Shaft Sink Share Discussion Threads

[wylecoyote] 23/9/2013 13:12

Incredible,

all that time, you professed to be long here and slaughtered anybody who was bearish on here. When all long you wasn't actually invested at 80.0p, 60.0p, 40.0p. You have no credibility in my opinion.

[hedgehog 100] 21/9/2013 16:29

WC,

Thank you for your concern - I'm rather touched!

At 22.75p the SHFT share price is about fifty per cent higher than a couple of months ago, so I prefer to think of the fact that I have made good money here since my average down at that point.

The share price is more or less flatlining at the moment, but I'm expecting good contract news imminently which will hopefully trigger the next leg up to 30p -


29/08/2013 07:01 UKREG Shaft Sinkers Holdings Plc SHFT preferred bidder in Kazchrome JSC tender

" ... The project award, valued at approximately $75 million is subject to the negotiation and conclusion of a contract scheduled to be completed by the end of September 2013. ... "

[wylecoyote] 20/9/2013 22:32

Hectorp & HH have you continued to lose money here?

[hedgehog 100] 18/9/2013 18:33

How about you Hector, are YOU back in SHFT?!

It certainly looks like a good time.



P.S. PAF, a South African gold and platinum miner, announced good annual results yesterday, and reinstated its dividend, which was well-received by the market -

17/09/2013 07:00 UKREG Pan African Resources PLC Provisional audited results for the year ended 30.06.13

[hectorp] 18/9/2013 16:38

I also believe SHFT remains oversold after the recent contract win. The bottom should be in , for SHFT.
H.

[mega_trader] 10/9/2013 12:41

Miners back to work, wage disputes settled better than demanded by unions, no more wage talks for 3 years, looks good for shafty!

hxxp://articles.timesofindia.indiatimes.com/2013-09-08/rest-of-world/41873420_1_harmony-gold-south-african-gold-miners-wage-dispute

[hedgehog 100] 09/9/2013 21:34

Thanks to the respected poster Rainmaker for this useful contribution from his thread "RAINMAKER'S VALUE THREAD (VAL)" earlier today:

Rainmaker 9 Sep'13 - 11:07 - 5341 of 5342 1 0

"Hi Hedgehog, I think the whole point of Shaft Sink that it is low risk business franchise that has a specific sought after skills set ie digging deep vertical shafts through all types of ground, including sand, that is transferrable across different miners and different countries and their services are always going to be in demand whether it be mining platinum, gold, zinc, potash. Furthermore once they are awarded a contract, the Company receives money for the equipment and materials before they start work-how good is that. If one mining sector becomes low demand because of a depressed metal price or due to country specific problems then they are others and they will always earn high rates of return on equity and assets under normal market conditions.IMHO the company has not been well managed in recent years due to poor management and this is on top of other short term difficulties means that,due to the market's "earnings myopia", Investors have the opportunity to buy into a great long term business franchise, way below it's low term value at absolute bargain prices.

regards"




And thanks to Harkins1950 on iii for this useful post last week about a SHFT presentation to share price Angel Corporate Finance that same day:

Wed 11:55 share price Angel Harkins1950 1

"Shaft Sinkers (LON:SHFT) – meeting at share price Angel
By share price Angel
September 04 2013, 11:29am

• Shaft Sinkers yesterday updated us on their results and operating performance.
• The company is showing steady performance with all new projects now seen as replacement infrastructure.
• It appears there is good ongoing demand for new shaft infrastructure to expand and extend the life of many mines.
• Margins not expanded to target levels but remain steady which looks like a good result compared with the performance of many companies in the sector.
• The company lost AngloGold's Moab shaft project due to uncertainty in South Africa, though this could come back if the threat of strike action eases. The company now has no effective exposure to the South African gold industry.
• Some lessons have been learnt from operating in overseas markets with Shaft Sinkers taking over the role played by its local sub-contractor
• The order book remains steady at around £350-400m with good potential for new business additions as miners need to expand further.
• Shaft sinkers are a quality outfit in our view. The team come well presented and well prepared. They are straight forward and clear in their delivery and they could easily run a bigger business on the back of their structure.
• Shaft Sinkers are the go-to team for shaft sinking and their new reach into the DRC, India, Russia and Kazakhstan gives the company a .
• Shaft sinking quality, cost and times are mission critical to many mines be they start up operations or for the development of new underground workings.
• We wonder if the company might be able to better use its trusted position within the market to secure some form of upside participation or royalty from new projects going forward.
• Shaft sinking costs are often a key determining factor in the economic value and viability of a mine and few companies have the skills, team and reputation required for assured delivery.
Conclusion: The company now has no exposure to the South African gold mining industry though it is still working on a number of shafts for Impala platinum. While there is potential for some further disruption from strike action on the platinum belt we feel this exposure is now limited and that the company's expansion into new overseas markets should ensure future growth."

[hedgehog 100] 06/9/2013 21:14

More evidence of the trend towards underground mining, which should clearly benefit SHFT in its long-term global growth:


"Mining in Chile Going Back Underground

By Marianela Jarroud

SANTIAGO, Aug 23 2013 (IPS) - Declining mineral content, the need to preserve the environment, and technological advances are causing big mining companies to turn back to underground mining in what is a rising trend in Chile and around the world, experts say.

Juan Carlos Guajardo, head of the Centre for Copper and Mining Studies (CESCO), told IPS that "not only Chile is opting for underground mining, but the industry itself is evolving towards that kind of extraction."

The trend, he said, "is because large deposits that have been mined through open cast mining have better reserves at greater depths, and exploration in Chile is tending towards the deeper resources, since the minerals on the surface have long been exploited."
This South American country possesses the world's largest underground copper deposit, which is owned by the state National Copper Corporation of Chile (CODELCO) and has been mined since 1905.

The El Teniente Division mine, as it is formally named, was responsible for 25 percent of CODELCO's total production of 1.75 million tonnes of fine copper in 2012.

Some 137,000 tonnes a day are extracted from El Teniente's Sector 8, which is currently operating.

But the deposit under the Andes mountain range, 150 km south of Santiago, with 3,000 km of underground tunnels, has only enough copper to last until 2025 at the present rate of extraction.

As a solution, CODELCO is developing its New Mine Level project, which is expected to start operations in 2017 and will access 2.02 billion tonnes of reserves at greater depth, at an altitude of 1,880 metres above sea level, 100 metres below the current mining level.

The project will extend the productive life of the mine for another 50 years. It involves the use of cutting-edge technology and an investment of 3.3 billion dollars, similar to the amount spent throughout the history of this emblematic mine.

"CODELCO has a number of structural projects in hand, aimed at maintaining its leading position as the top world copper producer and maintaining its contributions to the Chilean state," a company source told IPS.

If these projects were not implemented, the source added, "copper production and the generation of surpluses (financial contributions) for the state would fall dramatically, with enormous effects on the country and the company."

... The main advantage of underground mining compared to open pit mining "is that in general only the ore is extracted, and waste rock is left behind," Jorge Baraqui, acting manager of mining technology and innovation at CODELCO, told IPS.

"This means you can avoid removal of the material without economic value, and limit environmental impact," he said.

The operational costs for an underground mine are not necessarily higher than for open pit mines.

"With open pit mining, with time excavation goes deeper and deeper and the cost of transport increases. Also, larger amounts of waste rock must be removed to get access to the same amount of mineral," Baraqui said.

"That's why it may be necessary in some cases to shift to underground mining methods, for which operational costs may be more competitive," he said.

An example of this is the Chuquicamata mine, 1,650 km north of Santiago. It is the largest open pit mine in the world, and it will become an underground mine in 2019.

This is another of CODELCO's structural projects: the state-owned firm says that in itself the conversion of Chuquicamata will cut down on dust emissions by 97 percent, in spite of building 1,200 km of tunnels.

Chuquicamata is expected to become one of the industry's lowest-cost mines, mainly because of estimated energy savings of 50 percent.

CESCO's Guajardo explained that as the transition from open-pit to underground mining proceeds, "there will be some cost reductions compared to the present high operational costs."

Mining underground may reduce the cost of safety measures, as well as saving time with shorter trips back and forth, using less energy and more technology. ... "




Incidentally, Chuquicamata is the mine that awoke the political awareness of a young Ernesto "Che" Guevara in the 1950s, as related in "The Motorcycle Diaries".

[hedgehog 100] 06/9/2013 20:32

Some good news today:


6 September 2013 Last updated at 14:18

"South African gold miners return to work

Most of the 80,000 South African gold miners who have been on strike since Tuesday have returned to work after a new pay offer, union officials say.
The National Union of Mineworkers (NUM) spokesman said workers for four of the seven companies had accepted the offer of an 8% rise.
The NUM had been demanding 60%, while employers had offered 6% - the same as the current annual rate of inflation.
... NUM spokesman Lesiba Seshoka told the AFP news agency that the remaining workers were still being briefed about the latest offer.
"This may possibly mark the end of the strike," he said.
Mine owners had warned that a long strike could lead to gold mines closing and thousands of jobs being lost, following a fall in the price of gold.
They say that their production costs have increased as they have had to dig ever deeper to extract gold. ... "




And note the last sentence in the extracts I have posted above.

[this_is_me] 02/9/2013 12:01

Plenty of risk in the short term, reflected n the price.

There is plenty of potential upside which is not reflected in the share price and could be a multi bagger from my buying price last month.

[mega_trader] 02/9/2013 07:50

Satisfied with results, looks positive going forward planty of upside. Also like the look of CAPD, quality company, way undervalued, solid management, good outlook, should be a good day for miners.

[hedgehog 100] 01/9/2013 21:15

Thanks Ian, and yes, I'm not the only one.

E.g. brasher2, cocomac0, Hectorp, Ivyhuang, mega_trader, Noirua, TechnoFiend ...

There's a lot of excellent and informed posters who are very familiar with SHFT.


I actually regard the dispute with EuroChem as presenting an extra special investment opportunity with SHFT, and I explained why in my post 62 above -
Hedgehog 100 2 Jul'13 - 20:15 - 62 of 137 0 0 edit


In essence, I believe that SHFT is in a win-win situation here.

If SHFT wins the arbitration, then it could get about $30 million for work it has done, and legal costs -

"Stumbling into its own Stalingrad
by David Gleason, 13 June 2013, 05:30
...Shaft Sinkers says Eurochem owes it $15m for work done. Legal fees may well double that. South Africa remains its major operating area but it does have work elsewhere, notably in India and the Democratic Republic of Congo. ... "


That's over two thirds MORE that SHFT's current market cap. of £11.52M. (US$17.85M.) at 24.25p!


Whereas if it loses, then the rest of the SHFT group continues relatively unaffected.


In either case, the mere removal of the uncertainty would doubtless be seen as a positive, and SHFT's profits should rebound strongly as the substantial legal costs drop out of its performance.


P.S. My posts 32 & 33 above are also worth a look for more detail on the EuroChem dispute.

[ianjan] 01/9/2013 16:08

your last paragragh makes a fair point hedgehog,must say I have not thought of that perhaps I will make a small purchase Monday then average up if the situation becomes clearer. Without the court case it is a no brainer. thanks for the quick rely you seem to be one of the people on here who knows most about this company

[hedgehog 100] 01/9/2013 15:50

Ian,

There's quite a bit of useful material about that on this thread, e.g. this extract from my AGM report in post 44 above:


Hedgehog 100 15 Jun'13 - 20:34 - 44 of 135 0 0 edit

"HEDGEHOG 100'S 2013 SHFT AGM (7.6.13) REPORT

... 1. EUROCHEM CLAIM & COUNTERCLAIM

No provision has been made for it in SHFT's accounts, because they believe EuroChem's claim is totally without merit.
"But EuroChem must believe it has merit, to have brought the claim?"
SHFT are restricted on what they can say because of the terms of the arbitration.
But people have different motives for bringing claims.
There are people round the world who like to do this; to hurt other people by doing this.
SHFT's auditors KPMG have had to study the claim very deeply, and say that no provision is required.
EuroChem's claim is against a subsidiary company of SHFT, not against the group as whole; if this subsidiary goes bust, then the rest of the group continues as a going concern.

£9M. is due to SHFT from EuroChem that SHFT haven't written off.
Under contractural obligations, EuroChem DO owe them the money.
SHFT cancelled the contract in April 2012, but after EuroChem suspended operations in December 2011.
SHFT took view that it wasn't in their interests to let the company continue in a suspended contract.

If the dispute isn't resolved in advance, it's likely to be resolved by the end of 2014.
It costs a lot in legal fees; if SHFT win the arbitration claim, they're likely to get a large proportion of those back.
These legal costs are accounted for in full in SHFT's forecasts, as near as they can estimate them.
"How much are these lawyers' fees?"
SHFT can't say how much it's costing in legal costs because of arbitration confidentiality.
Early settlement is always possible, and discussions are ongoing with EuroChem, but they're not very active at the moment.

"EuroChem are also claiming $800 million against International Mineral Resources?"
SHFT are aware of that and don't think that claim has any merit either.
"It seems strange that EuroChem should try to claim the same money against two different companies?"
SHFT agreed.

"What are the implications of EuroChem's claim on the due diligence on Shaft Sinkers by potential clients?"
The Rangold Resources contract was signed after the EuroChem claim was announced.
Rangold studied the claim closely beforehand, because they wouldn't want their project being hit by their shaft contractor going bust and not fulfilling their contract.""

[ianjan] 01/9/2013 15:43

but what about the lawsuit that could wipe the company out if it loses ? not knocking it the company but would like to know. I would like to buy but this issue keeps stoppimg me.

[hedgehog 100] 01/9/2013 15:35

Another new extract from proactiveinvestors.co.uk about SHFT, which shows that hydroelectric contracts could be on the cards for Shaft Sinkers as part of its diversification strategy:

"Shaft Sinkers: Diversification the name of the game
By Jamie Nimmo August 30 2013, 1:05pm

... Davidov told Proactive Investors that there are plenty more international deals in the pipeline, adding that the company is not only diversifying geographically, but also looking for business away from the mining sector.

"We're looking at quite a few deals," said the CEO. "Some of them are not directly in mining, some of them are in hydroelectrics or ventilation access to major transport tunnels – sinking a ventilation shaft to 500-600 metres is a skill we possess.

"We are looking for more mining opportunities outside of South Africa. Our prospective pipeline is comfortably sitting at about £1 billion," he added.

Davidov is quick to stress that South Africa, which sits on 80% of the world's known platinum reserves, remains a key market for the company despite its troubles.

"We're certainly not shying away from the South African environment; we're just well aware of some of the difficulties that the industry is undergoing right now in South Africa and we're bracing for that," he said.

"We've been delivering on the major items, which is getting international business, which does have good margins, and it helps diversify us away from the South African environment to some degree.

"But also working to our project ethos in South Africa should see decent returns from there as well and opportunities for new business there."

He launched a cost cutting drive to counter falling revenues, which helped pre-tax profits rise to £2mln in the first six months of this year compared with £1.1mln in 2012.

But despite margins climbing from 10.5% to 12.7%, the ambitious South African was hoping for more from today's first-half figures.

"We've improved our operational profitability, but not in the satisfactory manner we would have liked," he continued.

"The main impact we're feeling is from the issues at our South African operations that we've been working to address for a while.

"We've addressed quite a few of them, but we're still feeling the effects of a very difficult trading environment in that industry as a whole and in South Africa in particular."

The majority of Shaft Sinkers' clients are platinum miners in South Africa that were at the heart of last year's violent strikes.

So it will come as no surprise to those unfamiliar with Shaft Sinkers' story that it has been under the cosh of late.

Two of the company's most high-profile customers are Lonmin and Amplats, giants of the platinum producing world whose businesses have felt the full force of the ugly protests.

The widespread unrest at many of South Africa's mines disrupted production, which had a knock-on effect for the company.

It may have cut the interim dividend, but the company insists that when cash flow improves it will return cash to shareholders once again. A pay-out next year looks the most likely option if things go to plan."


A SHFT move into renewable energy work would I believe make great business sense for the company, as well as helping its green credentials ... which I believe are already good, as underground mining is more environmentally acceptable than open-cast mining.


An extract from Wikipedia about hydroelectricity:
"It is the most widely used form of renewable energy, accounting for 16 percent of global electricity generation – 3,427 terawatt-hours of electricity production in 2010,[1] and is expected to increase about 3.1% each year for the next 25 years."

[hedgehog 100] 31/8/2013 20:12

Two extracts from proactiveinvestors.co.uk about SHFT from the last couple of days:


" UPDATE - Shaft Sinkers wins £48mln Kazakh contract
By Jamie Nimmo August 29 2013, 2:58pm

... Broker Westhouse Securities hailed the news and expects the formal award of the contract to follow shortly.

"We view positively Shaft Sinkers growing exposure to higher-margin international contracts, increased diversification by both geography and commodity, and management demonstrating their ability to convert its pipeline of opportunities," said analyst Kevin Fogarty.

"With the valuation (FY2013 P/E 2.8x, EV/EBITDA 0.6x) pricing in a more negative scenario than implied by the recent trading update we retain our 52p target price and Buy recommendation," he added.

The shares rose 6.4% to 25p each on Thursday."


"UPDATE - Shaft Sinkers looking for better second half performance
By Jamie Nimmo August 30 2013, 9:04am

... Westhouse Securities said the share price is currently pricing in significant downside risk to earnings.

"FY2013 P/E and EV/EBITDA multiples of 2.8x and 0.6x, respectively, don't reflect any potential recovery in profitability and compares with 6.5x and 3.0x for the global mining services peer group," said analyst Kevin Fogarty.

He has a 'buy' stance and 52p target price, compared with the current market price of 24p, down 2.4% on Friday."


And British Bulls issued a new buy recommendation on SHFT yesterday evening:

"SHFT.L

BUY
Last Pattern: BULLISH HARAMI
Last Close: 24.2500
Change: -0.2500
Percent change -1.02%

Signal Update
Our system's recommendation today is to BUY. The BULLISH HARAMI pattern finally received a confirmation because the prices crossed the confirmation level which was at 23.7500, and our valid average buying price stands now at 23.8000. ...

Market Outlook
Let's jump on our white horses and go for a bullish ride. The bullish pattern that was previously identified is finally confirmed and a BUY signal is generated. The market is telling you about a new profit. Do not miss this bullish opportunity. ... "

[mega_trader] 30/8/2013 12:15

OK RCT. Looks like buyers reading the positives in the rns.

[rcturner2] 30/8/2013 09:16

mt - I have never been short on any share in my life. How many times do I have to post that?

[rcturner2] 30/8/2013 08:18

My view would be that they need to conserve as much cash as possible. That is never a great sign. Earnings are 3p a share, yet they couldn't even risk paying any of that as dividend. Not even .5p, for example.

[bill-e] 30/8/2013 08:15

How does the non payment of a dividend at interims indicate they know they are in trouble?
Margin up, profit up, Current ratio 1.26:1 and free unrestricted cash reserves???
This is not a sign of trouble, but an indication of consolidation for the full year.

[billy_liar] 30/8/2013 08:03

"This performance is however below management expectations due largely to challenging conditions in South Africa. Whilst gross margins have improved, and are well above H1 2012 levels, our cost saving measures did not mitigate fully the impact of operating difficulties and the negative impact of the South African Rand exchange rate."

"Subject to the labour situation in South Africa we expect the Group's financial performance during the second half of 2013 to improve compared to the first half of the year."

What's positive about that? That's rather a large and significant caveat to 2nd 1/2 improvement.

Some extremely rose tinted spectacles here still.