Shaft Sink Share Discussion Threads

[ivyhuang] 06/8/2013 12:57

what if EuroChem goes bankrupt before Shaft?

[brasher2] 06/8/2013 12:33

Looking good for the next leg up. Volume picked up nicely

[it_trader] 06/8/2013 12:22

That's the gap filled, and reached back to the 50 day EMA. I've now sold.

That'll do me for now. If it breaks above I may buy back in.

[wylecoyote] 06/8/2013 10:38

Regardless, the charts on here is so easy to follow. I have made a mint on this.... So I am delighted

[jaf111] 06/8/2013 10:14

Whatever the merits or not of Shaft, certainly interesting times....up over 50% already this week on no "official" news......

[noirua] 06/8/2013 10:07

End of an era in the potash market.

Last week's announcement that Uralkali plans to quit the trading cartel Belarusian Potash Corp will significantly alter the industry landscape for years to come. After years of limiting supply to support high prices, Uralkali's move may now push major producers to compete for market share rather than price. We are concerned that the outlook for potash prices and new potash products has significantly weakened.

Potash Price War Risks Weighing on Uralkali Bonds: Russia Credit - Bloomberg

[brasher2] 06/8/2013 09:59

Hopefully a few more days before the hordes arrive

[mister md] 06/8/2013 09:53

another 100k buy reported late

[mister md] 06/8/2013 09:42

"Net debt has improved, declining to £0.2m at the end of H1 vs. £2.1m at the end of FY2012 and management expects to agree a refinancing of existing facilities shortly," Westhouse's Kevin Fogarty said.
"The trading update implies that financial performance for this year will be second half weighted. Ahead of the release of interim results on 30th August the valuation (FY2013 P/E 2.7x, EV/EBITDA 0.6x) is pricing in a more negative scenario than that implied by today's trading update in our view. With no changes to forecasts we retain our 52p target price and Buy recommendation," the broker said.

[brasher2] 06/8/2013 09:37

Only 48 mill shares and half tightly held

[muckshifter] 06/8/2013 09:35

Noirua,
Russian Law, however, has nothing to do with a binding contract with a dispute procedure which both parties to the contract have signed up to in making the contract, does it?

My posts are not concerned with the share price, in which I have never had, and am never likely to have, any interest. My posts are written as a reaction to a stupid misleading article by Helmer and the provocative drivel Hedgehog used to write, which seemed to fool the gullible amongst us.

So, can you tell us how much potash is actually produced from opencast mines and the cost of producing it then. I've always made the point that opencast is normally a cheaper method of production but have no knowledge of opencast potash production.
Regards.

[mister md] 06/8/2013 09:35

any idea as to the free float here , is it a tightly held share ?

[brasher2] 06/8/2013 09:27

Bridging that gap and then upwards. Market sentiment might be changing or something is happening in the background . Either way still think this is way under valued for all its assets.

[noirua] 06/8/2013 09:17

muckshifter, your enormous posts are unduly negative against the present price of Shaft Sinkers -- maybe there is an unsaid reason for this. If the stock price was 50p I would accept your arguments put forward.

Eurochem's deep shafts are very expensive compared to nearer surface finds elsewhere in the world and even finds in Australia are quite impressive. Note Sheffield Resources' recent finds in WA. That's the problem, there is too much potash around now and even BHP are thanking their luck stars the Canadian takeover fell through.

If you check Russian Law, available over the net, Eurochem have no case. I think they are grasping at straws.
Eurochem's potash development should really be shelved as so many other finds are on ice.

[brasher2] 06/8/2013 09:11

Have done looking forward to 30s within the month?

[wylecoyote] 06/8/2013 09:06

Brasher, you have to ask why the market has priced it as such. The market is never wrong, so tread carefully and do your own research...;-)

[brasher2] 06/8/2013 08:54

This is valued at just 8mill. Crazy low price.

[muckshifter] 06/8/2013 08:13

Apologies for repeating this post(post66), but after writing it I remembered two things I'd meant to include:

Noirua,
Insurance will play no part in this situation. neither shft nor Eurochem will have any relevant insurance – you can't insure against failure to perform.

The article you reference from "Business Insider" is the absolute drivel written by Helmer, which is not even worth reading unless you want to see how poor journalism can be. I'm not sure whether he is just deliberately lying to make his ridiculous theory look more credible, or completely incompetent. But I think it's most likely that he is deliberately lying to build his theory.
For example, I think it would be quite difficult to miss the statement in just about every relevant RNS, and in all shft annual and interim reports since the termination of the Eurochem contract, saying that the contract was terminated unilaterally by shft – but Helmer manages to miss this and writes that Eurochem terminated the contract.
Similarly, he claims that "It took several more months before it was disclosed that Eurochem was raising its claim to $800m to include etc etc" (he says the claim was "raised" in Feb 2013, iirc). When in fact, Eurochem's initial arbitration claim on 5th October 12 was for the full amount of $800m, was extensively reported in press articles that same day as being $800m, and was the subject of shft responses long before Helmer's "date".
And most obvious of all, one that he couldn't really pretend he didn't see was his assertion that "During the five years in which Shaft Sinkers has been excavating at Gremyachinskoye potash has failed to reach Eurochem's breakeven point." He had by that point in his article conjured up his ludicrous "breakeven" value of $500 / tonne for the Eurochem project, and included immediately below this statement the price graph from Infomine.com which showed clearly that during the three and a half years shft were working under contract at Eurochem (not five as he states), the price of potash was above even his absurd "breakeven" figure, for approximately 30% of that period.

But the two most serious lies, or fabricated mistakes presented as facts, upon which his incredible conspiracy theory effectively rests, are:
The shft contract was going well (swimmingly was Helmer's expression) until end of 2011, when work was suspended. ACTUAL FACT:In more than 75% of the contract period, shft had achieved 8% by depth of the shaft sinking (the easiest 8%) and had failed to get through any of the three known difficult, time consuming, water bearing strata, in other words they were failing, and they had spent more than a year trying to negotiate a contract period extension with Eurochem, without success.

Break even for the Eurochem project was a potash price of $500 /tonne. FACT: This number was conjured out of nowhere by Helmer. None of the existing potash mines require anything like even $300 / tonne to make a profit. If you look at UKCoal's mining costs in much more difficult and expensive mining operations in UK, use their mining cost and add the appropriate depreciation, finance cost etc, it comes nowhere near $300/tonne. Sirius are in the planning permission process for a remarkably similar potash mine to the Eurochem one, near Whitby in Yorkshire, and they expect to make a profit at $250/tonne. At the time the button was pushed to start on the Eurochem project the price of potash was less than $300 / tonne, why would they start the project if they needed $500/tonne to "breakeven"?
One further piece of evidence to refute Helmer's nonsensical "breakeven" price of $500/tonne is the information provided in Uralkali's presentations. Uralkali say cash cost for mining, processing, transporting to docks, and loading onto shipping, for Russian potash producers is $80/tonne, for North American producers approx $150/tonne and for European producers $260/tonne. Adding $25/tonne for capital investment cost (from Eurochem presentations) and say 40% as a very generous allowance for overheads gives a more realistic "breakeven" for Eurochem of $147/tonne, a "breakeven" price level less than half the lowest realised price shown on the graph in Helmer's article.

But in the end, it's the whole concept that you stop a project because the current price is low (but profitable still, imho), when you are still at least three years from commissioning because a critical element of the project is late (the shft shaft), which is completely crazy. How does anyone know what the price of potash will be in three years time when the mine should be commissioned? Such doubts about the price of potash in 2016 do not seem to have been seriously considered by Sirius, or by Potash of Canada, the biggest N. American potash supplier, or any other Russian or Canadian suppliers as they get on with new projects.

This is not a damage claim in court it is an arbitration, and will be governed by the terms of the contract, which I'm fairly sure will be a version of FIDIC. FIDIC's original sponsoring National Engineering bodies (similar to our own Institution of Civil Engineers) included Switzerland and France (but not us, iirc!), and as a consequence, arbitrations are by default referred to their relevant bodies as stated in the contract where the opposing parties do not agree an arbitrator. One of the most common clauses in such contracts is a liquidated damages clause for late completion, and I suspect that is the basis of the amount claimed. The version of FIDIC that I last worked on is now almost certainly out of date, but one curious thing I remember about it was the absence of a "corruption" clause, whereas I can't remember any big UK contracts which didn't include a clause dealing with corruption and the contractual consequences where it occurred.



The FT article you reference is quite interesting. A court in the Netherlands, where Eurochem are suing IMR for damages relating to the shft contract on the basis of corruption, has frozen IMR assets. The basis for the judge's action is very close to what I've been saying here for a long long time. IMR and shft would have been well aware of each others actions, imho, as they had two senior directors common to both companies and IMR owned 54% of shft. The judgement actually said that a director appointed to the shft board by IMR was the person accused of bribery.
In post 1473 on the shft board, a long time before allegations about corrupt acts by either shft or IMR appeared, I made the point that perhaps consultants had been warning that grouting wouldn't work since pre contract stage, which later seemed to be confirmed by one of the allegations within the court action against IMR by Eurochem. That allegation was that a consultant's report saying that grouting would not work was suppressed by a Eurochem employee who was being paid for services rendered, by either shft or IMR.

My view remains that Eurochem are likely to cripple shft financially, seriously damage their reputation (as already reflected in the huge jump in bonds shft have had to supply since the dispute became public) and may even end up destroying them, unintentionally.
Regards.

PS. Forgot to point out that according to Helmer Eurochem would be producing 2.3 million tonnes / year at least a year before the scheduled completion of either of the shafts, which would be a bit difficult!
PPS. Forgot to point out that Uralkali operate potash mines in the Perm region of Russia, where Eurochem's intended second potash mine is being built, so their figures are absolutely relevant. Perm is much further from port facilities than shft's ex project -something like an extra 1000km, and was regarded by Eurochem as its second choice in terms of building priority, but is now ahead of the "shft" job because of shft's failure.

[muckshifter] 05/8/2013 20:52

No Technofiend, they have been working continuously on the change over to freezing since shft departed, it is just that the freezing carried out in the last six months or so is now allowing them to start excavation again, that they are announcing, progress or otherwise of the dispute with shft has absolutely nothing to do with it. It also doesn't mean they are any more likely to settle soon.

The only thing which was detrimental to shft in the IMR asset freezing was the fact that the judge believed shft & IMR acted effectively as one, which is what I've been saying here for some time. My suggestion a couple of posts ago was that perhaps some people think that judgement means that shft are off the hook and it's now just IMR in the hot seat, which I think is unlikely.
Regards.

[technofiend] 05/8/2013 20:32

Muckshifter, I am not too sure, but it seems ominous.

Perhaps it is necessary for Eurochem to settle with SHFT before they re-open the potash project?

Perhaps the re-opening of the project is a sign that they will be settling soon?

I don't know to be honest. I also thought the FT article about freezing IMR's assets sounded bad for SHFT, but others on here think otherwise?

[brasher2] 05/8/2013 15:54

RNS soon maybe?

[muckshifter] 05/8/2013 15:51

I can't see how that would benefit shft though Technofiend - it is exactly what I expected, Thyssen get to do the job.
Regards.

[technofiend] 05/8/2013 15:37

This could be part of the reason:

hxxp://www.agprofessional.com/news/EuroChem-restarts-cage-shaft-sinking-at-Volgakaliy-217982901.html

EuroChem restarts cage shaft sinking at VolgaKaliy

EuroChem, Russia's largest fertilizer company, announced that it has restarted the sinking of the cage shaft at its VolgaKaliy potash project following the successful completion of the shaft freezing stage. The cage shaft sinking operations have been resumed from the 100 meter mark following the suspension as a result of the failure in the grouting technology used by Shaft Sinkers, a South African contractor, which had been hired by the company for the project.....

[thelongandtheshortandthetall] 05/8/2013 14:43

could it just be shorts closing?

thats my guess

good luck long term holders

[wylecoyote] 05/8/2013 14:35

something and nothing. It had been sold down for a significant period of time, a derth of sellers in my opinion. This is why I closed my short, also some significant volume started passing through in the last day or two.