Roundtable Discussion; The Future of Mineral Sands. Watch the video here.
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Lastly, EyeGuy
"Potential to increase further."
Yes, I am aware of that from recall. However, since you are interested in mining share, you will be aware that FURTHER EXPLORATION HAS TO BE DONE, PEA, PFS AND DFS. All this will cost money and depending on the SCOPING STUDY, it has to take in whether in the IRON ORE CYCLE between PFS/DFS, building, the iron ore FORECASTS will hold.
That is a long way off - this will be AFTER 17.5 YEARS from now [18 mths to ship tailing, 18-24mths to do scoping study and recommissioning and 14 year mine life].
Will any of the KDNC*er be still around to HOLD KDNC SHARES AFTER 17.5 YEARS?
They might be around but will any of them hold after 17.5 years given they have ALREADY HED KDNC FROM REM days and during the commodity bear mkt.
I am NOT the person to discuss thing with because I take a COMMERCIAL VIEW rather than what appears to be simple on paper.
That way, I have allowance.
If I had taken YOUR EBIDTA FIGURES at $200/t iron ore price and then NOT TAKEN OFF TAX, I got some really wild figures which could have been 40-50% MORE.
I am not one for back of envelope figures as those have caused a lot of problems in many cases.
We, shareholders NEED ACTUAL ACCOUNTING FIGUES WHICH CAN BE OFF BY 5% NORMAL VARIANCE FOR THE MARGIN OF ERROR.
IF, in 3.5 YEARS TIME, WHEN THE 1ST ACCOUNTS OF DEV [JV-KDNC/SINO] COMES OUT AND IF THEY AGREE WITH YOUR CALCULATIONS W I T H O U T T A X [that was on Twatter], then fine otherwise, all needs to be proven by ACTUAL AUDITED ACCOUNTS OF KDNC then ie what has been actually distributed from Amapa and how it is treated in the accounts ie is KDNC still an investment co or do they have to change status to operating co etc?
LOTS TO ASK AND CONFIRM WITH KIRAN MOZARIA.
I am not in contact with Mr Mozaria, never spoken to him or met him.
Old-timers are used to tweeting to the Founder as he usually will answer if he can in the past.
I only commented BECAUSE THE FIGURES you quoted were so high that the share price would be mind boggling????
Otherwise, I would have NOT said anything.
Peace out. Thank you.
News, Mon 1 Mar 2021.
By the way, your sums will now have to be ADJUSTED FOR AMAPA TAXATION.
Do re-check but I gather it is 34% in Brazil in 2020.
As I said, I have checked some time ago from another PURE iron ore listed plc, and the figure they take off COMES TO 45-47% FROM EBIDTA.
Therefore, YOUR EBIDTA FIGURES ARE NOT TAXED which the JV cannot distributed WITHOUT PAYING TAX IN ANY COUNTRY.
As for $200, I take the Chinese iron ore prices but you take what you view is appropriate for yourself.
I am hoping that you are not the same chap who believed that the Czech govt*s minority party ie Communist was going to take back Cinovec lithium from EMH, an investee co of KDNC at some 20% some time ago but this figure is now nearer 9%.
We, shareholders provided links to politicians in their parliament discussing this matter and that to take Cinovec could involve international arbitration and that means big $$$$.
In the end, Czech govt went with the discussions per their radio channel and now their largest ultility has taken a 50% stake in Cinovec [EMH] and attributed a PREMIUM of substantial %.
I say this is because, this chap on EMH would NOT BE CONVINCED that a minority Communist party does not have 100% total power and from empirical evidence, they do take the sensible route given advice. However, not always the case in all cases but this is what happened.
DYOR. IMO. This is history now but I think it is profitable to go to and fro.
Thanks eyeguy. Take your figures to the main KDNC forum as I am sure many will be interested?
News, 1 Mar 2021.
By the way, to answer: "DEPRECIATION DOES NOT COME OFF IT, JUST TAX" per EyeGuy.
EBITDA
The Amapa iron project is NOT HELD in the hands of KDNC but rather the JV co called DEV of which KDNC could hold 20% initially and the rest is Sino.
When EBITDA of say $136m is cited by KDNC modelling, you now accept that TAX MUST COME OFF IT which is quite a lot to take off.
You feel that depreciation DOES NOT COME off it. However, in FORMAL ACCOUNTING, the FINAL NET PROFIT FIGURE MUST ALWAYS TAKE IN DEPRECIATION, AMORTIZATION if necessary which is standard.
Then, from the NET PROFIT figure, the JV can make a DECISION for a DISTRIBUTION. This is going to be quite complex as to whether it is a distribution or via a dividend. I am not nuanced in Brazilian taxation laws. Then, it has to be converted to £*s as ALL COMMODITIES ARE QUOTED IN US$, even iron ore. There is also possible for EXCHANGE RATE adjustments just like FTSE co*s that operate with overseas subsidiaries. So, lots of accounting.
Whether one likes it or not, DEPRECIATION & AMORTIZATION is part of EBITDA ie EARNINGS BEFORE TAX, DEPRECIATION AND AMORTIZATION.
There is also RETAINED EARNINGS as no one is going to deal with a JV with $0 in the bank with 100% net proifit distributed. There can also be IMPAIRMENT but that is not the case but something that is norm in any co to consider-everything must be considered.
If you do NOT AGREE, that is FINE BUT THAT IS BRAZILIAN OR STANDARD ACCOUNTING METHODOLOGY.
As I have said, GO TO THE KDNC AGM AND ASK OR TELEPHONE KIRAN MOZARIA ABOUT THIS AND CHECK - IT IS CALLED DUE DILIGENCE AND Do Your Own Research [DYOR].
Mon, 1 Mar 2021
The studies were done assuming iron ore at 61$/t.
But that was when iron ore was similar in price.
Also the previous mine plan was assuming 62% fines.
Now the mine plan is for 65% fines which are circa $200/t.
The EBITDA figures are based on 61$/t.
If iron ore is $200/t the only thing left to come off is tax
Dereciation doesn’t come into it. Neither does ramped up production as the figures given are averaged over LOM.
Kierans figures are just a repeat of what is in the public domain as there hasn’t been a study done to take into account a new iron ore price.
This is a billion dollar asset at a much lower iron ore price.
And note potential to increase resource further.
P.S.
I have done further sums of the latest bank valuation for Amapa vs the potential modelling done by the JV [KDNC-Sino]. The JV did their modelling on $61/t. Currently, the iron ore price is about US$174 approximately. If what Mr Mozaria, CEO, KDNC said in his latest Directors T interview of 2 days ago of US$600m for Amapa, then the figures I worked out suggests that the bank takes very little downside RISK relating to the iron ore price and appears to NOT work valuations at iron ore highest prices. So, one that one can only revisit in 17.5 years time as said.
News, Sun 28 Feb 2021.
That*s all on the topic of KDNC-REM. I have checked further on the lithium forecasts and different investment banks give a variance in their date of expected deficit that is IF it eventuates and there is NO repeat of co*s all rushing in all at once like the last time. Useful to hear from Mr Mozaria, CEO of KDNC that the co*s that survive are those with LOW COSTS and with particular locations eg CINOVEC [EMH] IN EUROPE.
Today, Sun 28 Feb 2021, I decided to listen to other forum chatter on KDNC. I note that the HISTORIC share price of KDNC had falled to 5p at one stage recently with a MKT CAP OF £6M.
It appears that the more professional investors bought in at around this 5p mark and some sold at 14-15p, thereby realising 300% or 3X and some 400% or 4X [those who kept some or all of their shares at 5p.] CURRENT SHARE PRICE IS AROUND THE 19P MARK, MKT CAP £24M last time I checked. For clarity, I HAVE NEVER BOUGHT KDNC SHARES AT 5P.
HISTORY OF KDNC
The Amapa project Court process has been going on for some time. From the latest Court result, it was NOT surprising that the JV won against the creditors. Why? The ruling favours the JV in that they have a plan to bring Amapa back into production together with the stockpile sale. This effectively means that the STATE OF AMAPA, BRAZIL WILL BENEFIT in terms of taxes, job creation and port activities. The deal is also structured that the JV [KDNC & Sino] receive a fair share of US$10m for their efforts in selling the stockpile which would DEFRY THEIR ORIGINAL COSTS TO BRING THIS ABOUT which is currently in deposit. Thereafter, should the iron ore price hold for the WHOLE OF MINE LIFE, then the JV would benefit but they take on the SAME commodity price risk as Zamin in essence [as it appears? which is norm in ANY COMMODITY]. I have also read about the potential dates etc.
WHAT HAPPENED?
Some of us legacy folks from days of REM plc under the Founder have remained POSITIVE given that everyone was aware that there was a commodity bear market in LITHIUM FOR MANY YEARS of which even big projects like Nemaska with hundreds millions in mkt cap went to the wall and is history now. Thankfully, the 20% SONORA & 30% JV[BCN] & 20% CINOVEC [EMH] stake were NOT AFFECTED as Mr Mozaria informed that their 2 investee co*s have LOW COSTS. Its these 2 LEGACY ASSETS [LITHIUM] THAT SAVED KDNC OR REM AND THE FOUNDER*S STRATEGY WORKED AS THE CO WAS HEDGED. One investor from days of REM wanted the co to go to 49% stake in the JV and thankfully, the Founder said the price was too expensive. Instead, the Founder bought BCN stock as a hedge as the JV would take it to Stage 2 before any advantage. Mr Mozaria now elucidates that it is YEAR 8 onwards for the BNC-KDNC JV.
TODAY, OUR POSITIVE OUTLOOK HAS SEEN LIGHT - SENTIMENT DROVE THE KDNC SHARE PRICE TO ROCK BOTTOM not helped by naysayers saying that the EMH stake could not be sold. Today, Mr Mozaria said that EMH went from $3m to $13-14m for KDNC.
So, a PARTY for some and for those who sold with all the ...SENTIMENT a loss?
This is now the HISTORY for REM-KDNC. I have learnt something very important which I have found COMMON to many forums that SENTIMENT can drive share prices IRRESPECTIVE OF THE UNDERLYING FUNDAMENTALS of the stock/co.
Too many co*s to name. So, a lesson that will stand in good stead.
A POSITIVE OUTCOME for us positive folks.
News, S