Shanta Gold Share Discussion Threads

[goodgrief] 14/12/2019 16:17

There have been too many examples of companies raising debt, esp. in USA, in order to execute share buybacks so as to allow CEO's to achieve performance/bonus metrics!

[meanreverter] 14/12/2019 15:25

Share buybacks make sense when the company has spare cash and the shares are at a deep discount to net asset value. The problem is that what the company sees as its NAV may be considered an overestimate by investors (hence the discount). In the case of property (real-estate) companies, I tend to side with the company. For miners, working out what the true NAV number should be is far trickier, and they should probably leave it to the market rather than act as though they knew better — even if they do know better.

[chestnuts] 14/12/2019 11:52

Share buy back are like giving your self a blood transfusion

[juju44] 14/12/2019 10:55

Agree . Share buy backs almost never work

[goodgrief] 14/12/2019 10:35

Never understood the point of share buybacks? Would far rather have any surplus cash returned to shareholders!

[redhill] 14/12/2019 10:18

Yes and there is also a mandate in force for a share buyback as and when.

[fitton] 14/12/2019 09:09

At 9p ish, Shanta are currently one of the best value stocks I have looked at recently.Debt has been the problem with Shanta over the last few years but this is clearly reducing at a fantastic rate.Even if gold falls to $1200 Shanta will still be making a great margin per Oz.I think the hedge will be cleared by May next year?.I also believe there is a very good chance the VAT will be drip fed back to the company.
Drilling results continue to be very good and current drilling campaign has been very cost effective.It looks like the company will be debt free sometime next year even without the VAT.My understanding is the CEO is focusing on paying down the debt and introducing a dividend as soon as debt is cleared.At the current £72m market cap I hope with will double next year.I think the company should be able to pay at least a 1p dividend once the debt has gone.

[imnotspartacus] 13/12/2019 23:06

Historically Jan to Feb are good months to invest in gold, so I’m expecting gold to move above $1500 soon, also on the weekly chart Shanta does not look over bought.

[redhill] 13/12/2019 14:36

338

Yes also we are still due the regional exploration update.

[338] 13/12/2019 12:45

I am expecting the drilling update to be released next week 👍

[chestnuts] 12/12/2019 14:12

Chip

Thanks for your reply

[jasper2712] 12/12/2019 13:52

Always better to have the grades out of the ground rather then an inference grade. i.e. "a bird in the hand " comes tomind.

[jc2706] 12/12/2019 13:36

Chip,

This has varied hugely over the years with the variance between transactions being large. As such it is not, I believe, a particularly reliable mechanism for assessing value even if it does at least provide a mechanism for very immature projects. Personally I would give nothing for inferred resources. A lot, of course, depends on the nature of the deposit.

[chipperfrd] 12/12/2019 11:48

chestnuts,

re value of inground gold resources - at least for explorers!

A reasonable rule-of-thumb is the % of PoG that has been paid on average for deposits held by explorers under M&A activity.

Measured ~ 20.8% of PoG
Indicated ~ 11.4%
Inferred ~ 2.4%

Chip

[chestnuts] 11/12/2019 16:34

If everything stopped still SHg should make around £100m over the next 5 yrs so you would think the share price would at least go to £100m.

[jc2706] 11/12/2019 16:32

There will certainly be more confidence with a two year mine life extension. Plus, of course, two more years cash flow to discount, which makes a material difference to the NPV.

[chestnuts] 11/12/2019 16:29

JC 2706


At the moment SHG have 5 yrs in the ground so this update we are expecting is hopefully going to add more than 2 yrs. Which should help the share price.

[jc2706] 11/12/2019 16:09

Generally speaking, I find DCF as the best valuation mechanism. A 5 year mine life is not ideal - 7 years is an industry target but the longer the better (within reason as you have he law of diminishing returns). There are many factors that feed into the DCF model so not all ounces are equal.

[chestnuts] 11/12/2019 16:01

Does any one know what value you put on the books for the gold in the ground, say sqz updates there resource by 400,000 ozs 5 yrs production how much is that worth.

thanks in advance

[juju44] 11/12/2019 15:25

Price outside top bolly band too

[338] 11/12/2019 15:19

SHG looks better every day 👍

[jc2706] 11/12/2019 14:52

As there appears to be confusion, 'overbought' is a technical term that relates to a few indicators, the most commonly used of which is RSI (relative strength index). Most tend to view over 70 as overbought and under 30 as oversold, although sometimes over 80 is considered overbought. It can be useful where the direction is relatively unpredictable but personally I think that it is a pretty poor indicator for entering or leaving a position if you trade during a clear bull or bear run as a share can be overbought for a long time and continue rising or oversold for a long time and continue falling.

Gold is particularly prone to this as bull markets tend to be widely separated and short-lived - gold stock tend to stay overbought for months during this period and increase in price significantly. I don't think that we are in that kind of market yet so it is a fair enough indicator.

[juju44] 11/12/2019 13:58

No problem with being bullish longer term . Short term - overbought

[chipperfrd] 11/12/2019 13:34

I compare the financial metrics of 62 PM producers (mainly gold).

Here are 4 of those metrics for Shanta compared to the average across all 62 (low = under-valued).

SHG AveragePrice/Book Value (PBV) 0.84 0.9Price/Sales (PSR) 0.78 3.3Ev/EBITDA 3.89 10.6Price/Cashflow (PCF) 2.38 19.4



The 5th main metric I compare is Price/Earnings (PER). However, SHG had a negative value in it's last FR so unfortunately I cannot include it in the above.

Clearly SHG remains under-valued compared to most producers. Tanzanian politics & VAT, debt, past under-performance, et al, have all played a part. But for value-hunters SHG remains a stock to consider IMHO.
Chip