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Sorry should be £ 400k raised----wishful thinking!
@observer842 "I try to ignore ...belittling ..of the BOD but it does influence me"
I reckon I might feel likewise had I not had face to face conversations with all the BOD who were present
at the last AGM. Last September one of the board members told me that he had scraped together all
of his personal savings and more, to buy into the placing re Amapa.
As Degsie repeatedly points out £400m was raised for investment by the BOD in their own names as Directors.
This underlines their personal commitment to kdnc and the Amapa project. No doubt those who have not met
the CEO will have other views but for myself I was convinced he is prepared to back this project wholeheartedly.
Only time will tell whether the doubters are right and I am wrong: so as always research is vital.
You know Obs -- I never said I didnt hope you were right on all on all of this, I dont like losing my money after all !
I know the feeling @Bannor. I don't particularly like the thought of people making investment decisions based on what I write on here, but I concluded a long time ago that if I am to write on here (LSE in general, not just KDNC) and to try to write informatively and honestly to the best of my abilities then I'm just going to have to accept that everyone who reads what I write will be influenced by it by differing degrees. Why do I write? To share information, to have others challenge my beliefs and logic and to point out errors in my understanding or indeed my naivety.
So I pay attention to what others write who I have good reason to believe they (mostly!) know what they are talking about. and I mostly ignore idiots except when many of them congress together in an attempt to alter sentiment, which seems to work on thinly traded AIM shares...
I try to ignore your belittling name calling of the BoD, but it does influence me. I do wonder if we are being taking for fools. On balance I think not, but without your voice (and others) influencing general sentiment I wonder more often than I would otherwise whether I'm being too trusting.
As to my opinion of "Strong Buy" to me that is the best way I can think of to mark to those reading this that I am very likely biased in my positive views towards the company, even though I try my damnedest not to be.
Anyway, I'm sure you'll be back commenting on the performance of the BoD regardless of what you say today, influencing my decisions. LoL. ;-)
Ob.
OK Obs.... consequently then you've had the last of it (minus the lengthy one I lost LoL) ..... you can make decisions without considering any further comment from me.....although I retain the right to join in on any fun posts I choose to do :-)
Exactly @tomcat. It's as clear as day why they stopped at 19 years.
@Bannor. You can't tell me what I should and should not do (well you can, but I won't listen). The decision I take are influenced by what you write. End of. LoL ;-)
why did they stop at 19years... really...
I had a lengthy reply typed out & this is the second attempt at a shorter one ...I now think it's a fault of this site or the myriad of Ads on it)... however others SHOULD NOT be making choices or decisions based on anything I (or indeed in my view anyone else) post hence my NO OPINION.
Whilst I consider this my further comments / posts may be intermittent.
Thanks for the reply @Bannor. Let me assure you that as @mrcautious has pointed out and @Frankie has confirmed, that mine and pretty much everyone else who takes in information from various sources has their opinion swayed by those sources to a degree which depends on how much they value them, from pure logic to pure sentiment. Sure some sources are discounted to zero, but others are not. I do not discount your opinion (logic + sentiment) to zero, as I'm sure many on here do not either, so like it or not, what you say on here *does* affect my decisions and no doubt others - in particular how much risk I estimate and consequently how much I add when I do.
I was part joking when I said: "Of course I'll be thanking him if we fall flat on our face and cursing his negatively if we fly in the coming weeks! LoL.". Only part joking as we all know it's perfectly acceptable to thank someone if they helped you arrive at a decision which later transpired to be a good one (i.e. money was made), but if that decision later transpired to have been a bad one (i.e. money was lost), then it was your own fault and you should blame no others. Weird, but seemingly true, in polite company at least! :-) Ideally we'd neither thank or blame as ultimately it was only yourself that decided to buy, sell or hold. Sadly we aren't Vulcans.
As to my "calculations". I find them *very* useful, not just on this share but others, to get a good feel off the top of my head for the range of returns or NPV from a particular project and that really can only come from ball park range calculations as I demonstrated for Amapa yesterday and previously too. Forethought is forearmed. But I'm quite cognisant that £100-500m is far from being realised today. There is risk, and there is time, and there is sentiment to overcome. Point being I now don't have to get my calculator out to have a good feeling for how much a changing iron ore price impacts the project finances.
Here's another example. No doubt you will, as I do, have a feel for how much Sonora is worth to us if they start at 25kt and quickly increase to 50kt. My feel is rooted on back of the envelope calculations:
If they stick at 35ktpa and never increase beyond 19 years (yeah, right!), then at production Sonora is perhaps worth £10-20m to us - today I've got it down as worth £2-4m based on BCN's share price and percentage ownership (Ganfeng @22.5%)
Very ball park Sonora @50ktpa calculation: Assume the additional 15ktpa comes from JV area on average: 15kt * 0.3 * 17 = 75kt of our LCE mined. After tax profit might be say £2-4,000/t = £150-300m. Discount by 2 to 3 as mined later on average. Results in my ballpark value for Sonora @50ktpa to KDNC as being £50-150m. If your gut feel is £100m, then well done :-)
At confirmation of an increase to 50ktpa those who realise the consequences will likely be diving in here. Good luck buying on that day! :-)
Ob.
Exactly right Bannor.. You cant deal with shares like this on on a purely Vulcan logic and calculated value basis. After all the vitriol I and others directed at our losses in this share, I decided that it was well under-valued and bought another £3k worth at about 9.5p at the end of Sept, and look where we are now, its been a constant decline since then . OBS never factors in market hatred !
Hmmmmmm ...you really shouldn't be making 'buy' decisions or your fevered optimism based on mine or anyone else's posts ..... & you'll also forgive me for not plunging in & buying evermore based on your previous 'calculations' for the various projects we've got involved in over time.
You buy (or otherwise) on what you think, assess, believe is right for you & everyone else should do likewise...... I've already stated I'm prepared to buy more when I think the time is right, which I wouldn't be doing if I didn't think there was the potential for a good return & despite what I consider the BoD's abysmal track record so far 'since' the Sonora JV results ... which is still where the Big pay day is in my opinion assuming these clowns don't sink us first.
Unlike you however I won't be blaming you & your calculator of many numbers or any other 'uber positive' posters if I do buy & the SP falls further.
I've also said I hope Amapa doesn't follow the same path as so many other 'projects' has but to be fair if it does we get $2.5M back which be a small boost.
If we do hit payday with Sonora I might even miss our 'banter' in the future eh :-)
Indeed @Ivybush. I hope @Bannor won't mind me saying but I personally might have added even more than I have since the end of August as I recently I had an opportunity to significantly increase my holding (perhaps by as much double today's) which I might have taken had his constant postings reiterating the past performance of the BoD not made me think twice. And of course he's right, the BoD to date have had a disastrous run when viewed in the cold hard light of day. We don't know the full story behind the decisions that were taken and whether they were required to protect our Sonora JV's - I like to think so but it could equally have been a gamble that just didn't pan out.
Anyway, the point being my estimate of success for KDNC is hovering around the 20-30% mark when without @Bannor's and perhaps a few other posters I respect tempering remarks it might be more like 40-60%. That's a reasonable risk IMHO for potential 5-20 times return in the short to medium term, and perhaps more longer term if we are able to snowball returns to our other investments - as was always the plan: to cadence our investments together.
Of course I'll be thanking him if we fall flat on our face and cursing his negatively if we fly in the coming weeks! LoL. In all seriousness I hold myself to account and I have probably already made the right decision to hold off attempting to double up - so thanks for that @Bannor, regardless of what happens next. :-)
Ob.
@observer842 I agree, which is why I bought 75k [3x25k] just before close yesterday.
Of course there are risks, as in every equity investment, but at Amapa the political will is there.
Forecast of up to 6000 jobs for an area of great deprivation is a powerful catalyst.
DYOR should certainly be carried out to consider risk/reward.
62% Fe fines is the benchmark value that is typically quoted mainstream. I thought it might be interesting to see what price that would have to fall to for the optimistic potential £500m of value to KDNC from holding 27% of Amapa (we currently hold 0%) associated with today's spot prices to become the conservative £100m value I estimated in the previous post.
From the previous post:
=====[
http://www.custeel.com/en/csi.jsp
===[
Date Seaborne index 62% Fe fines Seaborne index 65% Fe concentrates premium Seaborne index 65% Fe fines Seaborne index 65% Fe pellets premium
2019-12-12 93.75 2.40 104.55 23.05
]===
Applying the 65% concentrates premium to the 62% fines price the conservative $323.3m revenue increases to:
4.4 * (104.55 + 23.05) + 0.9 * (93.75 + 2.4) = 561.5m + 86.5m = $648m
]=====
If we say 65% Fe pellet feed premium continues to be around 120% of the 65% Fe fines price, and 62% Fe concentrates around 102% of the 62% Fe fines price. And that 65% Fe fines continues to be around 112% of 62% Fe fines then I think we are trying to solve:
https://www.emathhelp.net/calculators/algebra-2/simultaneous-equation-solver/?s=323.3%3D4.4+*+1.2f+%2B+0.9+*+1.02t%2C+f%3D1.12t&v=f%2Ct
===[
323.3=4.4 * 1.2f + 0.9 * 1.02t, f=1.12t
]===
f (for five): 65% Fe fines
t (for two): 62% Fe fines
which results in:
f=53.0 , t=47.3
Which means by this measure the oft quoted benchmark 62% Fe fines can fall from it's current $93/t to as low as $47/t and we'd still have an estimated £100m of value to us @27% interest in the project based on a 10 times multiplier - which is a reasonable measure IMHO as life of mine is 14 years with scope for lengthening. Another way of looking at it is the $61/t quoted in the 30th August RNS, is probably more like $47/t. I can see why they used 62% Fe fines @$61/t as to do otherwise would have involved a fair few assumptions, as can be seen above!
But I can't emphasise enough just how risky the project is at the moment. We derisked considerably on August 30th, and again this week, but to start buying outfits based on these calculation would be madness. LoL! Admittedly, over sextupling my holding based (partially!) on these calculations might be as equally mad. But they are my calculations, so that's OK. I think. :-)
The risk is still large (we may even be forced to walk away completely!), but the rewards at this point considerable outweigh them IMHO, perhaps by a factor of 10 or more. DYOR. Please. LoL.
Ob.
Starts about 21 minutes in:
"Xtract Resources, Russ Mould, Alan Green" (13 Dec)
https://audioboom.com/posts/7450796-xtract-resources-russ-mould-alan-green
===[
I just want to talk about Cadence because I believe this company is fundamentally undervalued right now and I'm going to tell you why.
]===
Sure he's got a vested interest, but I find it interesting that with all his optimism surrounding our investments he doesn't seem to have picked up on that the $136m EBITDA is based on a quite conservative ore sale price. I suspect his eyes might pop if he does the calculation of what the flow to KDNC might be based on today's prices. (which could move in either direction)
At full production the conservative estimate is based on if we sold the 5.3Mt @ $61/t = $323.3m. Net shipping costs this becomes US$266m, and after OpEx the EBITDA is the stated $136m.
Of that $136m there might be around $20-40m of historic debt and $15-30m of CapEx debt to repay each year. $35-70m. Both of these depend on the repayment schedule. It could be quite front loaded in early years, or it might be spread out more equally. Paying off debt quickly from free cash flow is good for overall project value but the creditors may insist on a longer pay back to maximise the returns on their investment. The $35-70m reduces the $136m to $66-101m and after tax we might be talking say $45-70m. 27% of that is £9-14m worth of after tax free cash flow associated with our holding. This may flow to KDNC or be reinvested in the project, e.g. to increase the ktpa from 5.3Mt as has been hinted at in recent news stories and announcements.
With a 10x multiplier that gives a value to KDNC of £90-140m, call it £100m
This is the conservative scenario.
But what about if we use today's spot on what we are actually planning on selling?
Steady state production in 2024 is an "estimated 4.4 Mt of 65% Fe and 0.9 Mt of 62% Fe per annum."
and
"The beneficiation plant consists of a crushing circuit followed by screening, flotation, thickener and filtering to produce a 65% Fe Pellet Feed and a 62% Fe Spiral Concentrate."
According to Custeel:
http://www.custeel.com/en/csi.jsp
===[
Date Seaborne index 62% Fe fines Seaborne index 65% Fe concentrates premium Seaborne index 65% Fe fines Seaborne index 65% Fe pellets premium
2019-12-12 93.75 2.40 104.55 23.05
]===
Applying the 65% concentrates premium to the 62% fines price the conservative $323.3m revenue increases to:
4.4 * (104.55 + 23.05) + 0.9 * (93.75 + 2.4) = 561.5m + 86.5m = $648m
Meaning the EBITDA increases to:
$136m + (648m - 323.3m) = $461m
Take away the $35-70m and after tax this might be around: $270-300m. 27% of that is £55-60m worth of after tax free cash flow associated with our holding.
On a 10x multiplier call it £500m.
DYOR. Could contain mistakes. Much risk still present.
Oh, and we have an option to take our holding to 49% :-)
Fingers crossed!
Ob.