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Graphite prices up again - 98 days since ML can someone predict RNS tomorrow?
Stummer - some of the selling could be continued pre warrant fund raising, depends on the liquidity/cash position of some of the warrant holders, there is £500k to come from non MB/K direction, someone has to find the money. However I think they would be dumb to sell pre news when they don't need to cash in warrants until April. However, K had to raise funds for Volt, then he was likely to have to pay tax on the profit of selling all the shares for Volt, then as he has more warrants to finish probably needed to get the cash for that.
There is nothing in the battery narrative or EV sales narrative that says to me that there is a demand issue for the foreseeable future and given graphite pricing increases throughout the last year, says that demand is increasing for all types of graphite.
The project remains in any mining terms a very economic (and safe as it can be risk wise) project that wil not be hard to see progress in a market looking more supply, it is low cost and high quality so finance sees it as a lower risk to back.
Older - some of the above applies to negotiations, demand (even 18months ago we had 100+% of offtake in MOUs, there will be more interest now), high quality, tested and suitable to the markets to be sold into, good economics (buyers want a company that can repay finance and stay afloat in low cost environments). To me we are entering a sellers market, buyers won't have the same leverage as 1-2 years ago. We have a wide basket so not commited to one offtaker, different industries with different demands/needs so not reliant on the one source to take the product.
Don't know because I don't know him well but what we have is high purity graphite which they want so that's a good starting position to negotiate from particularly as price is creeping up! Negotiation is an art it is true but it is best to be selling something the buyer wants/needs badly.
How would you characterise Matt's negotiating strengths, in relation to the bargaining power position of the Chinese offtake producer?
Yes sorry for the O/T but I do also see GRL as a no brainer as a hedge when it all goes south, as Evergrande may yet push, on wider markets. Got to hold some gold. I think it is important these miners close their finance deals before global markets head south so I'm hoping Matt is well advanced here. Once finance is secured you only care about commodity pricing which generally should be OK in recession. So we need finance done. On the other company I won't mention I'm just pleased it's done you don't want to be doing deals that big in choppy capital markets. On GRL I'm now nearly equal weight GRL/ACP. I see GRL as my 2022 will deliver results investment, ACP as my 2023 will deliver results investment.
Come on Matt, some news in next 2 weeks please :)
Sorry for the O/T guys.
Thanks Wasa.
Yeah know what you mean about the long game. Sometimes wish I was a better pure trader. As most of my recent shares, with the exception of GGP where I got lucky, are all progressing onto Jam very much the year after the year after next etc.......!
Anyhow, I am OK with that here to a large degree.
I may even dabble a bit more into GRL. That one I bought into in the late 6s and 7s. But decided to sell when it went top 11s simply as my stake was fairly small and I needed a bit of cash at the time for something else. I note that one went fairly quickly to 14s odd. But has now stalled and fallen back a bit lower even than when I sold it quite a few months back...
AIM, not the poster here, but the Market really is a hard to work out beastie as you indicate.... At least a bit of good news today on HZM though. But again the price there is laughable still given the asst value in a few years....
Let's see if the ACP manic seller folds up his tent after Xmas then hey.... :-)
Regards.
SJ only thing to be aware of here I think in terms of risk profile of the investment is - maybe don't expect the post finance valuation and build time to fully reflect the economics of the mine. So I'm thinking very much along the lines of 'sell no shares till 2023 earliest' because AIM is a bit of a s***show at the moment and we may not be valued correctly on NPV. All that changes at production I reckon when the cash starts rolling.
There is clearly a lot of upside from 4.5-5p even post finance but the full value will be at production. Thankfully production will be a lot sooner than certain other stocks I'm invested in!
leathal - just on demand side, we won't need to worry on the timescales most PIs here care about - because the offtake will secure it. If your investment horizon is 2023 (which is fine nothing wrong with it - I may and probably will de-risk some at first production too) we will have a buyer for our product well before that with published terms in the offtake - i.e. you will know this information in the next 6 months no more.
Demand side doesn't bother me here at all - it's different if you see this as a 20 year investment. I am quietly hoping we can actually up 'early' production to hit the sweet spot in the demand cycle then you can throw the current estimates on NPV out the window and pencil some better ones. The original DFS is designed to only utilise less of the mine to keep capex low but if there is a buyer for the product and it can be squeezed into the capex producing more earlier is a no brainer, if graphite prices are rising. GLA
Cheers AIM.
Yes I feel that way too.
As an investor rather than trader by nature. I tend to set mid term review target dates to assess my holdings for each share. For RMM it's around Aug or Sept 2022 for example. Happy with that, as have already built my position more or less there.
ACP I haven't yet decided on my review point. It's clearly giving people extended opportunities to build or add though, as appears that the consistent selling goes on still. The theory that this player had had his fill seems a bit premature I assume. But that doesn't overly bother me. As any target I set here once my position is built will likely be similar or greater than my RMM one.
Thanks, & as ever find your analysis of good depth and interesting slant.
Oh btw did you exit HZM in the end. Or are you just leaving it to ride like a few of us for a couple of years now etc. I know you used to have a few regular run ins with old DJ on that BB. But hadn't seen you crossing swords with him recently... ;-)
Regards.
I purely used it as an example of copper plays where volitiity is no less guaranteed in other popular AIM companies, by no means a slight on the play itself.
I think RMM first major pullback was in part due to the huge overhang created originally at 22-24p which those involved were always going to take some money off the table at 60p odd, but from what little following I did, there were some delays and finance issues to clear up. So a few hiccups as always is the way. Some brave souls well repaid averageing down in the low 20s now it has got into its groove again. Low prices don't mean anything other than opportunity sometimes.
In some ways a little like ACP, Kabunga was an overhang of stock that had reason to leave, which has impacted the mining licence news and value add. Fundamentally as per RMM nothing changed and the sector bouyant, so those with the faith that can buy in or add will no doubt be rewarded well across the next year, nevermind end of Q1.
Hi AIM.
RMM. Agree, v much up & down.
But I have long term invested to review at start of Q4 '22.
I think it's got a good chance to multiply from circa 33p to X4 by then..... Assuming progress on the 2% Cu proves Minable, and the strong turnaround can continue ....
Do you disagree?
Cheers.
AIM thats really good of you to post in depth , i will take a look at the link , thanks for your posts much appreciated
Leathal
https://www.reddit.com/r/pennystocks/comments/pvzx17/dd_armadale_capital_plc_acplse_large_flake_high/
Go here and look at the Benchmark Minerals slide I copied from the presentation on Monday, it is the last one with 'ZOOM' at top of the picture..... look at the points BM are making about Graphite, these guys are market leaders in their field regards EV commodities, that looks like they are very bullish on graphite demand.
https://ottawacitizen.com/news/local-news/electric-vehicles-and-tech-catalysts-in-40m-deal-for-northern-graphite
Northern Graphite easily found $40m in finance from Sprott to buy 2 mines. One only has 3 years LOM left. So I suspect getting $40m for 15years of mine and NPV of $500+m won't be a problem
https://snip.ly/s6o0dt?no_cache=1638375326#https://www.nxtmine.com/news/articles/energy-critical-metals/tsxv-gph-graphite-prices-heading-higher-on-market-tightness/
- Does this sound like there will be a demand problem for Graphite? Every chart has it as the biggest expansion of demand vs current supply.
Every EV commodity is going to have cycles, in fact every commodity has cycles.
Talk about looking at copper, how as it gone for ARS, or ARCM of late and copper price is flying. What about RMM, roller coaster there, AIM shares of any kind or commodity have their moments. If you want safe go for a FTSE 100 producer and look for 10% gains, ACP is a very economically favourable mining venture vs any commodity/company with htose DFS figures, it is grossly undervalued to its NPV and when further derisked value will increase but more than 10%! Look at peer valuations on finance complete this is easy 100m, x4 todays price. That is why there is greater risk because there are greater rewards....thats investing. But look at the journey and the risks now mitigated. Resource drilling, finding resource, building resource, JORC resource, SS, PFS and DFS to show economics, FEED, CSIRO, EISA, Mining Licence.....all steps that had risk and provided reward. There are still some steps and definitely reward to come. However, do they seem manageable? Well graphite prices are rising as demand goes up, demand projected to continue rising through the decade so product is needed new mines are needed (I suggest you watch Benchmark Minerals latest presentations especially the Graphite one from Monday 8am - They don't think there will be enough mines to keep up with demand) so getting offtake shouldn't be a problem, but what gets you an offtake over others?... Well quality high TGC product does and ACP has that, it has been proven. Finance....well get the offtakes and the finance can see you have buyers, what is the risk to finance, high capex and long pay backs with high cost mines....ACP is low capex, fast payment and will operate in the lowest cost quartile.
This is how I justify my decision
Great post AIM , for what its worth i took no.6 onboard and figured yes this is ACP , i agree every stock obviously has its risk im hoping to keep this one atleast until end of 2023 by then we should have a clearer picture of how much demand graphite will be needed .. Is that fair to say ?
Thanks
You need to leave the commodity space if this ONE article puts doubt in your mind. It needs context.....it is the ONLY article I have seen suggesting graphite is a volitile market, but probably based on 'historic' graphite demands and like ANY commosity has its ups and downs.....but there is a new demand factor in town that is going to cause a long term increasing CAGR for graphite to fullfill growing EV battery demands (and storage). This will take the swings out of demand in other sectors requiring graphite.
This report is a little shock jock, but it is putting in disclaimers....we told you to buy but we told you to sell if it turns, we are not to blame if you are left holding a bag.....and pick the right one...
The bull run with the pinch in supply for EV graphite is just getting started so by all means be careful but this is entry time.
Some points they make.
1. We believe there is a secular bull market in graphite stocks that will run throughout most of this decade.
- So graphite is interesting for the rest of the decade but it is secular, so prices go up and they go down but it is a 'bull' market. Why will prices go down at times, well there might be an even bigger chip shortage and battery production slows so does material needs.....but this will affect EVERY battery commodity and even the copper going into each car, or a load of mines arrive to market at once bringing new supply, but the market will catch up as EVs continue to expand.
- That means when your shares are flying, watch for a down turn in prices due to outside factors and position accordingly....investing 101
2. On a year by year basis we expect a typical cyclical evolution: powerful bull runs which are followed by good selling. The key is that those support levels hold.
- ERRRRRR investing 101....next!
3. 2022 will have at least one bull run, if not two
- hasn't started yet, you are on the start....but this affects producers more because it affects their bottom lines directly, not pre production that could be undervalued anyway awaiting important milestones, milestones bring value devoid of market prices
4.Be extremely careful picking graphite stocks
- Be careful picking ANY stocks. But if you do you pick the best economical ones, like look at BRES economics versus ACP, ACP is better on every metric, BRES might be boasting future possible large resources, so what, I won't be in graphite in 20 years, so what is the point
5. Most graphite stocks are not worth your time nor capital.
- ERRRR most stocks are not worth your time or capital....next!
6. The graphite stocks with prospects of becoming a producer before 2025 (well capitalized) are the ones that will be the most juicy stocks to hold.
- Which is exactly ACP! - They are saying getting to the table pre 2025 and producing through the mid decade bull run will reward those in early. No on eknows the graphite demand end of the decade, but I can assure you every chart for graphite demand is going up steeply r
Safe, i read this .. It started to put doubt in my mind if im honest , im not sure i want to be in something thats as highly volitile as Graphite , il admit id not done much research before pulling the trigger here , that being my own fault of course
Saying all of that surely there comes risk with most minning stocks , im thinking Copper might be the safer play for the nxt couple of yrs or so .. Thanks for sharing
https://investinghaven.com/forecasts/graphite-stocks-forecast-2022/
Some interesting extracts from this article :-
Graphite stocks are known to be wildly volatile. They can rise like crazy, but when they decline they tend to fall scarily deep. With this disclaimer in mind we are going to forecast at least one wildly bullish graphite stocks period (cycle) in 2022. This implies that a downturn can reasonably be expected, so taking profits is healthy. It also implies that spotting a great entry point is going to be the challenge for graphite stocks in 2022. Along with this, finding the right graphite stocks is going to be the other challenge.
Graphite stock investing
Investing in graphite stocks is not easy. That’s because of two reasons:
There are many graphite stocks that have no idea how they ever will be producing graphite (at economically acceptable conditions).
There are many management teams from graphite stocks that are in business to do one and only one thing: fill their own pockets.
It’s a dangerous place. Many graphite stocks are money losing machines. They can get away with it as they are small or nano caps (not a lot of analysts pay attention to their practices). During a graphite stock bull run they sell massive amounts of their shares and also raise capital by issuing new shares.
I sincerely hope that our Management Team are not out to ''fill their own pockets'' !!!!