The latest Investing Matters Podcast with Jean Roche, Co-Manager of Schroder UK Mid Cap Investment Trust has just been released. Listen here.
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Many mining exploration companies hope for just one off-take MOU, Blencowe confidently expect numerous, so we can be sure that those selected will be offering competitive terms. Add to this the near surface already proven quality graphite and the DFC project financing from the US and the downside risk seems negligible
Something else that inspires confidence is the 25% tariff the I.S will impose from 2026 on Chinese natural graphite imports...
BRES......flying in stealth mode for now.
Another great interview.
This guy just inspires confidence - he's clear, visionary and not afraid of signposting risks.
I was very interested to hear his thoughts on Chinese producers looking to shift production outside of China to circumvent the export restrictions.
Definitely backable.
Offtake MOUs potentially in the next 1-3 months, hopefully that piques some interest.
#BRES Video 🎥 CEO Mike Ralston outlines the progress at the Orom-Cross #Graphite project to @MiningOnline, with upcoming milestones to include offtake agreements, feasibility work, funding discussions & strengthening the concept of downstream production
https://t.co/BfSPOARr7G
Reserved,
That’s a very useful comparison, thanks for posting.
What I was struck with on the recent interview with MR was the complete and utter change of direction from being your a graphite concentrate producer to processing downstream SPG. Previously he had suggested that being a producer of concentrate would yield very good returns for the company, and clearly this is reflected by the PFS. However, MR was clearly excited about the prospect of doing something different and addressing an area in which almost no western firms operate. For those that weren’t on the call, he mentioned that producing graphite concentrate isn’t the issue, its downstream SPG processing and refining the concentrate into something that can be used within EV batteries that is causing the west a major head ache. As such, this is an area that BRES need to get involved in.
Clearly, BRES don’t have the knowledge and experience of being able to execute downstream SPG without a joint venture, again, referenced on the call. However, he seemed to think that processing downstream SPG would be a game changer for BRES, which for me is very exciting because the NPV is huge at present (under PFS), so area I am keen to find out more on.
A final point is that the all in cost of producing graphite concentrate is likely to drop from around $500 per tonne to just over $400 per tonne. This again is likely to have a material impact on the already impressive NPV and return profile of the project. So even if BRES start with a 5k tonne per annum plant (lets say for the first year), then this would still yield a huge return (given the current market cap.
Say cost per tonne to BRES: $400
Selling price per tonne: $1,100
Net return per tonne: $700
Net return x5k tonnes: $3.5m
BRES Market Cap: $15m
Return % vs Market Cap: 23.3%
Pauliewonder
With reference to your informative list of "short term factors", I note below some data from studies produced for Greenroc:
PEA for the mine reported an after-tax NPV8 of US$179M with IRR of 26.7%.
The feasibility study for an anode plant reported an after-tax NPV8 of US$545M with IRR of 25.3%.
This demonstrates the potential for a multiple of 3x for downstream processing.
Some good points there Paulie. Let's see what happens. I'm certainly not ruling out a re-rate before the DFS, but not expecting it until afterwards. Bres has always been a bit of a slow burner but we can be agreed that it's time will surely come. GLA
I'm not entirely convinced that it is beyond the wit of the USA to process graphite.
Given time and resource there is more than a decent chance that the USA can replicate what others are doing.
There are a number of short term factors that will cause a re rate:
1. Off take agreements - yes not binding until DFS is completed (as we all knew) but it can hugely de risk the project - and by the way they can potential forward sell to secure finance. To suggest that this will not impact the share price is missing the point in my view. If they were to land say POSCO, then not only does it validate the product, but it secures an indicated route to commercialisation and opens up possible financing. This is as close as two weeks away from the first non binding agreement.
I tell you what legal, at the BRES £1 share price party (which we absolutely should celebrate if it ever gets there), If we get an a non bonding off take agreement with POSCO and we don’t bag that day, I will buy your drinks all night. Vice versa too.
2. SPG - a game changer make no doubt. The PFS showed $492 NPV life of mine. This will be smashed with a downstream SPG facility (and I mean well and truly smashed) - news on this likely in short term.
3. Additional drilling - this is likely to increase life of mine, increase NPV and potentially expose other high quality results (outside Camp Lode). The DFC are encouraging this and will likely provide financing on this. Let’s face it, it they want US to have this resource otherwise they wouldn’t be involved. So it’s logical that they will look to encourage BREs to increase it
4. Graphite shortage - slipping into a supply deficit, will impact graphite prices
5. Funding - if they can outline how they will fund the mine, this will re rate the share price. The market is still worried about dilution. Wrongly so in this case because MR has said he will only raise through small and well timed placing a, not to retail as we are seeing with many AIM and small main listed firms at the moment
6. There are lots of other factors that can cause a re rate including further testing of results, completion of DFS, further financing agreed with the other DFC dept, securing, further strategic investment, updated broker notes, market cottons onto how under rated we are.
And by the way, MR didn’t say it was Q1 2025 for DFS completion for definite. What he said was Q4 2024 but there are some items that are out of his control that “may” slip into Q1 2025.
We have to remember that BRES doesn’t have a £100m market cap. We sit just over £10m, although Mike did say that at the point the DFS is completed (say eight months ish), he expects this to be worth £50-100m. That’s a x4 to x7bagger from here if it goes as MR suggests. So I’m not categorically saying you are wrong Legal, I just have a materially different outlook.
Correct Zapsnap, and as I previously mentioned that bulk sample is almost certain to be of very high-quality based on the previous sample test results taken in the US and in Wuhan, China
I think we will get a rerate in the next 6 weeks once we get results of bulk samples. Everything will be clear then
Mike made clear that offtake and plant financing can only come AFTER the DFS is completed in Q1 of 2025. He suggested within 6 months of the DFS. What we are likely to get beforehand are non binding MOU. This could change of course but these are Mike’s most recent words.
If he gets an offtake or two then the market will re rate the stock for sure .
Then what do the Yanks do ?
Watch Mikes interview again,
He says the testing is being done as we speak, the Chinese like what they see so far and he’s expecting things to happen quickly once finished.
*Mavern's (apologies) was thinking of the Worcestershire town not far from me.
This is what makes it all so interesting, differing views and opinions, I'm loaded up and unlikely to add much more now so will obviously champion Malvern's prediction!
Couldn’t disagree more, markets are forward looking and the share price won’t stay here until the milestones you’ve stated. At £12M the market cap contains virtually none of the newsflow to date, we should be at multiples of the current share price but that’s down to AIM bear market which thankfully looks to be ending. I expect a significant share price re-rate throughout 2024
I think the difficulty here is that Bres is some 18 months to 2 years away from actual production, based on MR's recent interviews. Even then, initially production will only be a small plant and so sort of like a testing phase. The DFS is also delayed until Q1 of 2025, which means binding offtake and binding finance won't land until middle of 2025. So timescales have moved back to what we thought they might be. Therefore, it's hard to see a re-rate here just right now, and I suspect it will have to wait about a year, by which time the DFS will have landed and Bres will be closer to binding offtake and financing. Of course, anything could happen before then with US imposing tariffs on China and looking to decrease its dependency on China. All imo and dyor
Spank
Your right to chill out with this share
I’ve been here from the start fella and payed nearer 8p and averaged down over the years.
Soon the News will flow and hopefully when it starts it will keeps coming, we’ve a lot of News flow Coming very soon and cannot wait to see this gain traction.
I’m hoping September to see prices nearer .09p-.12p👍
Thanks, I think I'm spending too much time willing the value to be realised, need to have more patience, turn off from it and just let it play out.
Agree with pwlx. The company I work for does this and we are encouraged by our marketing team and external PR company to do this. I would argue that it’s good marketing content that gives the company ongoing marketing material to encourage ongoing online engagement.
I agree it’s frustrating that we aren’t seeing more from the company in terms of news flow although this can be the hardest time to hold. Clearly there is a lot going on with BRES and we just need to be patient and wait for this to materialise into RNS. The biggest gains are made not through trading, but through holding.
Spank - lots of companies do this, releasing snippets over time reaches audiences who are unlikely to commit the time to watching the entire interview. The comms including Twitter account are managed by a third party who has the interview footage and cuts it up into bite size chunks. Keeping regular engagement on social media helps keep it high profile among investors who have money to pile in at various times, not just when the interview is released.
There's another tweet but it's just another snippet from the FocusIR interview the other week, I don't know why they do this, it looks a bit desperate to me.
I'm assuming that if/when BRES goes into a JV with a leading Chinese spg manufacturer at a location in Uganda not far from Orom Cross, that the Chinese outfit with their IP and access to finance, will be in the driving seat from a control point of view, leaving Bres as the offtake supplier. Just can't see Bres running the show, even if it is still around at that point in time.
In that case, what's the difference to the USA from a strategic pov of imposing extra tariffs on Chinese-made graphite flakes from China, or from them in Uganda?