Shaft Sink Share Discussion Threads

[hedgehog 100] 03/7/2013 18:12

Posting extracts from the "Risk Factors" section of SHFT's prospectus I think just shows your quite transparent agenda Muckshifter.

Of course you don't post any of large amount of positive material from the prospectus.

Here are a couple of extracts:

"7. Key strengths
The Directors believe that the Group's key strengths are its:
• Safe operating record;
• Past experience of working at depth;
• Access to experienced sinkers;
• Ability to commence work within a short timeframe;
• In-house mining and engineering technical services capability; and
• Standing with ECIC.

8. Business strategy
The Group's key business strategies can be summarised as:
• Maintaining and building on its existing strategic and technical strengths;
• Further expansion into the CIS and India;
• Diversifying into additional end-market applications; and
• Potential for selective acquisition opportunities."

[rcturner2] 03/7/2013 16:51

hh - I have followed SHFT for a long time, as it came up on a dividend screen (obviously now lapsed since the last final dividend was passed).

I have also been following POG closely on a similar basis.

What I have learned from following these two shares is that resource stocks seem to be under tremendous pressure.

I think you have got this one wrong unfortunately.

[muckshifter] 03/7/2013 16:48

Oh, and in terms of the effect of the overseas work, which you attempt to dismiss as unimportant and "old hat" for shft, this is what they said at flotation:

"The Group could lose international customers to such customers' own in-house divisions or to competitors.
While the Group has established itself in the South African market, it has yet to build a similar reputation outside of South Africa and the contracts that have been won in Russia and India have yet to be delivered successfully.
The Group is reliant upon the successful completion of its contract with EuroChem in order to enhance its reputation and pursue its strategy for international growth
The EuroChem contract is important as a major contract in its own right but also as the Group's first major contract in the CIS. Although the pre-sink work has been completed, the Group has not yet commenced the sinking work in respect of the main shaft. If this contract is not successfully performed, this could prejudice the Group's opportunities for developing its relationship with EuroChem and developing its international strategy in the CIS and elsewhere. The EuroChem contract is currently running some eight months behind the original planned schedule due to external circumstances, and negotiations are in progress with EuroChem to finalise a revised programme of work.

Originally founded in 1961 and part of the Anglo American group of companies until its sale in 2001, the Group has in the past successfully completed major shaft sinking projects in Africa, Europe, South America, the Middle East, Asia and Australia. Over the last few years the Group's focus has been on its principal market in South Africa but it is now again diversifying both outside South Africa and into new end markets and has recently been awarded major contracts in Russia and India."

So, Eurochem was a first in Russia, and shft had been sticking to Africa for a few years before those "good business men" from Russia took control. Two major international contracts, much bigger together on an annual basis than their previous years turnover, must have been quite challenging.

[hedgehog 100] 03/7/2013 16:21

muckshifter 3 Jul'13 - 16:13 - 2140 of 2141
"...I think it's fairly well established that they mostly became fabulously wealthy by corrupt and frequently violent business methods and deals Hedgehog, ..."

Well, the boss of your beloved EuroChem, i.e. Andrey Melnichenko, is an oligarch too!

And unlike the trio who own 48% of SHFT, he doesn't have the restraining influence of being one of three.

[hedgehog 100] 03/7/2013 16:17

From SHFT's final results in April 2013:

"Year end committed order book GBP346.5 million (2011: GBP301.1 million)"

I.e. the order book has RISEN strongly ... at least according to my maths!

[muckshifter] 03/7/2013 16:13

And I see you're still on about the "better business controls and pursuit of growth", which you normally claim is the input of the IMR "top business men", but you forgot to mention that this time.

Would that be because of this post:
"From HH post 2065 on shft board
"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."

From my post 2105 on shft board
Perhaps you could explain what better business controls they use, and how exactly they pursue this growth.

And I see you are still repeating your praise for the Russian Oligarchs in posts here, but I notice you didn't answer this Hedgehog. If you asked the average man in the street what he knew about Russian Oligarchs business methods, if you got any answer at all, it would either be "Chelsea" related, or corruption, in 99% of respondents, I reckon. So when can we expect an answer?

Hedgehog's answer shft board p2107
"Oligarchs from the former Soviet Union are typically self-made men who have become immensely wealthy - sometimes multi-billionaires.
How do you think they did that: by being bad businessmen?

But that is different from saying that they are squeaky clean."

I think it's fairly well established that they mostly became fabulously wealthy by corrupt and frequently violent business methods and deals Hedgehog, so obviously that's the magic ingredient which you so admire in their pursuit of growth, or was there something else we in the west missed in the last 300 years as capitalists, which these oligarchs discovered in their 20 or so years of capitalism?

Certainly the growth shft experienced while majority owned by these "good business men" was more than spectacular, with two huge new jobs in Russia and India awarded in 2008 on top of their existing workload, just one of which, Eurochem, had an anticipated annual turnover as big as their previous years total turnover. I wonder how they did that?"

[muckshifter] 03/7/2013 16:06

More importantly Hedgehog, shft's turnover increased five fold between 2007 and 2011, which ties in with the point I was making here (note the use of Hedgehog's favourite method here, as I'm posting the same thing for the third time)

"I take it your little hissy fit in post 2132 was to do with this post of mine Hedgehog,

muckshifter
28 Jun'13 - 15:55 - 2118 of 2133 0 0 edit


Two things pulling shft in different directions are, imho:-
The need for cash. I feel they have a problem without regular infusions of advanced payments from new contracts - and I don't think they will want, or be able, to pay an interim dividend because of this, without an "infusion".

But the reduction in number of current contracts that must be occuring by now may well be good news in a way. My first employer expanded far too rapidly in a segment of civil engineering where it had acknowledged expertise, and struggled because good staff were then too thinly spread. Because of its internal problems, and government brakes being slamed on at the same time, it then ended up with a much more concentrated workload which condensed the staff again, into an industry beating bunch, with spectacular results.

Hope, for the sake of holders, that something like that occurs here.
Regards.

Which as usual you call lies, attribute all sorts of weird motive to, etc.

But this particular post was not aimed at your rubbish as most of my posts are, it was, as usual, my original thoughts based on many years of "business experience" gained within the civil engineering industry.

The turnover of shft went from £40 million in 2007 to £183 million in 2010, and then beyond, a fairly dramatic build in turnover by anyone's standards, which included 2 major international contracts. International contracts, in my experience, always face different problems from those faced at "home" and require more management than "home" jobs.

The latest order book breakdown I've seen of shfts shows the following contracts completing in 2013: Lonmin Hossy, Anglo Gold Moab, Impala 16 -3 shafts, Kalagadi, Impala 16 development,Lonmin Karee 3 Resource Development,Hernic Ferrochrome, Leeuwkop. That looks to me like a lessening of site management pressures.

The difficult times my employer endured years ago, and the subsequent turnaround as described, are absolutely factual and can be backed up with contract details if others (ie. not you) are in doubt. The company never looked back from that time."

[hedgehog 100] 03/7/2013 15:47

SHFT's turnover has grown about five-fold since 2002.

I would have thought that shows what a great growth story this is.


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).


And Shaft Sinkers has been transformed from a previously sleepy, under-performing business (sold by Anglo American Limited at the market bottom) with better business controls and pursuit of growth.


The Rio Tinto open-cast Bingham Canyon copper mine collapse in April demonstrates that you can only go so deep with open-cast mining.
The vast landslide was about a couple of thousand feet wide and tall:



SHFT's growth is long-term and growing, as shown by these extracts from the final results in April:

"Year end committed order book GBP346.5 million (2011: GBP301.1 million)"

""Against this backdrop the company has delivered on its strategic objectives by expanding internationally and into new markets including gold and zinc. This is not a short term change for the company but, as evidenced by the strength of our order book and pipeline, we believe we are becoming truly global and mineral agnostic which will help us capitalise on the many opportunities that exist.
"Even if there are pressures on mining capital expenditure, mining companies are still reacting to growing global demand and therefore our technological expertise will be in demand as new projects come online and mines get ever deeper, making us all the more confident of delivering value to shareholders in the future.""


And as a well-managed company in a non-competitive business SHFT should be able to make good profit margins, and contracturally protect itself against excessive risk.

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

[hedgehog 100] 03/7/2013 15:24

Shaft Sinkers have long and extensive expereince of work globally.

From SHFT's website:

"In the past, our group has successfully completed major shaft sinking projects in Africa, Europe, South America, the Middle East, Asia and Australia."




And these extracts from John Helmer's article suggest that they are the global leader, and have never failed in their mining efforts -

"They are the largest shaft constructors in the world, so the choice was obvious.""

""I can say that as Shaft Sinkers has – so far – not failed in its mining efforts, provision for failure was from Shaft Sinkers' point of view unnecessary.""

[buywell2] 03/7/2013 13:08

Yeah

And learn about charts too

Helped me forecast a drop towards 20p for ITM ............ yesterday

[hedgehog 100] 02/7/2013 20:15

I think that a relatively small hit would be the most that would be countenanced by SHFT for early settlement of the EuroChem dispute.

Having met SHFT's Chief Financial Officer Chris Hall, I don't think that he's the sort of person to let EuroChem off £9 million that they owe SHFT, especially as his interests are very well-aligned with SHFT's. And nor would I want him to.

But it probably makes sense to offer some sort of token compromise, e.g. on some of SHFT's legal costs, to allow EuroChem to save face, and to let SHFT move on.


But if things do drag on until the end of 2014, then a cash sum award to SHFT then could be well in excess of SHFT's current market cap. (£12.23M. at 25.75p), i.e. £9M. plus most of over two years of legal costs. I would hope and expect that a lot of that would be paid out as a special dividend.

And from the end of 2014 onwards, SHFT's legal costs for the EuroChem dispute, which are allowed for in the 2013 and 2014 forecasts of £6M. and £8.4M. of pre-tax profit respectively, should drop out. Which should mean that 2015 pre-tax profit could also be well in excess of the current maket cap., with continued recovery and growth.

This would be to be expected in view of SHFT's pre-tax profit for the three years prior to 2012:-
2009: £12.46M.;
2010: £16.71M. (incl. exceptional £3.8M.: £12.91M. after this);
2011: £13.51M.


And for more risk-averse investors, the news that EuroChem's $800M. claim against SHFT is ring-fenced should provide the reassurance they need to allow them to buy in. The worse-case scenario for SHFT in the event of EuroChem winning (albeit that doesn't seem at all plausible) would therefore appear to be losing the £9M. that SHFT are claiming, plus their legal costs. But these aren't allowed for in SHFT's current lowly rating anyway, and the rest of the business would continue.

And removal of the uncertainty would doubtless be seen as a positive, as in the case of Lamprell:

From the London Evening Standard, 19 November 2012:
"Lamprell soars as profits warning clarifies firm's woes
Lamprell warned that its full-year loss would be seven times greater than previously forecast as it unleashed its fifth profits warning since Spring. But shares soared 14% as the group removed the uncertainty which had been dragging them down for months....
Shares, which have lost nearly three-quarters of their value this year, jumped 9.50p to 78.75p on the news...."


The LAM share price has since risen further, and is currently 143p.


In my opinion SHFT may now perhaps be the safest and best value share on the market - certainly that I am aware of. It is in effect a support services company with an exciting technology angle (i.e. the SightPower shaft scanning technology), but being treated like a risky mining or mining explo. company facing declining commodity prices and funding problems.

[hedgehog 100] 02/7/2013 17:13

WyleCoyote 1 Jul'13 - 20:54 - 2129 of 2130 0 0
"Yup, my short is going fantastically. My target was 20.0p but may consider extending it to 10.0p"

Translation - you're planning to buy in at about 25p. The oldest troll trick in the book - give a ludicrously low price, while you buy in far higher.

Perhaps you did today?


Buywell - you have previously called the bottom at 25p, so stop lying!

- Perhaps I should go through your old posts to dig it out?


And as regards the stuff about South African GOLD miners ... the South African part of SHFT's work is with PLATINUM miners. Shows how much you know, &/or how dishonest your posting is.

Platinum is now about ten per cent higher than gold, and is looking strong.

[buywell2] 02/7/2013 11:28

................ Latest news on South Africa Mining situation ...............

Where SHFT sinkers like to sink shafts when the shaft sinking market is rising not sinking as it is now.

SA Labour demands/costs should be known within the next week or two .... I expect a circa 10% increase .... why ?

''The companies are not only confronting slumping commodity prices, and yields spurred higher by concern the Federal Reserve will start to scale back stimulus, but also face labour unrest amid demands by entry-level workers for pay to be doubled. Mining industry costs have outpaced inflation over the past five years, partly because of strikes.''






Crash in bullion price hits SA gold miners' bonds hard
by Kevin Crowley, July 02 2013, 06:57






SOUTH African gold producers' bond yields surged to records relative to US government debt last week, driven higher by the biggest quarterly loss for the precious metal since at least 1920.

The extra yield investors demand to hold August 2022 dollar bonds of AngloGold Ashanti, South Africa's largest producer, over 10-year Treasuries, rose to a record 471 basis points on Wednesday. The premium for October 2020 debt of Gold Fields widened to a record high of 542 basis points on Thursday.

The average spread of emerging-market mining and metal companies' yields over Treasuries was 453 basis points on Monday of last week, the highest in a year, JPMorgan Chase indices show.

The companies are not only confronting slumping commodity prices, and yields spurred higher by concern the Federal Reserve will start to scale back stimulus, but also face labour unrest amid demands by entry-level workers for pay to be doubled. Mining industry costs have outpaced inflation over the past five years, partly because of strikes.

"Gold companies are essentially a leveraged bet on the gold price, and particularly for comparatively higher-cost producers like the South Africans," Peter Archbold, a London-based credit analyst at Fitch Ratings, said on Thursday. "When the gold price falls, their earnings fall exponentially."

Gold miners globally have been hurt by the bear market in bullion, with the 188-member Bloomberg Research global mining and exploration index down 55% this year.

The metal dropped to $1,180.57 on June 28, the lowest intraday level since August 2010.

Bullion has plunged 24% since March, the biggest three-month fall on record, because of an improving US economy.

The Fed would "moderate" the pace of bond purchases this year if economic data suggested the US continued to improve, chairman Ben Bernanke said last week. Gold, which is traditionally a safe-haven asset, has slumped 11% since then.

The difference in yields for the April 2022 dollar bonds of Barrick Gold, the world's biggest miner of the metal, and similarly dated Treasuries, rose to a record 383 basis points, or 3.83 percentage points, on Friday. The company's bonds are trading as if they have lost their investment-grade rating after the slump in gold, according to Moody's Investors Service.

Moody's actual rating for Toronto-based Barrick is Baa2, the second-lowest investment grade.

The Association of Mineworkers and Construction Union, which represents 17% of South Africa's gold miners, wanted underground-employee pay more than doubled to R12,500 a month for entry-level workers, it said last week. The National Union of Mineworkers, which represents 64% of the workforce, wants a hike of 60% to R8,000.

Costs for gold mines in South Africa, the world's fifth-biggest producer, are steeper than abroad because of higher levels of labour needed to dig its ageing mines.

[wylecoyote] 01/7/2013 20:54

Yup, my short is going fantastically. My target was 20.0p but may consider extending it to 10.0p

[buywell2] 01/7/2013 19:28

I have not called a bottom on SHFT prikles , the chart is in downtrend

Plus we don't know how much more they are going to have to pay the SA labour force yet ... but soon will

For now 25p looks like coming tomorrow though




This is what I said .... last week .... it seems the share wants to go to 25p in one instead of 5 days


HH try learning about charts ... it will help you avoid these bad picks you are aking





buywell2
29 Jun'13 - 11:58 - 2120 of 2128 0 0 edit

A forward order book in SA is meaningless with the parlous state of the Mining Industry there both GOLD,PLAT ,COAL for example.

Profits if any will be cut to the bone by re-negotiations with mine owners who are struggling to maintain break even due to wage demands /strikes/ and falling commodity prices ALL AT THE SAME TIME.

SHFT could NOT be operating in a worse environment in a worse place ... they are deep in la merde so deep they are sinking out of sight.

The chart of SHFT share price clearly demonstrates what is happening ALL facts/future data are in the SP

My call next week is therefore is now 25p

Hope this helps

dyor

[technofiend] 01/7/2013 19:18

Shaft Sinkers has never ventured to these depths before so whoever is selling is selling at a loss.

[wylecoyote] 30/6/2013 23:19

You have forgotten that printing money causes prices to rise too...

[hedgehog 100] 30/6/2013 22:16

Buywell2 has previously called the bottom here at 25p.

ADVFN is currently showing SHFT as just:
Bid
26.00

Which suggests that it would be hard for holders to trade out and in without losing money, even if 25p mid was hit.

But prices tend not to reach such targets, due to people dealing in advance of them in anticipation of the turn. And the falling wedge pattern has now been well filled, which is technically a very bullish indicator.

This being the case, I believe that it's a time for strong nerves and calm thinking, rather than making the classic beginner's mistake of being scared out right at the bottom.

SHFT has clearly suffered by being linked to poor mining sector sentiment, unjustifiably so I believe due to its secure long-term contracts performing essential work for major mines.
But it is now I believe so cheap that risk is far more than factored into the price.

And as a quality, main-listed company SHFT has consistently exhibited better institutional support than risky AIM miners.

Bear markets always throw up bargains which looking back look absolutely mouth-watering, but it takes intelligence and vision to grab such opportunities at the time.

I notice that FRX has rebounded well recently, which shows than when a price gets too cheap, bargain-hunters WILL move in.

[hedgehog 100] 30/6/2013 20:35

muckshifter 30 Jun'13 - 14:05 - 54 of 58 0 0
"With reference to Hedgehog's post 52 defending Helmer's article.
I note that as usual Hedgehog, you are happy to believe in the third hand opinion of a journalist with an agenda (imho), without engaging your brain and questioning that opinion – probably because the opinion suits your purpose. ..."

On the contrary, I critically appraise and analyse everything I read. Whereas you as usual are closed-minded to anything pro-SHFT.
John Helmer doesn't have an agenda: YOU are the one with the agenda.


John Helmer is the longest continuously serving foreign correspondent in Russia. He has also been described by Mineweb as follows:
"He's the doyen of the foreign press corps in Russia, and a tough, no-nonsense investigative reporter."



With regard to the global economy: haven't you heard of economic cycles? As the global economy recovers, demand goes up, and commodity prices rise. It's not rocket science, and no gypsies or crystal balls are required.

My overriding comment regarding your John Helmer article rebuttal thesis in general is this: EuroChem can clearly make FAR MORE money from the new Gremyachinskoye potash mine in Volgograd over its life if it starts a few years later, even if they could make a narrow profit from production at the moment.
Remember that the impact of all that new potash hitting the market now would clearly depress the price greatly.

I notice that you have ignored John Helmer's point about other potash miners cutting production dramatically, which is probably more difficult that not starting mining in the first place:

"Since the potash price is well below where the miners would like it to be, mining less potash is one way of putting a bottom under the price. Eurochem's Russian potash rival Uralkali implemented a production cut in 2012 of 8%. In the first quarter of this year, Uralkali said it is cutting by another 40%. The Russian cuts match those of Canada's Potash Corporation, the largest producer in the worl, which has taken 1 million tonnes off the market since last year."

You have also ignored John Helmer's point about EuroChem not starting excavation on the Karatau phosphate project in Kazakhstan, which backs up his thesis:

"...The releases from Eurochem include the announcement in February 2009 of Kazakh presidential approval for the Karatau project, with capital spending of $2.5 billion ...
It would be madness for Melnichenko to be spending $2.5 billion on adding to phosphate supply when it is suffering from the same downturn in market demand and price as potash...
But promising to start excavation in 2009 and not starting, Eurochem has paid real money for additional phosphate reserves elsewhere...."

[hedgehog 100] 30/6/2013 19:47

muckshifter 30 Jun'13 - 15:51 - 58 of 58 0 0
"...You'll say anything to try to confuse people won't you...."

On the contrary, I am scrupulously honest, but it seems to me that YOU will say anything to try to mislead people about SHFT.

I see now that your 'passing bus' statement can be read in two ways; I read in in the way that wasn't you attributing your made-up thoughts to myself.

It's a pity that you couldn't have recognised that you created the misunderstanding by your wording.

[hedgehog 100] 30/6/2013 19:27

29/04/2013 07:01 UKREG Shaft Sinkers Holdings Plc Final Results

"-- Year end committed order book GBP346.5 million (2011: GBP301.1 million)
-- Strong tender pipeline GBP1.1 billion (2011: GBP1.1 billion)"




Extracts from SHFT's final results presentation:

" Target is 8-10 new contracts over five years
• 1-2 major new contracts this year"

"Typical shaft sinking project
Tendering process
Pre-qualification (1 month)
Tender process (5 months)
Contract negotiation(3 months)"