Shanta Gold #SHG – Multiple catalysts, multiple risks, low valuation

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Opened a very small, c1.2% portfolio weight position in Shanta Gold.

Shanta is a London-listed Tanzanian small cap production company. It has a 33m GBP market cap and is trading at a forward PE of around 2.6 / historic of 3.2 or EV/EBITDA of c2. (source).

The company is a standard, small, gold producer.  It has a good cost base – cash cost c $505/oz / all in cost of c$750/oz. There appears to be lots of opportunity in its holdings to expand production. They have just released an RNS valuing their Singida project at c $31m USD at a (highly optimistic) 8% discount rate. They say they will develop it at no cost to existing shareholders – as the company is worth c$44m Equity and c$35m  net debt this is potentially significant – even if we say it’s only worth c $20m.

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Rasmala – Exiting,c25% loss last tranche, up 17% overall

Exited my position in Rasmala. Took the usual liquidity based hit.

They have decided that instead of delisting in the UK and relisting in Dubai (which I was OK with) they will simply delist.  They have a tender offer for 20% of their shares at $1.50 a share, presumably to let UK investors out. 15% of shares wont be tendered, but that still leaves the remaining 85%.

The delisting vote needs 75% approval from shareholders – I am not sure they will get it. Even if they don’t companies can delist via the back door so I dont want to be in this.

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Dolphin Capital $DCI – reentered

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Have just bought back in to DCI at 6.3p 4.4% portfolio weight.  I am easing up on weights a bit as I have not had a particularly good run of ideas of late, better to be careful before I get my mojo back!

Quick refresh this is a luxury resort developer, mostly in Grece I bought in Dec 2016 before selling out at evens in April 2017.

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Loss after Loss – Origo -33%/-67%/ Polo / Tau

Things haven’t been going well for me of late.

Origo has proven to be a disasterous investment – mitigated a touch by me getting out relatively early but worsened by absoloutely no liquidity relative to my size.  My original investment thesis is here.  I thought that the prefs could be redeemed and that the NAV was possible / there was payout potential.  The evidence for this was a balance sheet in theory worth about $80m when I got in vs a capitalisation of 23m across the prefs and ordinaries – so potential for a decent return.

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Portfolio Update – Selling PIL 0%, Trim OPP/P, TJI +500-1000%

Quick portfolio update.

Selling PIL – I am a bit concerned that they might struggle to meet debt covenants due to a poor harvest.  I have had a couple of year’s dividends on this – so am actually up c5% in total. I sold for what I bought them for.  Little disappointing but these things happen.

I am also easing up on OPP / OPPP – they are going impairment crazy, just after I bought.  Weight was maybe a little too much.

I also bought in a touch of DUPD again – didnt get round to posting on they distributed – made a little on it.  Breaking my own rule on this as it is majority owned now – but I think they will delist / pay out eventually….

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OPP/P – Origo Prefs / Ordinaries

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Just bought a reasonable chunk (c6% portfolio weight) in Origo Prefs and a similar- c6% weight in the ordinaries.

Origo is a Chinese private equity investment trust. As you might imagine when you hear the words ‘AIM listed Chinese private equity trust’ performance has been disasterous. c500p in mid 2011 has become c1.5p now.  Putting a lighter to your money would probably have given you a better return.

In theory the ordinary has a NAV of 9p a share (June results) vs a market price of 1.5p –  so a decent return from here.

I am going for the prefs – trading at 0.30c vs hopefully a redemption at $1.00 – or a 3x return as well as the ordinaries.

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More Crypto – sold KR1 / direct holdings, shorting Tether

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Exited all my crypto holdings gradually over the past month or two.  I was lucky enough to be able to sell quite big chunks in early January.  Some of these are up over 10X but they were only ever a very small portfolio weight.

There is too much froth / junk / fraud in the market and I dont see downwards trend reversing any time soon.  I think there needs to be a big clear out before we can get decent rises.

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PVCS – selling half -7% Taking too long

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Selling half of my PVCS at a c7% loss.

Their strategic review is taking too long.  In addition I was over optimistic / didnt put enough thought/work into my estimate of closure costs which I now believe could be a lot more than the €2m I guessed.

This might reduce my upside quite a bit and the delay on the strategic review is making my nervous so I am lightening this up substantially.