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Shaft Sinkers


THEBIGMAN
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Full disclosure: I own shares in Shaft Sinkers (LSE: SHFT). Technically this post makes me a ramping bastard, so do your own research and make your own mind up...

 

It has often been said that, in the California gold rush, very few prospectors struck it rich.

However, those selling picks and shovels made an absolute fortune.

I think Shaft Sinkers is such a stock. They're specialists in digging out these ruddy huge mining shafts hundreds of metres deep for other mining companies to perform their operations. And they have the most amusing company name on any listed stock market.

Most of their contracts at present are in South Africa for diamond, gold and platinum mining, where SHFT also seems to specialise.

Since continuing QE suggests rising precious metal prices going forward - making PM mining more lucrative, SHFT should have plenty of business. They don't seem to be too involved in sinking shafts for mines that obtain the sort of commodities that would be hit hard by a China slowdown.

A spate of unfortunate incidents has absolutely hammered the share price to 41p. At this price they yield over 12%. Being a small company (FTSE SmallCap index, curent market cap £23.3m) there is usually a large-ish bid-offer spread of around 3p.

They had a fatality back in June 2012, and South African miners have been striking for better pay and conditions. Earlier today, EuroChem announced they will take legal action against SHFT to claim compensation for a botched Russian potash mining shaft.

I think this legal action is unlikely to succeed (EuroChem terminated the contract and have made little further progress due to the same adverse ground conditions). Thus I think the market has over-reacted to the bad news and will recover nicely in time, with that monster yield to enjoy in the mean-time.

 

Whatcha nincompoops think?

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I own a number of Stinkers, that have Shafted me - so this one looks better

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  • 2 weeks later...

Chart : SHFT.L

 

Wait for a flattening out?

 

39.50 Change:

arrow_up_sm.gif +1.75 Open:

37.85 High:

40.00 Low:

33.01 Volume:

260,765 Percent Change:

+4.64%

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Chart : SHFT.L

Wait for a flattening out?

 

Blood on the streets at the moment: Down to about 33p and ohhhh my butt is hurtin'.

Still, am quite optimistic after perusing the latest interim annual report - http://www.shaftsinkersgroup.com/uploads/interimresultspresentation2012final.pdf

Looks to me like a massive market overreaction. Time will tell.

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Hi TBM, Looked at these following your first post and read up the thread on ADVFN, but decided until the S.A strikes are healed they faced short term weakness. Suspect your butt may feel better once that happens and any confirmation of the EuroChem issue going away.

 

Watching these now though, interesting play.

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