Shanta Gold Share Discussion Threads

[redhill] 10/3/2019 19:56

Thats about right. Perhaps they can get up to 2 years. That's about the time TZ government take to make VAT refunds !

[redhill] 10/3/2019 19:10

ag

Keep up to date. Since June 2017 Shanta made new arrangements with most of their suppliers.

[buywell3] 10/3/2019 18:57

The point about City Financial being a distressed seller is correct

They were also a distressed seller in LIDCO(LID) where the offloaded just under 3% of shares since the start of the year.

Has anyone heard that a USA Institution reckons GOLD is heading to $1400 this year ?

[redhill] 10/3/2019 17:46

Refinancing with Exim has smoothed the repayment programme but the convertible loan is fully covered with cash held.
No one is going bust and wow you will look at yourself in 13 months time wondering why you spent so much time here and kept getting it so horribly wrong.

[tsmith2] 10/3/2019 15:36

He needs help, serious help

[hazl] 10/3/2019 13:42

Same old...things move on....

[redhill] 10/3/2019 12:59

ag

Possibly but that's assuming that every variable remains the same and of course it won't be.

As i have said before, i don't believe they would have doubled their exploration budget if they were not confident about repaying debt.

[redtrend] 10/3/2019 12:18

Hazl - Zurrin confirmed CF were out in the interview Tsmith summarised:

hxxps://www.proactiveinvestors.co.uk/companies/stocktube/12522/shanta-gold-ceo-on-singida-financing-and-looks-ahead-to-further-exploration-12522.html

Appears majority taken up by Sustainable Capital

[hazl] 10/3/2019 10:42

There were large trades on Monday the 4th of March if you look back as CF likely finished.

IMO

[hazl] 10/3/2019 10:39

Part of the reason for the previous sell off, though, was
a distressed seller....City financial....who had to sell it's stocks regardless of the potential and it has now finished selling SHG it seems.

[hazl] 10/3/2019 10:36

A common thing for most miners is the need for finance unless they are much higher stock prices!

This is only 5 pence!

But agree it ought to be clearer after next month.

[redhill] 09/3/2019 21:52

Yes good summary from Redtrend.

I'm a little more optimistic on production numbers and the price of gold so don't feel it will be quite as tight with the repayments.
Will see a much clearer picture after the first half of the year when the first $5 million of loan notes have been repaid.

Just rechecked the figures and i believe that due to the refinancing of the Exim Loan that our total loan repayments will reduce to $18.9 million this year.

[hazl] 09/3/2019 15:12

Great summary TSMITH in your plusonecoin post at top of bb.

[hazl] 09/3/2019 14:38

Redtrend thank you very comprehensive.

[redtrend] 09/3/2019 14:00

In terms of paying down loans and borrowings, I’m not going to lie, without the VAT rebates its incredibly tight (as I mentioned around 10 days ago). SHG have to pay off:
- USD 19.9M of debt in 2019 and
- USD 14.1M of debt in 4 months ending April 2020

After April 2020, SHG will only have $6.5m Gross Debt and jobs-a-goodun. But now until end of April 2020 is the tough period.

In 2018 based on 82,000 Oz and avg. gold price of $1,260, Net Debt improved by USD 8m. If we assume same production, gold price and no VAT rebates, that coupled with cash position provides USD 17m in 2019. With USD 2m less Capex forecast and USD 1.5m less spent on interest payments (due to significant reduction in Gross Debt in 2018), that’s another USD 3.5m. So we may have circa USD 20.5m to pay off USD 19.9m in 2019. But after that for 1st 4 months to April, we of course have the issue of USD 14.1m to pay.

Before we think this is an issue, the SHG market cap is only £39m, so the above concern appears already priced in. Options:

1. VAT rebates (or part thereof) of 21.9M returned to SHG. The recommencement of VAT rebates for 2019 would also add USD 7m on to the 2019 free cash above I forecast. Obviously the best case and share price would more than double in my opinion.

2. Refinance/ extend loans in 2019 – Investec which is US Libor + 4.9% or perhaps a new additional Exim loan (7.25%) considering good relationship.

3. Private Placement of circa $5-10m with Institutional Investors. Appears a lot of interest at the moment and after April 2020 when Gross Debt suddenly near non-existent, instigate buy-backs to return shareholders back to before such placing and then some. However SHG should wait until they exhaust routes 1) and 2) above.

4. Extend Loan Notes again (least preferable due to interest rate of 13.5%).

5. Mix: in reality it may of course be a mix of some or all of the above. For now we have some time to work through options.

Obviously the IIs are reassured and positive about potential ways forward.

[redtrend] 09/3/2019 13:59

Hazl - yes we now have circa 47% SHG equity in hands of 4 IIs. As per statement in Accounts, SHG management meet regularly with institutional shareholders. The likes of Odey, Sustainable Capital, Majedie, and River & Mercantile know far more than the likes of us.

They know their mining companies and have teams of experts who can actually read a set of Accounts and understand why Gross Debt is stated as $40.5m for SHG (Loans of $43m minus Exim Restricted Cash of $2.5m, which is not counted in the $9m cash) and Net Debt is $31.5m, as per the Accounts & last Quarterly. They are aware that as standard industry practise, not one single mining company or their accountants classify Metal Streaming Agreements as Debt.

The credit agency Moody’s concurs with this and the one of the biggest Gold Mining companies Barrick includes it in “other” liabilities in their Accounts, not Debt (it is a commercial agreement with a liability in delivery of physical metals). Due to selling the metal below spot in advance to a 3rd party, an imputed/ notional interest is applied until the agreement comes to an end. Explained in detail in Barrick’s Accounts and in a one-liner in SHG’s 2016 Accounts: “These [Silver Stream Agreement obligations of physical delivery] have been included under Borrowings in the financial statements as prescribed by IAS 32 and adjusted for fair value as well included in interest paid due to the imputed interest charges arising on this advance sale”

“In economics, an implicit cost, also called an imputed cost, implied cost, or notional cost, is the opportunity cost equal to what a firm must give up in order to use a factor of production for which it already owns”.

[hazl] 09/3/2019 13:19

MARCH 2019 I C
conclusion

'As Barrick Gold and Tanzania inch towards an agreement over Acacia, we think the real beneficiary could be Shanta, which expects VAT refunds to follow a deal. The large proportion of borrowings listed as current liabilities remains a concern, although major lender Investec is supportive, presumably because it sides with our original call (6p, 31 May 2018) that VAT resolution could help correct the shares’ 50 per cent discount to net assets. Buy.'

[hazl] 09/3/2019 13:15

This is IC view,reassuring but realistic this month.
Laying out the debt situation fairly clearly in my view.