Shaft Sink Share Discussion Threads

[muckshifter] 04/12/2013 08:12

Still no announcement of the Kazchrome award, which surprises me a little.
It might mean that all has gone well with bank negotiations, facilities have been extended and all is well, but I doubt it.

My expectation was that shft are getting extremely tight in terms of bank facilities, and as I'm always saying (apologies to sensible readers for banging on about it), cashflow is the killer for this type of company. Shft acknowledged in several recent reports that they are in a tight situation in terms of cashflow / facilities, and I felt that the timing of the Kazchrome contract, to be awarded effectively by shft's biggest shareholder, IMR, served a few purposes. Kazchrome presumably need a shaft, shft might well need cash desperately in the near future if the bank is awkward, shft, and the boys from the former Soviet Union, need good news. The Kazchrome award would fulfill all those requirements, imho.


I thought that the award would be confirmed in time for an advanced payment before year end, which would save the day for shft. Leaving it as late as possible might well serve to get shft noticed by journalists doing their superficial research for Christmas tipping season, and help them engage in the Santa rally, which would perhaps give the shares a good boost. My belief is that if that could be achieved there would be a rights issue to get shft a bit of clearance in terms of lack of bank facilities.

For readers who doubt the point I'm making about the tight cashflow situation, even though shft effectively have warned about it several times, consider this:-
Profit, for shft, does not correspond to cashflow. The income and profit declared in results is effectively moved from the advanced payment cash already in the bank into the profit and loss statement. Without regular substantial advanced payments shft's cashfow situation becomes dire. This will be particularly important next year because that is when the big cost will be incurred in terms of the arbitration. I would expect this year's arbitration related cost to be reasonable, perhaps £1m, but next year's would probably be several times that and it's cash up front.

PS. Oh dear, I see Hedgehog is at it again, trying to misrepresent me in every way he can, twisting anything I've posted, lying etc, anything to discredit me rather than answer specific points.

[hedgehog 100] 03/12/2013 20:38

He who laughs last laughs longest. And the real gains here are still to come.

The coming months and years will provide the definitive answer as to who was right and who was wrong. And personally, I'm very happy with my SHFT predictions to date.

I bought in on the basis of an operational turnaround I expected - which has happened - and my belief that there had been an overreaction to the EuroChem claim - subsequently my belief in that has strengthened.

The evaporation in profits that some bears were suggesting simply hasn't happened, and was never likely to.

SHFT is now on a forward P/E of 2.1 for the current year ending in just a few weeks, 1.5 for next year, and probably below one for 2015, after the EuroChem claim legal costs (which could be up to about half a million pounds a month) drop out.

SHFT has the three main attributes that I look for in a long-term holding:
- Operational growth potential.
- Barriers to entry.
- Value.

It's very rare to have all three of those looking as good as in this case.

[hedgehog 100] 03/12/2013 20:34

When SHFT was 15p, Muckshifter and other trolls were ludicrously suggesting that it was going to pennies or worse, when people like me and Rainmaker were buying ... I suppose we should thank them!

They were shown up big time when SHFT's excellent interim results came out, showing eps up nearly 90%, and strongly improved margins:

30/08/2013 07:01 UKREG Shaft Sinkers Holdings Plc Half year results


One troll had actually been claiming that margins would be wiped out!

[stockologist] 03/12/2013 20:25

muckshifter certainly seems to be more on the ball here than hedgehog

[hedgehog 100] 03/12/2013 20:25

Buywell2,

'A' chart low has been tested again this week and has passed the test: i.e. rebounded today from 17p, hitting 18.5p at one point.

Looks to me like it could be 'gap-filling' in the area between 15p - 19p.

Also, the steep fall after a rise looks similar to early August, when the rise then resumed.




You should climb on board mate!

[hedgehog 100] 03/12/2013 20:07

TROLL-TRACKER

A breakdown of Muckshifter's ADVFN posting for the last six months or so.
His last 141 posts, 9th. May 2013 onwards (which is all that ADVFN make available).

Ticker Number of Posts

SHFT 128 (90.78%)
HOIL 5
SID 4
BVM 1
CCE 1
TDW 1
VLG 1

I.e. Over 90% on SHFT threads, many quite lengthy, and uber negative!!


Some third party views on this -

From this thread:
cocomac0 21 May'13 - 19:22 - 1961 of 2338 1 1
"Yep......... totally fed up of muckshifters comments now, there's absolutely no way I believe him when he says he has no financial investment in the company. He must spend hours and hours on this company and it just is not credible what he says about no financial interest, only personal interest.
He's damaging to the share price of a company I am invested in, and it's made all the worse for the way he's tactically negative about it, not too much at once, also maybe taking a slightly different tone at the end of a post to soften the negativity, and to disguise it a little. He's also a bit of a smartypants who knows he knows more than almost anyone in the BB about mining, he uses this to his advantage by going into details nobody really understands to give his opinions more weight, and to make it hard for anyone to take on his arguements with any real authority.
Come on mate........ put your cards on the table and show your true colours, or just get lost please. Stop bashing a share price I'm invested in. Your comments regarding this year being a question of survival are really over egging it.
Cheers. Peace out."

From the thread "SHAFT SINKERS The thread for debate not bile. (SHFT)":
Noirua 6 Aug'13 - 09:17 - 87 of 234 1 0
"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."

[hedgehog 100] 03/12/2013 17:57

People will pursue legal action if they feel they've been wronged, even if they have little or no real chance of success. In such cases the action can be an ends in itself, allied to which the bringer of it may also delude themselves to some extent. I'm convinced that this is the case with EuroChem.

Understand that the basis of Eurochem's substantive claim against some of Shaft Sinkers is not about slow progress per se, but about communication of that. They are alleging a fraudulent cover-up.

But as Muckshifter has stated on this thread -

muckshifter 17 Oct'13 - 08:44 - 205 of 233 0 0
" ... almost every RNS issued by shft, from the initial shft IPO document through to contract termination, as they all mentioned delays, negotiations to amend contract terms, etc, on the Eurochem job. ... "


Well, it's not much of a cover-up is it, when the problems have been announced so publicly.

In summary, the substantive claim is hopelessly flawed.


In addition, fraud is very difficult to prove in any case, and the person accused was an employee of EuroChem, not SHFT.

[buywell2] 02/12/2013 23:35

Chart low to get tested again ?

[hedgehog 100] 02/12/2013 16:53

No MD, about two years would be my expected time frame for tenbaggerhood from the July 2013 low of about 15p.

Say the 2015 interim results, due in August 2015.

That's too long for many, who are obsessed by day-to-day share price movements, but not for people like me or Rainmaker.

Do you have any useful research or views to contribute, or are you just here to troll?

[mister md] 02/12/2013 16:06

"in due course" but not today then ;)

[hedgehog 100] 30/11/2013 19:02

Hedgehog 100 6 Oct'13 - 14:41 - 3 of 50 0 0 edit
"Spob,
You started this new SHFT thread a year to the day after Eurochem's claim against SHFT was announced ...
According to an article on entitled "Profit warnings: Numbers, Time periods and What you can do?", this one year period is very significant. ...
It's amazing how often this 'one year' rule seems to work: two recent examples that I have benefitted from have been PVCS and REH."


Another good example is ten-bagger Thomas Cook (TCG), where the story looks similar to SHFT in terms of problems, solutions, and share price:





And in due course I look forward to ten-bagger profits here from SHFT.

[hedgehog 100] 28/11/2013 20:49

With SHFT's success in India, a move into China makes very good sense, and SHFT's IMS two weeks ago revealed some very good news on that front:

14/11/2013 07:00 UKREG Shaft Sinkers Holdings Plc Interim Management Statement

"...Collaboration agreement signed with China Nonferrous Metal Industry's Foreign Engineering and Construction Co., Ltd. ("NFC"), one of the largest Chinese Engineering, Procurement and Construction Management ("EPCM") companies..."

"...The Group also concluded a collaboration agreement with NFC, one of the largest Chinese EPCM companies, to jointly service the shaft sinking market in China. This is a very important territorial shift for Shaft Sinkers into a major new market where a growing number of mines are expected to move to underground mining in the near future...."




It looks to be a very mutually beneficial relationship.
NFC clearly feels the need to calling upon SHFT's services - and it's tribute to SHFT's expertise and reputation that they were chosen - and a joint venture will help to open doors and reduce risk for SHFT in this huge market.


Some info. from NFC's website:

"The PRC is the world's largest consumer and producer of lead and zinc, the Group believes the zinc and lead mining industry will provide potential investment opportunities required by the Group. With a mission to become the leader of the lead and zinc mining company in the PRC, the Group has planned to continue acquiring mining assets in the future to expand the business."




But let's hope that NFC isn't tempted to acquire SHFT, as I would hate to miss out on the long-term growth prospects of this little beauty.

[hedgehog 100] 28/11/2013 18:31

Muckshifter,

Your "comprehensive demolition" was actually comprehensive hogwash.

I have dealt with the substance of your criticism of John Helmer's thesis previously, in the above posts on this thread:

Hedgehog 100 29 Jun'13 - 21:17 - 52 of 232 0 0 edit
Hedgehog 100 30 Jun'13 - 20:35 - 60 of 232 0 0 edit


In summary:

- The impact of all that new potash from the new potash mine in Volgograd hitting the market now would clearly depress the price greatly.

- Commodities prices recovery in 2015 is the consensus view of analysts, based on research and analysis of stockpiles, supply, and demand.

- EuroChem can clearly make FAR MORE money over Gremyachinskoye's life if it starts a few years later, even if they could make a narrow profit from production at the moment.

- Other potash miners have been cutting production dramatically, which is probably more difficult than not starting mining in the first place.


I think that John Helmer is simplifying some points for general readability, and leaving out some economics that should be obvious to most people interested in business.


You appear to me to be trying to nit-pick to make out that he is dishonest. For example, you have previously said:
"Helmer's claim that everything was going "swimmingly" up to end of 2011 is completely contradictory to almost every RNS issued by shft, from the initial shft IPO document through to contract termination, as they all mentioned delays, negotiations to amend contract terms, etc, on the Eurochem job."
But John Helmer didn't actually say up to the end of 2011. What he was was "For the next four years." The contract was awarded in 2008, and in June 2011 EuroChem reported that Shaft Sinkers' work was going according to plan, and was "on track to allow potash production to start by late 2013."


When you 'simplify things' you think that's O.K., as when you referred to Kazakhstanis as Russians.
But when John Helmer does it, you say it means he is dishonest!

P.S. If you're so sure that he's dishonest, why not e-mail him and tell him?!

[dell1234] 28/11/2013 16:12

Shaft Sinkers features heavily in this article out today from Shares on mining suppliers, consultants, equipment providers:

[hedgehog 100] 28/11/2013 14:08

muckshifter 27 Nov'13 - 18:45 - 229 of 229 0 0
"Hedgehog,
The arbitrators would have brought the cases to a swift conclusion if there was no merit in them. ... "


I believe that their powers to do that are quite limited.

As long as the claim isn't invalid from a legalistic viewpoint - beyond their jurisdiction or powers etc., I think that weak cases have to be allowed to go forward for cross-examination of witnesses etc.

There is also a relatively small and legitimate contractual dispute, apart from the nonsensical stuff.

And remember: SHFT are also claiming against EuroChem.


As regards the timetable: you are attributing a quote to Chris Hall in inverted commas which the article does not. And the article speaks of "motivation", but not explicitly motivation for starting the claim: the collapse of the sales cartel could be a motivation for continuing with it, even though it is hopeless.

In addition, that collapse wouldn't have come out of the blue, but would have been on the cards for quite a while beforehand. And the claim against IMR was started far later than the claim against some of Shaft Sinkers.


In conclusion, you are desperately nit-picking, and just not seeing the wood for the trees.

[wanttowin] 27/11/2013 08:29

More good news here is the tide about to turn ? looking to get my toes in here

[hedgehog 100] 26/11/2013 21:00

I would add, Joseph, that I think we are now well through the worst.

As indicators of that, SHFT's major customer Lonmin posted strong results earlier this month, and SHFT's fellow mining service company CAPD has performed strongly since its IMS a month ago.


"Lonmin returns to profit after violent strike at Marikana

Production and Markets

Publishing Date 11 Nov 2013 12:32pm GMT Author Mining Journal

Lonmin plc recovered from violent labour unrest in South Africa last year, posting pre-tax profit of US$140 million for the 12 months to end-September.

The platinum miner recorded a loss of US$698 million in 2012. ... "




30/10/2013 07:00 UKREG Capital Drilling Limited Interim Management Statement






CAPD is actually on a forward P/E for 2014 of 14 (eps 1.93p, current share price 27p), over nine times as high as SHFT's forward P/E for 2014 of 1.5 (eps 11.84p, current share price 18.25p).

[hedgehog 100] 26/11/2013 20:47

Joseph,

If there were no issues relating to SHFT then it wouldn't be on a forward P/E of just 2.2 for the current year (eps 8.39p), and 1.5 for 2014 (eps 11.84p).

To quote Warren Buffett:

"The future is never clear; you pay a very high price in the stock market for a cheery consensus. Uncertainty actually is the friend of the buyer of long-term values."




But I don't believe that the latest IMS was a profit warning - see my post 41 above (Hedgehog 100 14 Nov'13 - 16:17 - 41 of 45). The company is always very honest in setting out the situation, and if it issued a profit warning the shares would not have just fallen barely a penny on the day (20p to 18.75p).

Please also see this broker report which was posted on iii on 14th. November, the day of the IMS:


"SHAFT SINKERS HOLDING*
Buy

SHFT.L / 20.00p / £9.50m
Event: IMS
Shaft Sinkers has released an Interim Management Statement

Confirmation from Shaft Sinkers that it is on track to meet profit expectations for this financial year, subject to certain factors, reflects the importance of the group's growing exposure to higher margin international contracts. At the revenue level, the combination of the South African rand depreciation, project delays and terminations will result in revenues for the year coming in below expectations.

Divisionally, international contracts performed ahead of expectations during the period, with the Hindustan Zinc project delivering an improved operating performance following management action to address its underperformance earlier this year. As recently announced, its Kibali project in the Democratic Republic of Congo has moved to the main sink phase and is reported as performing broadly in line with expectations. Having been selected by Kazchrome JSC as preferred bidder on its Skipovaya project, negotiations regarding the finalisation of the contract are on-going. Strategically, today the group has also announced an agreement with China Nonferrous Metal Industry's Foreign Engineering and Construction Co. Ltd (NFC) to jointly target the shaft sinking market in China.

Management's cost reduction initiatives to address underperforming South African operations and streamline activities have yielded results during the period and these efforts are expected to conclude by the financial year end.

The balance sheet remains subject to progress in collecting variation orders, as evidenced by net debt rising to £7.6m vs. compared with £2.1m at the end of H1 2013. As we highlighted at the time of the interims, variation orders will continue to influence over cash generation this financial year and management have confirmed that discussions regarding the collection of outstanding variation orders are on-going.

There has been no change to the group's position on EuroChem, with Shaft Sinkers continuing to robustly contest EuroChem's claims, pursue its own $16m claim and is expecting arbitration hearings to commence in mid-2014.

We make no changes to our full year profit forecasts on the back of today's IMS, though we expect to change the revenue mix following today's guidance.

On unchanged profit forecasts, FY2013 P/E and EV/EBITDA multiples of 2.4x and 0.7x, respectively, fail to reflect the potential for a recovery in profitability and returns as implied by our estimates."