Shanta Gold Share Discussion Threads

[338] 14/7/2020 08:52

Brasso3,
Exactly agree with you... hedging, VAT, debt challenges in the past had created an excellent opportunity for investors... by picking up the share cheaply... of course PoG rises can make 10 baggers for clever people who took the opportunity in the past and coming months 👍

[redhill] 14/7/2020 08:40

Just been quoted 14.756p--14.86p

[redhill] 14/7/2020 08:27

QS 99

Most of yesterday there was 1 Market Maker bidding 14.5p but for some reason this morning they dropped the bid to 14p.

Then a little while ago Peel Hunt who were asking 14.75 most of yesterday moved up on a mere £500 buy whilst yesterday nothing would budge them.

[amazoner] 14/7/2020 08:25

wakey wakey shonto got up early

[qs99] 14/7/2020 08:17

tried a sizeable dummy sale this morning, was offered 14.65p....says it all IMO, they want your stock! Don't have level 2 but someone out on a limb on the bid?

GLA and DYOR

[brasso3] 14/7/2020 06:29

The hedging has created an opportunity for everyone to get these at artificially low prices. Just hold and the closer this gets to expiry it will start to get reflected in the share price.

[space_bob] 14/7/2020 00:14

If the producer wants a maximum, the hedger will want a minimum which defeats the object. When the hedge was agreed Shanta was in a precarious position where a large drop in gold price would have ended the business, so a minimum (and therefore a maximum) wouldn't have been a good idea. For a fairly long period Shanta was receiving significantly more than the spot price through the hedge.

[kennyp52] 13/7/2020 23:22

Redhill ... do you not think it would have been reasonable to put a maximum in ? The hedge loan people are screwing a fortune out of the situation now . At least if they had a ceiling of , say , $1500 then at least they could be making $300 for the shareholders. Yeh ... I’m really impressed with the terms the BOD negotiated . Bodes well for future decisions . But let’s just ignore it happened and whilst every other goldie is raking it in Shanta has to give it away .

[redhill] 13/7/2020 22:07

juju44

Really ? Haven't heard you come up with that one before.

You do understand how a forward contract is transacted. There are no deals. you take the price on the day. end of !

[juju44] 13/7/2020 21:45

Eric was totally shafted over the hedging price. He should have achieved a better deal - thats what good CEO's do

[12strings] 13/7/2020 20:59

Hi Space_bob,

Will Singida need a processing plant? I was convinced I'd heard comment during an interview but can't find it. Eric quoted $20m to build Singida and 15-18 months to get it done, so it's not big bucks anyway.

juju44

Shanta were backs against the wall when they needed the loan that came with hedging conditions. Right now, as investors, we are benefitting from that history. You're right that the share price is low, at least in part because the market hasn't done the research to know that the loan and hedging are history. The gains we should see from here on are going to be so much more. Same with VAT.

There's going to be several juicy updates from the co in Q3, next is likely to be Q2 production update which Eric was very positive about during the June 18 presentation/Q&A. So plenty to help the share price along.

[redhill] 13/7/2020 20:54

12 strings
"
" Mine life is an issue at New Luika "

Not really. Just needs more drilling to prove up reserves.

[338] 13/7/2020 20:10

Doubters can sell at asking price... MM's are happy to pay at premium...

Barrick will not take Shanta shares as part of payment if they are not optimistic about the future of Shanta business... 👍

[338] 13/7/2020 20:05

No need to speculate... we should all get much clearer picture on the 21st...

[kennyp52] 13/7/2020 19:26

juju44... be careful ... stating the facts as to why this share price is dragging tends to get the optimists a little miffed 🤣

[space_bob] 13/7/2020 19:25

Are you sure Singida plans to use the same plant? It's around 250 miles from Luika.

[stmellons28] 13/7/2020 18:48

Always a pull back with Shanta at the death, this share will have its day & its coming very soon. £1 by Xmas

[juju44] 13/7/2020 18:37

It is underated but the awful hedging deal and the VAT mess have greatly tarnished it . These things need to be in the past before any real surge occurs

[12strings] 13/7/2020 18:29

In my opinion Shanta is the most under-rated share I have ever found, given the loan/hedging finishing, Singida and then Kenya growth plans, and cashflow already at a level to finance most of it. You don't really need gold price to rise to be interested in Shanta.

[12strings] 13/7/2020 18:26

Doubt it Chestnuts. Much less involved with Singida. Will use same processing plant as New Luika. West Kenya needs a plant of its own, there's some old kit but not used for ages. Sounds like 90% new needed. So more time and a lot more $$$ to bring New Kenya on stream. Mine life is an issue with New Luika, so adding Singida addresses this until West Kenya gets going.

[chestnuts] 13/7/2020 17:58

Maybe they will decide to start Kenya before singida

[12strings] 13/7/2020 17:31

The Proactive Investors Event June 18 2020 in case people missed it:

[...]

[12strings] 13/7/2020 17:28

The Proactive Investors Event June 18 2020 in case people missed it:

[...]

[12strings] 13/7/2020 17:01

On the issue of hedges against the gold price:

Details as far as I can obtain are from Page 60 of the 2019 FY Accounts

hxxps://www.shantagold.com/_resources/Annual%20Report%20and%20Accounts%202019.pdf

From this you can see that there have been roughly 40,000 contracts open at the end of FY2018 and FY2019. In effect they seem to be short selling gold at between $1215 and $1264/oz. It's been stated in recent interviews that approximately have of sales are hedged. 40,000 contracts is half of the 80,000oz annual production. So that fits.

I see no reduction in the number of short contracts between FY2018 and FY2019 so it appears that the terms of the original loan (which again from interviews will be fully paid off by the end of 2020) required 50% of production to be hedged throughout the contract period. The fact that the hedging is at a fixed price suggests that these prices were fixed at the time of the loan contact and that maybe the losses are going to the company that made the loan.

Anyway, all the above leads me to believe that 40,000 short hedging contracts remain open at a fixed price of less than $1300/oz and that that situation will prevail until the end of 2020.

The cost to Shanta would therefore be the difference between the present gold price and $1300 = $500. $500 x 40,000oz = $20,000 loss for FY2020.

The 2020 payments on the loan itself look like this:

$22m gross debt was outstanding at the end of 2019
hxxps://www.shantagold.com/_resources/Full%20Year%202019%20Presentation.pdf

And the interest payments in 2019 and 2019 were $3.5m and $4.8m, so less say $1m in interest in 2020.

OVERALL ADVERSE CASHFLOW IMPACT IN 2020
Hedging $20,000
Loan repayments $23,000
Total $43,000

That's big and will according to the June 18 2020 interview, likely allow Singida to be financed from cashflow, without a partnership deal (so retaining 100% of Singida for Shanta. That takes them to 115,000oz/annum sometime in 2022, with no debt.

And at the rate that the gold price is rising, Shanta may well be able to finance West Kenya out of cashflow to start in 2023/4. By 2025, there seems to be the possibility of Shanta being a 200,000oz/annum producer with very little debt and plenty of minelife going forward.

FOR THE QUALITY OF THE WEST KENYA ASSET
Listen closely to the June 18 2020 presentation and the Q&A at the end.

The West Kenya deal will be completed very soon and we should hear more about the grades in August/September.

[bogotatrader] 13/7/2020 15:40

L2 now 1 v 1 ...little more buying and it will tick up....