you've all read this bit as it's been posted many times, so I've deleted it. Hedgehog's questions to the board are in quotation marks, my comments on shft's answers are preceded by identification."


3. PLATINUM PROJECTS

Impala Platinum No. 17 Shaft Project: they have stopped work on one of three shafts, but it is not at this stage a material impact on SHFT.
And it is balanced by the fact that the Impala 16 Shaft Project, which had reached the end of contract, has been renewed; SHFT will make an announcement about this renewal if necessary.

The rest of the work, with Anglo Platinum / Royal Bafokeng Resources, and Lonmin, is continuing as expected.
SHFT's platinum clients NEED shafts to get platinum out of the ground to make them money.
Muckshifter comment – "Bit like Eurochem really, so much for Helmer's article."


4. EMPLOYEE PAY RISES

"Your prospectus suggests that your employee pay rises are passed on to your clients. Is that the case?"
That is still very much the case.
SHFT's contracts allow for costs escalation.
They agree pay rises with clients first, and make sure that they can pass them on.


5. BROKER FORECASTS AND COVERAGE

SHFT are still on-track to meet the forecasts.
Muckshifter comment – "It is easy in the short term to hit a profit target in this industry, because there is so much use of judgement in preparation of results. If you have any doubts when the results come out, look at the cash position to see if it reflects profits, and then check that creditors haven't gone up in the results drastically, because one of the favourite tricks of many a big contractor used to be to not pay their subbies and suppliers just before the results date which made their cash position look superficially better – and in shft's case the cash situation is important because of bank covenants (unless they get them waived)."

No half one / half two split has been published by their broker.
SHFT have engaged with a second broker, but they haven't started coverage yet.
SHFT can't comment upon the level of an interim dividend: it depends upon earnings.

[hedgehog 100] 16/6/2013 22:17

cocomac0 14 Jun'13 - 18:34 - 2039 of 2048 0 0
"Just to set the stage a little........... this is my worst ever stock buy, I've taken a heavy loss, and it's wiped out my profits which I could have used to buy a nice big flat screen tv. ..."


I'm sorry to hear that cocomac0.

But at least you should make those losses back here, and then some.

Investors elsewhere may not be so fortunate.


But in any case, it is not money that really matters, but peace, and love, and kindness.
(I'm feeling a little spiritual this Sunday!)


P.S. Would anyone like to volunteer please to start a specific thread for the SightPower Shaft Scanning Technology? Preferably a 'blue' poster to moderate it as necessary.