SeligdarSELG43.79
About company
"Seligdar" is engaged in the production of metals. The company distinguishes two business divisions: gold- and tin mining. The sale of gold brings Seligdar a significant part of the proceeds: at the end of 2021, its share amounted to 77%. Yet 17% accounted for the sale of concentrates of tin and other metals, produced by the tin mining division.
Gold mining division. Seligdar owns a number of companies, who mine gold and sell it through the largest Russian banks.
According to the results of 2021, Seligdar entered the top five largest Russian companies in terms of gold reserves. They are valued at approximately 10 million ounces., or 277 tons.
A significant part of the reserves - 175 tons - falls on the Kyuchus field in the Republic of Sakha (Yakutia), the rights to which the joint venture of Seligdar and Rostec acquired at the end of 2021. But even after acquiring the rights to Kyuchus, the company's reserves are several times inferior to the reserves of the public flagships of Russian gold mining: Polyus and Polymetal.
Seligdar is constantly increasing its gold production and ranks tenth among the companies, who mine gold in Russia.
The company has seven active fields, some of them are alluvial. But the vast majority of production comes from just two: in 2021, the Ryabinovoye and Nizhneyakokitskoye fields produced over 75% gold "Seligdar".
The company manages not only to control, but even reduce the cash costs of mining. At the end of 2021, total cash costs (TCC) Amounted 555 $ per ounce, which is less, than in 2019 and 2020, and total cash costs (AISC) Amounted 857 $ per ounce, which is lower than in 2020. In both of these indicators, Seligdar is inferior to Polyus, which has lower production costs, but overtakes Polymetal.
Tin mining division. Represents a share, exceeding 97% share capital, in the public company Rusolovo, a tin producer, copper and tungsten. We have reviewed it, so we won't repeat ourselves in this article..
The company has a strategy until 2024. Her main goals:
- Growth in gold production to 10 tons, and tin - up to 6 thousand tons per year.
- Acceptable debt burden, not exceeding the value 2 according to the multiplier "debt / EBITDA».
- Dividend yield approx. 5%.
To achieve these goals, Seligdar is actively investing in geological exploration, construction and modernization of gold recovery plants and processing enterprises of the tin mining division.
Compared to 2019, the company's capital expenditures more than doubled, at the end of 2021 reaching 7 billion rubles.
The main long-term growth prospects of the company are associated with the Kyuchus field. Geological exploration work has already begun on it, scheduled for completion in 2024, having spent about 2.8 billion rubles on them.
Production planned to start in 2028, and to reach the design level - in 2029-2030. According to the terms of the license, the design level of production should be at least 10 tons of gold per year, and it is much more, what the company is producing now, — 7,2 tons at all other mines, combined.
Seligdar's revenue structure for 2021
| Realization of gold | 77% |
| Realization of concentrates | 17% |
| Other implementation | 6% |
77%
Cash costs of public Russian gold miners in 2021, dollars per ounce
| TCC | AISC | |
|---|---|---|
| "Pole" | 405 | 715 |
| "Seligdar" | 555 | 857 |
| "Polymetal" | 730 | 1030 |
Cash costs of Seligdar by years, dollars per ounce
| TCC | AISC | |
|---|---|---|
| 2019 | 602 | 780 |
| 2020 | 721 | 990 |
| 2021 | 555 | 857 |
The volume of gold production by Russian assets of companies in 2021, tons
| "Pole" | 84,5 |
| "Polymetal" | 26,9 |
| Kinross | 15 |
| "Petropavlovsk" | 14 |
| Nordgold | 13,2 |
| "Yuzhuralzoloto" | 13 |
| Highland Gold | 11,2 |
| "Supreme" | 8,6 |
| "Bystrinsky GOK" | 8 |
| "Seligdar" | 7,2 |
84,5
Structure of gold production by Seligdar deposits in 2021
| Rowan | > 39% |
| Nizhneyakokitskoe | > 36% |
| lunar | 7% |
| Search | 7% |
| Nirungan | 4% |
| Samolazovskoye | 4% |
| Sininda | 2% |
> 39%
Reserves of public Russian gold miners, Moz
| "Pole" | 104 |
| "Polymetal" | 30 |
| "Seligdar" | 10 |
104
Volume of gold production by Seligdar by years, tons
| 2018 | 6 |
| 2019 | 6,6 |
| 2020 | 7 |
| 2021 | 7,2 |
| 1p2022 | 2,5 |
6
Capital expenditures of Seligdar by years, billion rubles
| 2019 | 3,2 |
| 2020 | 4,3 |
| 2021 | 7 |
3,2
Financial indicators
The company shows excellent dynamics: revenue is growing steadily following the growth of operating indicators. But the net profit, although in general, is growing, but every couple of years shows very small values. This is due to exchange rate differences on the Seligdar loan., denominated in gold, because market prices are quite volatile.
The company's net debt is also gradually increasing, but this is not surprising given the significant increase in capital costs. It is also worth noting the interesting structure of Seligdar's debt: more 80% nominated in gold, 11% - in dollars and only 6% — in rubles.
Company indicators by years, billion rubles
| 2017 | 2018 | 2019 | 2020 | 2021 | |
|---|---|---|---|---|---|
| Revenue | 15,9 | 11,6 | 22,1 | 33,3 | 35,6 |
| Net profit | 0,66 | 1,43 | 3,2 | 0,24 | 10,1 |
| net debt | 17 | 13,6 | 24,2 | 37,1 | 38,4 |
"Seligdara" debt structure for 2021
| Gold | 83% |
| Dollars | 11% |
| Rubles | 6% |
83%
History and share capital
The history of "Seligdar" began with the eponymous artel of prospectors, which was organized in 1975. In 2008, on the basis of the artel and several other gold mining enterprises, a holding was created. Its shares began to circulate on the Moscow Exchange in 2011.
More recently, the company had two types of shares: ordinary and privileged. But at the end of 2021, preferred shares were converted into ordinary.
Following this, at the beginning of 2022, a special fund was disbanded to pay dividends on preferred shares.. The company also carried out an additional issue of ordinary shares in the amount of 3,79% share capital in favor of the two largest shareholders.
The largest shareholders are companies, associated with the Russian Funds investment group. Also, top management is among the largest shareholders of Seligdar. More than a quarter of the share capital is in free float.
The structure of the share capital of Seligdar for 31 December 2021
| LLC "Maximus" | 50,0001% |
| Treasury-Invest JSC | 11% |
| Company President K. BUT. Beirut | 7,5% |
| Company CEO C. M. Tatarinov | 5,7% |
| In free circulation | 25,9% |
50,0001%
Dividends and dividend policy
The company has a dividend policy, according to which the amount of dividends is determined as a share of net profit depending on the debt load. If the value of the net debt multiplier / EBITDA does not exceed one, then it is planned to allocate for dividends from 30% net profit. If it does not exceed 2, then 20%, what if 3 — 10%. In recent years, the company has shown a good dividend yield..
Dividends and dividend yield of Seligdar
| 2017 | 2018 | 2019 | 2020 | 2021 | |
|---|---|---|---|---|---|
| Dividend per ordinary share | 0 R | 0 R | 2,2 R | 4,5 R | 4,5 R |
| Dividend yield on common stock | 0% | 0% | 17,9% | 9,9% | 7,8% |
| Dividend per preferred share | 2,25 R | 1,44 R | 2,25 R | 4,5 R | 1,97 R |
| Preferred share dividend yield | 9,4% | 7,9% | 8,3% | 11% | — |
Why stocks can go up
A growing company with a diversified business. Seligdar is constantly increasing its production and financial performance and does not plan to stop. This applies as a gold mining division, which at the end of the decade plans to start production at the large Kyuchus field, and tin mining, presented by PJSC "Rusolovo".
Metal diversification is another positive moment in Seligdar's business. Low cost of production is the strength of the company.
good multipliers. Seligdar shows good dynamics of multipliers: debt burden is gradually decreasing, and profitability grows. However, the company is not valued very highly..
You can say, that its assessment relative to competitors is fairly fair: Polyus and Polymetal are more expensive, but it makes sense, because they are bigger, more profitable and have a lower debt burden.
Defense sector. Gold mining companies are often of interest to investors, those who want to use them to put a share of gold in their portfolio, which is considered a defensive asset.
Why stocks might fall
Dependence on market conditions. Commodity companies are a priori highly dependent on the prices of their goods., which are often quite volatile. Gold, which is more used for investment and jewelry purposes, than as an industrial metal, and more dependent on external factors.
Not the best time for the industry. In March 2022, the London Precious Metals Association deprived Russian refineries of the status of reliable sellers due to sanctions. Besides, many large banks fell under the sanctions, previously bought gold from gold mining companies and resold it.
As a result, gold miners are faced with the need to look for new markets. In addition, the Central Bank began to buy gold at a big discount., than before. Yes, and world prices for gold are falling - all this pulls the quotes of gold mining companies down.
Not the biggest fish. Seligdar's business size is far from the industry's flagships. This carries additional risks.. Besides, the company's shares are not included in the Moscow exchange index and are unlikely to be heard by a wide range of investors, which also somewhat limits the growth of quotations.
Multiplier "Seligdara" by year
| 2017 | 2018 | 2019 | 2020 | 2021 | |
|---|---|---|---|---|---|
| P / E | 16,7 | 7,08 | 4,09 | 185,2 | 4,82 |
| ROE | 3,8% | 8,4% | 16,3% | 1,2% | 35% |
| Net debt / EBITDA | 2,66 | 2,95 | 2,58 | 2,56 | 1,99 |
Multipliers of Russian public gold miners for 2021
| "Pole" | "Polymetal" | "Seligdar" | |
|---|---|---|---|
| P / E | 9,23 | 10,4 | 4,82 |
| ROE | 41,1% | 64,6% | 35% |
| Net debt / EBITDA | 1,13 | 0,55 | 1,99 |
What's the bottom line?
Seligdar is a gold producer, tin and other metals. The company is actively developing, constantly increasing production and financial performance, reducing debt burden. Seligdar has big ambitions in gold mining, so is tin, but now the size of his business is not very large compared to the flagships of the industry. Despite significant capital expenditures, the company pays good dividends.
Now is not the easiest time for the gold mining industry, and in general, it is quite dependent on the conjuncture, but do not forget about its reputation as a defensive sector.
If Seligdar succeeds in realizing its ambitious business growth plans, then, maybe, his shares are not a bad idea in the medium- and long term.
