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Not sure Suzy, maybe, if I remember right there were concerns at the time with regards to road transport / number of journeys / size of trucks / road upgrades etc.
This may have been a prelude to a rail link direct to the mine.
It's maybe somewhere in the EIA if its correct. But I do remember reading it at the time.
Also, FarEnd since you quibble with the Redeye analysis... he didn't value in the high grade product.
Wasn't that 6mt figure initially...and not over a longer period.
BEM have previously stated their intention is 6mt pa not 10mt , I believe this was to allay fears at the time due to transportation initially from the mine site.
Obviously all this is speculation, thats 40% less (over a longer period).
Yes UnknownSoldier I think I added 3SEK for the graphite interests......
50% released to the partner? Any mine at Kallak, and the sales figures are into £billions. The capital injection required to build a mine is a small fraction of that figure! So, anyone wanting 50%, I feel sure, would be told to FO. Not even close. The above is a personal opinion only. atb
Thanks for the info OilyV. Unless I'm mistaken, the Redeye report says SEK 9.3 when concession is granted. I make that 0.77p not £1.
If there's any credence in that prediction of share value immediately after grant puts it conveniently right on £1 (makes my calculations much easier!)
Part2.
Valuation of Kallak and Beowulf's share based on LKAB's earnings. In the calculation we ignore the total volume of ore in Kallak. However, we expect the lifetime of the mine to be> 25 years. Furthermore, we assume that the broken crude ore is about 10 million tonnes per year (Mton / year).
We are based on LKAB's earnings in 2017, which we round out to SEK 6.7 billion, which is based on a total broken 49.6 million tonnes of crude ore with average price of 67USD / ton. This gives results per million tonnes of crude ore:
6700 / 49.6 = 135 SEK / ton of raw ore
Which corresponds to about 10% of LKAB's annual turnover.
We assume that Kallak has the same quality as LKAB's producing ore field. An estimated result for Kallak would be SEK 135 / ton of raw ore
135x10 = SEK 1350 million.
Let us further assume that Beowulf releases 50% of its share to partner (perhaps LKAB or Rio Tinto) against the partner taking all costs, even the initial ones. With 500 million Beowulf shares and PE figures 12, we get a reasonable value for the share
Valuation share 0.5x12x1350 / 500 = SEK 16.2 per share at full production
Which is in line with our previous post. It is about 18 times the daily rate, 0.87 SEK. The assets in Finland and Vardar must also be added to the value.
The current value of the share with assumed alternative return p = 5.5% and that it takes about t = 10 years to full production and achieved value of PF = 16.2 SEK per share will be
Present value share = PF / (1 + p) ^ t = 16.2 / (1 + 0.055) ^ 10 = 9.3 SEK per share, present value immediately after granted processing concession.
Disclaimer. We own shares in the company. The analysis should only be considered as information and not as a purchase recommendation. We are not responsible for the data being accurate. Before any investment, the council is given the opportunity to obtain its own information. All trading in shares entails risk, decisions are made at their own risk.
Appendix: We have used the same valuation model for NIO with the assumptions of 2 million raw ore per year, loan 2000 MSEK and straight depreciation 8 years and then receive the present value of 4 SEK per share. At the time of writing, the share is traded around SEK 3.50.
Beowulf's value with LKAB's result as a basis. We maintain previous valuation. The potential impresses.
2019-02-18 09:11
Views: 1663
After feedback from our previous calculation, we explain the model from another angle. The model we use for the Beowulf share is based on LKAB's annual report 2017. We assume that Kallak simply has at least the same profitability conditions as LKAB's now producing ore field. We have chosen not to rely on other economic models because they are extremely sensitive to project-specific parameters such as borrowing cost and yield requirements. Small adjustments give a big impact on the result.
Summary of the valuation. According to our model, the Beowulf share can be valued directly after the granted processing concession to approximately 9.3 SEK. In order to gradually trade up to SEK 16.2.
The valuation is based on the following essential assumptions and data:
Kallak has at least the same profitability as LKAB's current ore field.
Kallak has comparable ore quality with LKAB's ore.
LKAB's operating profit for 2017 is SEK 6.7 billion
LKAB outlet 2017 is 49.6 Mton crude ore.
LKAB's result for 2017 per tonne of raw ore is SEK 135.
Calligraphy at full production gives 10Mton of raw ore per year.
Beowulf releases 50% to partner against it taking all costs, no borrowing costs for Beowulf.
PE number 12 at full production.
Alternative placement 5.5% for 10 years.
Simple present value calculation.
The valuation in detail of Beowulf's assets in Kallak. We assume that Beowulf is authorized to establish the mine in Kallak. Most of it speaks for it, we believe. The prerequisites for entering into partnerships / acquisitions are very good. Beowulf's management, infrastructure for transport, the quality of the ore and low initial investments, because it is a quarry, means that we see Kallak as a very good deal. We also assume that the time to production calculated from today is less than five years. As we pointed out at the previous valuation, there are alternative models that take into account, inter alia, borrowing costs and yield requirements. The models are extremely sensitive to project-specific parameters. Which is also highlighted by those who use the models, as a consequence, comparisons via simple measurement numbers with other design companies are virtually impossible and thus meaningless.
In our estimation of the reasoned share price for Beowulf, we expect what the mine can generate at full break, about 10 million tonnes of raw ore per year. Furthermore, we ignore the fact that the ore is of extra good quality. Average P / E figures 12 based on known Swedish mining companies are reasonable to assume and in light of this valuation, we price Beowulf's share. The number of shares is approximately 500 million.
guys lets not gorget since Vale disaster Iron ore has surged 20% this last few months so Swedish minister must be think maybe now is the time to exploit Kallak.
BHP Rio and Vale being discussed right now on Bloomberg and BHP clearly stated they cannot ramp up production to exploit price rises and interested to see if Rio state the same in next update. But reality is there are no major producers to ramp up to make up the massive global shortfall Vale have which bodes well for sustainable Iron Ore prices in coming few years all very supportive for BEM!!!!
Nice one - thanks, Tintin
Didn't most of them go and have some 'fun' over on SXX?
well i think i know where golathlay is...
Probably still around under different names?
Kallak has the potential to generate SEK 1 billion in tax revenues, considering the case where 70 per cent of the mine's workforce are based locally, with annual tax revenues of SEK 40 million over a 25 years mine life.
Lozan, delt, bigbucksplease, netleylucas all there when we order finally went to 70 odd pence!
https://aim-watch.com/articles/price-monitoring-extensions-explained/
looking very strong L2 happy to be here now two years waiting for the Swedens mining inspectorate to finally say yes will be a fantastic result for LTH
Forgive my ignorance, but can anyone explain what Price Monitoring Extension RNSs are all about?
not long now for sure!
I remember Lozan - that's how long I've been here!
excellent find and clearly proves economics will usually always win the day! I thought museums is where old traditions go to rest?
"I am shocked by the government's decision. I had hoped that the Norwegian government would have heard our arguments ... They do not take us seriously," reindeer herder Nils Mathis Sara told Reuters. "We will definitely protest against this decision."
A group of reindeer herders will discuss whether to take legal action in an attempt to stop the mine, he said.
One green group, Nature and Youth, was planning a demonstration in front of the Royal Palace in Oslo on Friday when the cabinet holds its weekly meeting with King Harald.
I remember when it was 16p and held my finger over the sell button. didn't and always regretted it. knowing my luck if I sell at 16p it will go up past the 20's. lol
I remember holding all at 70p !! what a clot ` should have sold a few!