Petropavlovsk PLC (LON:POG), Centamin PLC (LON:CEY) and Kryso Resources Corporation Limited (LON:KYS) all outperformed the price of gold last week.
The price of gold performed poorly last week, dropping to a low of $1,277 per ounce on Friday morning, before recovering to end the week down by 2.2%, at $1,310 per ounce.
Of course, the only practical way for most private investors to invest in gold is through exchange-traded funds. The largest gold ETF, the $38bn SPDR Gold Trust (NYSE: GLD.US), ended last week down 1.2% at $126.53, while London-listed Gold Bullion Securities (LSE: GBS) ended the week down 2.3% at $126.13.
So far this year, shareholders of Gold Bullion Securities have seen the value of their holdings fall by 22.0%, while the value of SPDR Gold Trust shares has fallen by 22.5%.
Against a backdrop of weaker commodity prices, several companies managed to outperform the falling price of gold last week.
Petropavlovsk (LSE: POG) inched up 1.8% to 76.5p last week.
Investors in this Russian-based gold miner may have been encouraged by news that IRC, the Hong Kong-listed iron ore company in which Petropavlovsk has a 40% stake, had completed a second scheduled round of funding on time, raising a further $135m to help strengthen IRC's balance sheet at no direct cost to Petropavlovsk.
Centamin (LSE: CEY) edged up 0.6% last week to 45.2p.
The Egyptian firm's share price remains around 50% lower than it was before the firm's mining licence was questioned by an Egyptian court, meaning that Centamin, which is profitable, is currently valued extremely attractively relative to the price of gold, but is effectively an arbitrage play on the future of the business, as the firm's Sukari mine in Egypt is its only substantial asset.
Centamin's share price recently gained extra support when it was added to the Market Vectors Gold Miners ETF, which now has a 5.96% stake in the firm.
Kryso Resources (LSE: KYS) climbed 3.6% to 29p last week.
The firm is developing the 1.9 million ounce Pakrut gold project in Tajikistan, and is currently listed on AIM but is in the final stages of preparation for a main board listing on the Hong Kong Stock Exchange. This is expected to result in Kryso de-listing from AIM, making it a more complex investment for UK shareholders.
Carlos Panda - 01 Jul 2013 - 08:38 - 13070 of 13075
Your KYS shares will become New KYS shares (1 for 1) and then the New KYS shares will list on HK and delist from AIM.
The end result will be that you hold the same number of shares as now but that they will be priced in HK$. So if you have 100,000 shares and they close on AIM at 25p and open in HK at 35p (HK$ 4) then your holding will have increased in value by �10,000.
Carlos Panda - 01 Jul 2013 - 10:09 - 13074 of 13075
I think one can understand why some shareholders might choose to sell following the 08/05/13 announcement.
1. If their broker account precludes holding overseas stocks and they only have a small shareholding then it may not be worth the effort to open a supplementary or new account.
2. If their shareholding is in an ISA then a single listing HK stock is ineligible.
3. If they are by nature ill-disposed to overseas stocks (or foreign parts in general!).
I note that trading volume in KYS has been more than 150% higher in the period following the announcement compared to that before and also that the share price has fallen by some 20% (gold having fallen 15% in the same period). From this I think one may assume that a further 5% of the company's shares have made their way east.
Your point about the change being really a move from junior to main market is correct. Fortunately the KYS management have (wisely) decided (for reasons covered many times over the last few months) that a future in HK is preferable to one in the UK.
From other board, Here is the AGM brief from Carlos Panda - 01 Jul 2013 - 08:31 - 13069 of 13075
Apologies for my all too hasty appearance - I had intended to arrive around 1pm in order to meet other shareholders but ended up spending 3 hours slogging the 60 miles up the M3 and then had a commitment at 4pm. So much for Sunday traffic!
I find AGM type Q&A sessions tricky for both those asking the questions and those answering them, mainly due to the disparate knowledge levels of the various attendees but also because management obviously have to be rather more guarded in their responses. That said, Craig certainly appeared to do his best to provide straightforward answers where possible. I had rather hoped although not expected that perhaps the chairman, Tao Luo, might have attended.
I also was somewhat surprised at the range of figures mentioned for a possible market cap / share price pursuant to the HK listing ($300m - $500m, i.e. x2 - x3 current). It's not that I see such a level as fundamentally unreasonable, rather that the recent (and continuing) departure of UK shareholders may lower the reference price for HK investors. Still, as Craig indicated, the company received very positive feedback during their HK presentations so perhaps a starting point of HK$ 6+ is achievable with my 2017 target of HKD 15 not too unrealistic.
All in all there was nothing much new that came out of the meeting but the chance to clarify existing issues is always useful. It's also helpful to have an opportunity to get 'bigger picture', albeit more soft focus, feedback (something that often seems to get lost in the detail of RNS announcements) e.g. CNMIM's political and financial connections, regional M&A possibilities, a 250k oz pa company.
1. HK Listing. This will happen sooner rather than later this year and should help KYS achieve a more realistic valuation.
2. Funding. KYS will have no problem raising the additional equity / loan funding at good prices / reasonable terms for the enhanced Pakrut mine plan or indeed for M&A.
3. Subscription Bonus Tax. This is expected to be agreed towards the lowest end of the possible range.
4. Resources. The ITR contains much of the 2012 drill results, although not using independent laboratory figures. The full resource update is still awaited but will show increases in measured and indicated (from inferred) as well as data from East Pakrut and Rufigar.
So, despite short term UK investors still heading for the exit, IMO the future still looks very positive.
KYS announced today that it would not meet its previous target of completion of construction at Pakrut by Mar14. In our view, the market reaction has been excessive, with an assumed delay in start-up having only a mild impact on our valuation and target price. KYS aims to advise of a new target date in due course. Meanwhile it has ample cash and available debt facilities to continue with development of the project. Maintain Buy.
¢ KYS announced today that it had experienced delays in construction activities at Pakrut, with the result that underground construction is unlikely to be completed by Mar14 as KYS had previously guided. We had only assumed production from the 2H14.
¢ The delayed start relates to logistical issues that the Chinese underground contractor (15th MCC) has experienced in terms of delivering all of its equipment on site. Without this equipment, it has not been able to make satisfactory inroads into development of the underground decline. KYS has meanwhile seen good progress from other components of the projects development, including the road to site and the on-site accommodation camp.
¢ While KYS aims to advise of a new target date in due course, we have taken the precaution of delaying our assumptions even further and have assumed start of production from the end of 2014, with first impact on the P&L from FY15E.
¢ Our target price is made up of an equal blend of sector relative valuations and NPV. While the assumed delay has had a 6% impact on the NPV component of our TP, this has been offset by an appreciation in the peer group multiples.
Only notified on Saturday of what? Equipment delays? Why was this not put in the RNS?
This RNS tells us nothing and only creates uncertainty. You say there has been a massive overreaction but PIs can only react to the information we have, and what we were told this morning was pathetic:
"Not expected to be completed by March 2014" When then?
"Delays have been experienced" What sort of delays and how does this affect cost of the project?
"will advise a new target date...in due course" Rubbish.
Really poor RNS and I find myself agreeing with Hel x that this was designed to lower the share price to allow an elite few to pick some shares up at a discount ( a few decent buys have gone through) it certainly wasn't released to 'inform' the shareholders of anything. Delays are to be expected, this I have no problems with - been in here long enough - I want to know what management are doing about it.
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