Share
clock Created with Sketch.
27/05/15
21:37
Share
Originally posted by Nikec
↑
Also that is not $55milion dollars profit, you are forgetting interest repayment of roughly 13milion per annum (9mil since they get a 30% tax shield) as well as a company tax of 30% as well as royalty of 5%. The annual profit is closer to $32mil per annum on a company which has a market cap of $100 mil. Still a 32% return which is quite good.
There is also one short term, non-fundamental issue i've noticed that is holding TGS back. I was reading the annual report over the weekend and noticed that Taurus holds a substantial amount of Options.
From the 2014 Annual report:
"The agreement is subject to the issue of 55 million options to Taurus with a four-year term exercisable at A$0.10 each, of which 7,900,000 options were issued on 9 March 2015 with the balance to be issued on or before 31 May 2015."
This means that on 31st May which is only a few days from now, Taurus will hold (might already hold) 55,million options exercisable at $0.10c. This is equivelent to 5million dollars. Or 55milion shares.
I believe there is currently a ceiling of 10c on TGS, at least up until the next quarterly when the company updates the market on production. I believe Taurus will excercise their options as soon as the price goes above 10c. We saw it hit 10.5c breifly a few weeks back, i think this might be the reason why.
Sorry to be so pessimistic, I have sold TGS, mainly so i can avoid this weeks drop in commodity prices, most mining companies have been hit by positive US data, increasing the US dollar, which lowered commodity prices.
I will buy back once the prices stabilise again.
Expand
The Taurus options will hardly be a bad thing if exercised. 5 million in the kitty at 10 cents is great news and derisks Tiger to a certain extent or at least gives them a nice buffer.