Very bullish update from Cobus today on PAF. Some highlights are they expect mintails to start contributing by December, and with the elevated gold price a payback on the entire project in only 3 years.
Gold miners likely to have similar tailwinds but great to hear it from the CEO
Oak look more closely at PAF - when mintails goes live in q3 their p/e drops to 3, Sudan in for nothing. This is insanely cheap imo plus the management is far superior to cey.
On CEY, shouldn't they be on a lower multiple, eg. pe/4, given the in-country risks such as a history of resource nationalism with gas for example and the hyper inflation? Wheat prices are back down which is a positive of course. Agreed PAF looks good based on spreadsheet at least......
I tend to agree Tom. Imo it's Aurically 😁 hard trying to factor in jurisdiction risk. I take on board Oak's main point, namely that a price rise in the commodity can have a greater impact on leveraged companies, we also need to take into account relative valuations too - and PAF is still cheaper than CEY at current rates on most metrics. Also, I don't think oak factored in mintails.
There are also pgm producers one can look at (eg slp). Oak's work is tip top and I would defer to his final analysis...
I'm an ex SLP investor so do from time to time revisit SLP as well as do a THS vs SLP vs JLP. And to consider PGMs more widely. Logically they "should" follow gold as a precious metal at some stage, despite industrial demand, or at least Platinum should.
I will also definitely spend more time looking at PAF and its Mintails mine, thank you both for the heads up on that.
As for Egytian country risk, yes, canals don't fare too well out there, historically. But my rationale has been that CEY pays a decent Egyptian pound of flesh to the government and while it's not risk free the government relies on the Golden goose eggs too much to mess with it, too much. As for inflation again a challenge but cost cutting and efficiency has minimised this so far. While SA inflation is lower it's felt harsher - electricity price increases for example have been far higher in SA from Eskom than Egypt. 70% in SA vs 26% in Egypt in 2023 I believe, offset further by solar power gen in Egypt at CEY reducing the need for buying power. More than price increases, the load shedding has been extremely disruptive in SA too - and paying for diesel generators more expensive still.
Ultimately I have no particular axe to grind to prove CEY is better and the thrust of the article was to attempt to compare and contrast the moving feast....
Yes that's a fair point about CEY. I always wonder what non-evident arrangements might be being made between miners and government bodies of all hue.
I was running some screens yesterday and as we push into the future, despite its price rise PAF still looks good, P/E falling to 3 next year. At present it's PE is on 7, half that of CEY. So that would imply a doubling of price for parity. A PE of 3 would imply what fair price, I wonder? (TRR also looks good on the screens, as you noted in another post)
That said mining is a mighty difficult sector and anything can happen.
The resource space in many cases now offers decent dividends, maybe a theme for a future OB post, get paid while we wait...
Thank you for your excellent analysis. Looking forward to seeing the OB portfolio beat Buffett in 24
Very bullish update from Cobus today on PAF. Some highlights are they expect mintails to start contributing by December, and with the elevated gold price a payback on the entire project in only 3 years.
Gold miners likely to have similar tailwinds but great to hear it from the CEO
Oak look more closely at PAF - when mintails goes live in q3 their p/e drops to 3, Sudan in for nothing. This is insanely cheap imo plus the management is far superior to cey.
On CEY, shouldn't they be on a lower multiple, eg. pe/4, given the in-country risks such as a history of resource nationalism with gas for example and the hyper inflation? Wheat prices are back down which is a positive of course. Agreed PAF looks good based on spreadsheet at least......
I tend to agree Tom. Imo it's Aurically 😁 hard trying to factor in jurisdiction risk. I take on board Oak's main point, namely that a price rise in the commodity can have a greater impact on leveraged companies, we also need to take into account relative valuations too - and PAF is still cheaper than CEY at current rates on most metrics. Also, I don't think oak factored in mintails.
There are also pgm producers one can look at (eg slp). Oak's work is tip top and I would defer to his final analysis...
This is not advice.
I'm an ex SLP investor so do from time to time revisit SLP as well as do a THS vs SLP vs JLP. And to consider PGMs more widely. Logically they "should" follow gold as a precious metal at some stage, despite industrial demand, or at least Platinum should.
I will also definitely spend more time looking at PAF and its Mintails mine, thank you both for the heads up on that.
As for Egytian country risk, yes, canals don't fare too well out there, historically. But my rationale has been that CEY pays a decent Egyptian pound of flesh to the government and while it's not risk free the government relies on the Golden goose eggs too much to mess with it, too much. As for inflation again a challenge but cost cutting and efficiency has minimised this so far. While SA inflation is lower it's felt harsher - electricity price increases for example have been far higher in SA from Eskom than Egypt. 70% in SA vs 26% in Egypt in 2023 I believe, offset further by solar power gen in Egypt at CEY reducing the need for buying power. More than price increases, the load shedding has been extremely disruptive in SA too - and paying for diesel generators more expensive still.
Ultimately I have no particular axe to grind to prove CEY is better and the thrust of the article was to attempt to compare and contrast the moving feast....
Yes that's a fair point about CEY. I always wonder what non-evident arrangements might be being made between miners and government bodies of all hue.
I was running some screens yesterday and as we push into the future, despite its price rise PAF still looks good, P/E falling to 3 next year. At present it's PE is on 7, half that of CEY. So that would imply a doubling of price for parity. A PE of 3 would imply what fair price, I wonder? (TRR also looks good on the screens, as you noted in another post)
That said mining is a mighty difficult sector and anything can happen.
The resource space in many cases now offers decent dividends, maybe a theme for a future OB post, get paid while we wait...
Thank you for your excellent analysis. Looking forward to seeing the OB portfolio beat Buffett in 24