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You're thinking here does have some merit IMO.
I did flag a while ago about the possibility to increase throughput, but as far as I can remember RY has never mentioning anything on the topic. He did however back in time move from 4mt to 6mt and now with the prospect of much more lower grade material available as economic (if the COG is lowered to 0.2%) and the prospect of around 25mt of higher grade material a number of options should be on the table.
The issues as I see them are:
~The capex bill is unknown at 12mt we could be looking at close to double if the road also needs to be beefed up
~RY will want to get as much metal through in the first 10 years as possible in view of the benefit from lower tax and royalty rates, this will assist debt capacity and make it more likely that the project can support higher debt % like 60% and at the same time improve the NPV
~The average mining grade will take a hit, if material in the 0.2%-0.4% range is blended in, this will be negative for NPV
~We know from previous MET results that the recovery improves with better grade, so blending in lower grade material may also negatively impact the MET recoveries and therefor NPV
~With much more capex the dilution is also going to be astonishing, maybe RY should consider any expansion as cash flow allows after a 2/3 years of production, he may even be able to fund it partly from debt with a decent track record behind him.
~Of course you could argue that a partner is going to come in and finance all this, fair enough but whatever the production plans I think you would be looking at a 75% earn in for a partner (leaving 25% equity for AMC to fund), so how all the options pan out in terms of value per share need to be looked at by RY.
~As for metal price, well we can each take our own view, but it seems we are in a different place now and RY needs to adapt
So I don't blame RY for taking his time on this over recent months, but he has to do better talking to his shareholders, I can quote many other projects where the CEO has said consistency that interesting parties are in the data room and they are subject to NDA, and this has not stopped them from releasing a flurry of positive news.
There is no doubt that having all this extra material available now that we are in a different price environment opens up options and can only be positive for the project IMO, the old plans which ultimately ended up in the PFS were born much earlier out of a need to develop a project that can work and get financed in a lower price environment.
The newsflow over the next few months should be very interesting and hopefully RY will start to get on the front foot and start telling us a bit more about the strategy. ATB.RL
I think with 2018 drill results AMC could do a 15 - 20 year mine life at 10mn tonnes per annum.
Capex would increase, but the positive impact on the NPV will be astonishing.
The demand is going to be there
Hmm ... one of those that can be read both ways
re Malmyzh, don't forget the gold, current NPV based on POG $1500?
How would you get to that? The extra $2 per lb would generate another $600mn on current NPV but to increase production from 6mn tonnes p.a. that's a big, big ask.
“Russian Copper Company and the Far East Development Fund signed the agreement on implementing an investment project to build a mining and refining complex at the Malmyzh deposit (Khabarovsky Krai) worth RUB 142.5 billion; “
I'd be looking at a $12 nickel price, a shared smelter and a similar mine life but with increased production to fill the big gap coming mid 20's to see what our NPV is.
Circa $4 billion by my estimation
Frustrating share price, but eye on the prize
Hi GB33 .... the Malmyzh funding agreement mentioned $2.2bn .... could that be the cost of the whole project or the amount of funding coming via FEDF ?
Thanks for your thoughts, much appreciated.
Food for thought.
And yes, what is our NPV ?
Good question. A couple of weeks ago I was trying to weigh up a buy-out value for Kun Manie relative to what RCC had paid IGC for Malmyzh.
- Nickel has a more interesting future than copper
- There's still upside to the Nickel price over the current PFS
- 2018 Drilling etc to increase NPV
- Malmyzh is much better located
- Malmyzh has a longer LOM
All in all I reckoned the %age of NPV paid would be higher for Kun Manie than Malmyzh
Given Malmyzh was 11.76% ($200mn paid on $1,700mn NPV), I roughed out a range of 15-20% vs NPV for KM. The next question of course is on what NPV?
So, I uplifted the current NP (including smelter) option for $10 per lb Nickel plus 2018 drilling increase. For the purpose of this exercise I guesstimated this to be $2,000mn NPV.
So that calculates out as a range of $300mn - $400mn for the asset. Assuming a fully diluted shareholding of 800mn shares, this is roughly 30-40pence (37.5-50 cents) per share.
So an offer in this range would suit me fine.
However, anyone thinking of making an offer would know AMC's financial situation and would of course lowball to start although 10p is too low a lowball and would not do it for me.
I think AMC will be able to finance their way above an offer that low and I also think that TB not only made a good purchase for himself, but in doing so was letting any interested parties know that AMC had access to money.
One final thought - I haven't been able to find any Capex calcs for Malmyzh but the $2.2bn they've just signed an agreement for seems an awful lot for one GOK.
Sell the asset now, interesting thought.
Serious question and to end this saga.
What would you accept right now?
I would snap your hand off @ 10p
I hope so CBS, because any other non partnered form of funding will not be good news.
We'll see the half year soon, which will not make good financial reading. So the company needs to have something in place pdq.
Have to admit, I'd favour selling the asset now, been in this share so long I've forgotten what rational investing is all about!
I do wonder how much Tom Bowens made out of the sale of IG Copper to RCC.
He bought 1% of the company in newly issued shares and handed over roughly $200k.
No warrants, VWAP etc with that. That's some good funding I think. I wonder if he and his old IGC colleagues would be interested in a 20% stake in AMC?
Noloss.Like you I wonder how much we need to raise to take us to the end of 2020 and how are we going to find the money.Strategic partner best option but if not possible its difficult not to be concerned that with his track record of raising funds without much regard for the effect on the sp RY might be inclined to approach Riverfort again.Having said this the game has changed now that TB is on board with 1% of the shares and perhaps he will have other ideas which will not lead to a significant reduction in value of his own holding in the Company
thanks for the reminder on that Nolo, much appreciated. Important little paragraph there I think.
From the Strategic Plan of November 2018...
"The Company is in the process of completing detailed plans for, and costing of, the engineering work to complete a full BFS. There is a strong possibility that this engineering work will be undertaken in conjunction with a Strategic Partner, therefore the funding for this work may be a product of a Strategic Partner agreement which may be at either the Company or asset level."
So as I said this morning I'm keen to know who is going to fund this lot.
Okay, after a bit more reading, here are the next steps according to the RNS:
1.) Delivery of a TEO no later than 1 Dec 2020, condition of mining license. Approved reserves compiled by Oreol. This process has already begun.
2.) Resource Estimates for MKF, VOD and ISK being compiled. I thought this was already done? Yes, but the paragraph that refers to this means that Oreol are analysing/compiling these, then Oreol make consideration of the mine plan (OP, UG) to arrive at a reserve estimate (as opposed to resource estimate which is a different thing)>we haven’t had one of those (reserves) in ages.
3.) Due to JORC, we need to get Oreol’s reserve estimate audited. Roll the dice on a timeline on this one. JORC is not the regulatory standard for TEO. So this audit can realistically take as long as the BOD ‘wants’ it to > this bit has nothing to do with the TEO.
Well hey, at least their feet are held to the fire by the 1 Dec 2020 timeline (no more ‘near term’ nonsense in various interviews…)
Can we be snapped up prior to TEO publication? Sorry to be of zero help, but no idea; I cannot imagine why not. The acquirer will continue with that TEO work as part of the purchase.
Given the deadline, and assuming no offer is forthcoming the above achieves the following:
1.) TEO delivery / mining license obligations fulfilled > we don’t default on obligations and keep our license (maybe even get it extended?)
2.) DFS fulfilled > to JORC standards to a much higher degree of accuracy than a PFS > puts a more accurate, and we’d like to think, more valuable floor on a sale price.
3.) And crucially, barring any global recession, a continued rise in the Ni price while all this is taking place.
So, if you’ve got a year to spare, 2020 may be the ‘transformational’ year. The deadline of 1 Dec 2020 must be met, so I’d like to think our guys meet it (they are adept at not meeting their own timelines, but a government agency, that’s different).