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Well those who were at the Agm 2 years ago will feel a warm glow after reading that Article on Champion Iron :)
Might be worth reviewing Champion Iron's recent history which might indicate where we are heading? 50 bagger.
"Junior miners bring abandoned iron ore projects back to life" (JANUARY 5 2021)
https://www.ft.com/content/95d038cc-993a-47f5-8324-f733fc5a900a
===[
Another beneficiary of the iron ore price surge is Champion Iron, an Australia-listed producer that bought the mothballed Bloom Lake mine in Canada’s Quebec in 2016 for C$10.5m ($8m). The previous owner, Cliffs Natural Resources, spent $7bn acquiring the mine in 2011 and building infrastructure over five years.
“Look at what happens when the herd mentality sets in and most analysts and investment bankers say iron ore prices are going to x and staying there forever,” said Michael O’Keeffe, Champion’s founder and executive chairman. “I like to take countercyclical views.”
]===
Totally agree Obs, medium term growth is paramount, especially where Amapa is concerned. I note with interest that the UK govt has just approved a controversial new licence to a coking coal mine in Whitehaven, Cumbria, with the view to supply our own steel making industry. Historically the UK has imported 50% of it's high grade ore from Vale in Brazil but that supply has been significantly reduced after their tragic Mariana dam collapse in 2015. We presently import predominantly medium grade ore from India, Russia and Sweden. Perhaps we'll see the return of lower emission, high grade ore from our own mine in Amapa - I wonder if the timing of our getting involved in Amapa is pure coincidence?;-)
As to how we might fund the 49%. There are several avenues. For instance I'm hopeful that sometime imminently Ganfeng complete their studies which increase the ktpa and life of mine, increasing the NPV whilst reducing the IRR. Broadly speaking I'd be expecting them to deliver perhaps an additional $0.5B to 1B NPV8 which we might be right to associate roughly 30% with us, meaning at production and at reasonable Lithium prices (I believe they will seem very conservative in time!) Sonora might be worth $150m to $300m to KDNC. Would we, should we let it go for $100m if they deal was on the table today, pre-construction? Perhaps!
@Zoom - I certainly do share the view that this company has some serious potential! Medium term whilst we have growth in sight I'd rather we didn't dividend out but continue to reinvest, or if we really are flush with cash and not knowing what to do with it and believe we are undervalued - buy back our own shares. Something I read on one of the boards during the week sums it up:
===[
Bare in mind new companies don't pay dividends. Look at Tesla. Not expecting dividends there. But SP rises.
I am in this for Market Cap appreciation not waiting on dividends. That way you pay tax on Capital gains when you want. That is you can plan tax years and move from one year to another.
]===
@Bannor: "yes I am that predictable". LoL - if only the share price was! ;-)
@cmsammy - There was a bit of discussion regarding the 49% a few days ago. Worth taking a read back through @Bannor and my posts - if not the lot! :-)))
Ob.
LoL....
MrsB you post what you want when you want.... although if it's heaping praise on the BoD (or Lenigas) who I'm aware you have some affinity with you'll have to expect a response from me that might be in some disagreement to that view .... we both have a right to our thoughts & opinions though as well as the right to voice them, what we both agree on is the potential value of Amapa (now) & the JV's we had since long before Kiran & co started playing foolishly with our money, rainbow chasing assets & investments..... often with that snake with NPD Lenigas.
Obs - yes I am that predictable .... just because I'm not posting as much doesn't mean I'm not reading.
Yune - only my second & very last direct response to you.... the only list I believe you have is one of former posters you can't use again & right now is not the time to be doing anything until Amapa has finished playing out - if it succeeds few will care what's gone before, less about me, my opinions & thoughts & nothing for you & yours (which to be fair on the latter two is pretty much where we're at now in my opinion).
Take care most .... morning MB & Frankie :-))
@Obs. You said...Even if I did de-risk substantially post 20%, I was always intending to let a large portion ride. Like me, I'm pleased to hear you're taking the longterm view. I am investing here with longterm ambitions of eventually seeing a dividend return rather that having to sell the capital assets. That's what the mining sector does well if they've discovered the right assets in stable jurisdictions and identified growing future demand. All boxes are ticked so far. The next phase is to encourage institutional investors, hedge funds etc who are also seeking longterm returns for their own investor base. Our Non-Exec Chairman, Andrew Suckling, is not only an experienced former metals trader with the LME but came to us directly from Standard Chartered where he was global head of mergers and acquisitions and founding partner of New York based Ospraie Management LLC, who specifically invest in the commodities sector. He is also on the BoD of Singapore based UOB-Kay Hian Holdings Ltd, incidentally Indo Sino Trade Pte Ltd are also based in Singapore. So the stage is set for his experience and connections in the financial and commodity markets to come into play as we de-risk and grow the company. Our investor base is mainly UK retail at present and the shares traded on both Aquis and Aim. I certainly see us moving up an Index when we've grown sufficiently to attract those institutional investors and they'll also be looking for stable, longterm growth and exposure to a multiple asset base. We could even seek a US listing again given the right circumstances. I'd be interested to hear if you see the same potential and share a similar longterm view?
Haha Obs, worry not although I had got 4 crackling points to add next . I promise , no baiting my old posting chum Ban....my lips are sealed and I’m sitting on my hands (mb ... no) ;)... fire away guys !
@Tradecraft. On the subject of tax, and tax minimisation, I'd take the ANN profit 2012 declaration with a large pinch of salt - who did they sell to and for how much? Take a read of that blog I shared the other day - there are a multitude of ways to minimise tax, some more questionable than others...
@Zoom: "So Obs are you tempted to stay to £10+?....." sure am! Even if I did de-risk substantially post 20%, I was always intending to let a large portion ride. What I'm wondering now is whether I might let the lot ride, I'm certainly starting to be persuaded in that direction. ;-)
Thanks for the contributions everyone! I had to laugh at @Barksy's post (non maliciously of course!) as I was like uh oh, don't wake a sleeping bear. How about we leave congratulating the BoD until they have actually delivered the 20%, and no talking about Sonora history until we have a processing deal in place. No one mention the war! ;-)
Anyway, I hope the above is taken in light jest, what's more relevant to this thread is looking forward post 20%, and I must say I'm impressed at your spreadsheet @Tradecraft! (Good to hear from you!). I had a look through, not with my calculator, but with my ball park and everything seems about right at first glance for what it is. A few things you might want to consider:
1. Debt repayment - This is complicated, and I've tried to estimate previously what this might be at 8% discount. The JRP includes the schedule envisaged at the time and summarised in the 30th August 2019 RNS "The JRP schedule contemplates the majority of the historic liabilities will be paid from free cash flow in years 5 to year 17 of operations, which represents a discounted NPV10 debt value of approximately US$106 million.". It appears to be in BRL in the JRP and this has moved very favourably against the USD since then. And there is the secured debt which @tomcat might remember more about. Both of these aren't too consequential for your $120/t and $180/t scenarios, but they are for the $61/t base scenario.
2. Taxes.
3. Life of mine extensions. The 14 years is certainly now an underestimate subsequent to the news release on 2nd Nov 2020
===[
Highlights:
· Mineral Resource of 176.7 million tonnes ("Mt") grading 39.7% Fe in the Indicated category, reported within an optimised pit shell and using a cut-off grade of 25% Fe.
· Mineral Resource of 8.7Mt at 36.9% in the Inferred category, reported within an optimised pit shell and using a cut-off grade of 25% Fe.
· This Mineral Resource represents a 21% increase in total mineral resources compared to the equivalent MRE published by Anglo American 2012.
· The MRE will form the basis of the mine planning studies within the scoping study, to support the operational plan to produce 4.4Mt of 65% Fe and 0.3 Mt of 62% Fe per annum.
· Significant potential exists to increase the resource base after the completion of metallurgical and optimisation studies on the surficial Colluvium and Canga and the underlying Semi Compact and Compact Itabirite material types.
]===
Keep the (constructive) contributions coming!
Ob.
Jesus, it’s ‘Night of the Living Rampers’
Indeed MrsB only the board to thank for:
Taking out an unnecessarily large loan to buy BCN for a £1 a share that we had to sell down to 20p a share ....(after announcing to the public in a (seemingly now hidden/lost) webinar what our BoD &/or Kiran considered would be a significantly discounted raise by BCN) .... at a significant loss to pay off small parts of the loan which has led to significant cost & dilution after numerous 'renegotiations' .... buying into Leogang - fail..... buying into Auroch - fail .... along with destroying any relationship we might have had with BCN by making a ridiculous RTO attempt.
Regardless of how attractive & possibly well constructed Amapa might be it hasn't come about because of the above its come about in spite of it..... we could equally have still been here with the Amapa project & on potentially reasonable terms with BCN with a reasonable direct holding &/or EMH as well as our 30% JV holdings intact most of which we had prior to the ridiculous CLN which in my view led to nought but difficulties in the interim along with significant dilution & unnecessary debt caused by it.
Yes all thanks to a BoD that IMO have flapped around pretty aimlessly in my opinion trying to justify their salaries & position at our cost.... & have now somehow found themselves with (or been gifted/invited onto) a potentially company making project that either they've put together (or in my opinion more likely was put together for them).
As I've said Amapa looks a fantastic opportunity & deserves credit if/when it comes off but it doesn't change what I consider the poor performance, choices & actions between 2015 & IF/WHEN Amapa finally progresses to a point that we legally & officially own any of it which so far, by all accounts, numerous statements & missed dates has been just an agreement or ruling away for the last 15 months.
And this is why i do believe we will see £1 on Amapa 20% completion as people will slowly realise how big this is, on that rns the big boys/institutiions will have the green light and with only under 150 nillion shares in issue £1 is still cheap as chips for what is coming,
Well I must admit I was very disappointed when we didn’t go ahead initially with the Tesla deal and also when we didn’t manage to rto Bacanora , but now I really believe it has turned out even better for us as we now have our own iron ore mining project in Amapa plus we still have our JVs in Bacanora and our chunk of EMH plus Has Rare Earths and MacArthur’s iron ore in Aus and lithium in Nevada and the lithium plays in Australia . As I see it we’ve ended up with a much better diversified company. Only the Board to thank for their decisions if/when this takes off. Exciting future ahead for us.
Tradecraft, great to see you back and many thanks for taking the time to post your valuation to us of Amapa. The figures are pretty mind boggling and I can see now why Kiran and the BoD aren't going down the path of bringing in a strategic partner. I asked the question during the recent AGM Q&A and Kiran's reply was that we have sufficient in-house expertise and as such we don't need to involve a strategic mining partner. So the prospect is that the mine will be operated by ourselves and Indo Sino with DEV as the miner. That still leaves the question of what will our other assets add to the share price when actually in production? Happy that £10+ is good enough for now but there's every chance that we could be £s more than that figure if we include production from the JVs and EMH. Have a great weekend and look forward to hear what everyone else has to say....
Top slicing at 25-30p was my earlier thoughts but as the sheer size and possibilities that just amapa could bring has changed my goals
@Tradecraft welcome back to kdnc bb and your workings on EBITA forecast for Amapa.
Courts/Political Will are onside so expect conclusion of negotiations to be in our favour.
I see going to 20% of Amapa as just the first step to controlling our own destiny. Then there's going to 27% and 49%..... hopefully we'll be production by then and earning extra revenue from 3rd parties using any spare capacity on the railway and reinstated port facilities. And where do we spend the income from Amapa, apart from Amapa expansion? There's our share of the various JVs to fund to bring them into play.... maybe BCN/Ganfeng and HAS will accelerate the mine plans if our bit is fully funded and the demand for Li and REEs makes it a no-brainer. Then there's spodumene to drill in Oz on our Picasso, Litchfield and Alcoota prospects. We currently own 24% of them with the earn in option to go to 100%. I don't see the BoD walking away by selling out from any of these projects until their values have been fully realised. Plus why pay tax on profits taken out at an early stage when you can re-invest and significantly grow the company to achieve even bigger returns. Cadence is a minnow at present but I feel their ambition is to grow themselves and their team of companies into significant players in the renewable raw materials space. In the early days, 6 yrs ago, we had ambitions to rto BCN and brought Sonora to the attention of Tesla. We now have the significant prospect of Tesla signing an off-take agreement with EMH for giga Berlin and every possibility that Sonora may attract its own adjacent gigafactories (plural!) for the future car industries of S. America and Asia (India too maybe). Ganfeng are sure to have ambitious plans and already have an agreement to supply Tesla. I see it as a matter of when not if our 30% of the JV areas will come into play. There's always been a plan set in train years ago and we're seeing it unfold through the various companies. I don't think any of this his by chance. So Obs are you tempted to stay to £10+?..... if so I'll see you at the £10 party, if not before! :-)))
I'm inclined to agree @obs, my values are close to yours. You'll find detailed workings in the linked document. Page 1 uses iron ore price of $120 per tonne (implied SP £6 at 49% ownership), page 2 uses $180 per tonne (implied SP £11 at 49% ownership). Both pages include SP calculation based on values provided in the 31 Aug 2019 RNS. Very happy for people to point out errors I might have made. The biggest risk here seems to be whether the whole thing gets off the ground at all. For now at least I see no reason for that not to happen, albeit with some delay. But then we are used to delay with this share...
https://drive.google.com/file/d/1EGN1PjTDBPvsdo3CkA9ZZRaSmENcVy6a/view?usp=sharing
At 5.3mt per annum I'm sure the mcap would easily support an SP of £5-£10. My concern would be an early sell out for the easy money and early retirement for all on the board.
Hi Ob, well i guess we start with saying that the mine and infrastructure are in place and that alone is a monsterous saving in both time and money. IWithout looking i assume our opex is low and we should be producing and in profit in no time. It really is a gift if it comes off. i see very little ,nothing infact ,stopping us.
It feels like most holders think 40p to £1 is possible when we take 20% of Amapa - 40p if iron ore prices are low, £1 if they are high. I think it's worth considering what next. I'm beginning to think that if iron ore prices are similar to today's we might see a share price in the £5-£10 range at full production and assuming we own @49% of Amapa.
Discuss.
The more holders that are able to convince me with decent reasoning this is possible the more likely I am to hold on to all of my shares rather than starting to top slice on @20% news as I, as I'm sure many are currently planning to.
Calculators and comparators at the ready!
Foreresearched is forearmed. ;-)
Ob.