Hand sanitizer and surface cleaner company Byotrol had a strong 2020 and are confident about 2021 Watch Now
London South East prides itself on its community spirit, and in order to keep the chat section problem free, we ask all members to follow these simple rules. In these rules, we refer to ourselves as "we", "us", "our". The user of the website is referred to as "you" and "your".
By posting on our share chat boards you are agreeing to the following:
The IP address of all posts is recorded to aid in enforcing these conditions. As a user you agree to any information you have entered being stored in a database. You agree that we have the right to remove, edit, move or close any topic or board at any time should we see fit. You agree that we have the right to remove any post without notice. You agree that we have the right to suspend your account without notice.
Please note some users may not behave properly and may post content that is misleading, untrue or offensive.
It is not possible for us to fully monitor all content all of the time but where we have actually received notice of any content that is potentially misleading, untrue, offensive, unlawful, infringes third party rights or is potentially in breach of these terms and conditions, then we will review such content, decide whether to remove it from this website and act accordingly.
Premium Members are members that have a premium subscription with London South East and have access to Premium Chat. You can subscribe here.
London South East does not endorse such members, and posts should not be construed as advice and represent the opinions of the authors, not those of London South East Ltd, or its affiliates.
Following the Second Admission, there will be some 4.8b in issue, trust me that is nothing compared to some (vast ujo et al) - Lammings said he'll consolidate once in cash flow positive territory in recemt sharetalk & he's right you have to time these things. It gives a current mkt cap of circa £6m. So just on Nayegas 1st year production you get a KRS market cap of £45m (per Markys extrapolations) thats approximately x7.5 the current share price so circa 0.975p & 2nd year of production its £81.6m mkt cap so x13.6 todays share price equivalent to circa 1.76p. This is without the phosphate. We are very very cheap here.
Thanks Marky. Yes, Devon suggested revisiting 11 June post for Nayega numbers. I did reference this when posting.
He was recycling my original post :-)
I think Devon pointed him towards it as he wanted to understand the Nayega economics.
My comment was in response to Tradedesk's post, as he used that number. In your post recently you quite correctly used the close to 6 billion figure.
The guy of importance at Falcon Isle/to this project/to the here and now is Shawn Helda. I don't believe the other guy is involved any more.
The share numbers in that model were the ones I produced a couple months back, when Diamond Creek was not even a twinkle in our eye.
As is always the case with these things - they still remain valid in their indicative value. Given there is now another project of similar potential value - it's less about dilution and more about the value of the share - and again, the dilution has been material on the % of the company that I hold, but so long as that dilution delivers equivalent value, it's really no issue.
Perhaps he’d just had enough..... and took the deal!!!
Happy to try and be objective when I can see or at least try to understand the rational and economics behind something. Maybe I'm just too dumb! Nothing but blue-sky thinking however is equally as questionable surely?
As for the former Falcon CEO - where do you get that he was/is a 'sales guy'? "Jason Bahnsen, B.Sc. Mining Engineering, MBA, is a mining engineer with over 30 years of experience in natural-resources finance and operations. Jason's experience spans all facets of the mining industry from his early days when he spent several years working as a development miner for Canadian mine contracting companies at operations throughout Canada and at the Freeport copper/gold operations in Indonesia, to operations leadership roles (shiftboss/crew leader) for an operating underground gold mine, to engineering and executive roles with Rio Tinto (where he was involved in the development of the Century Zinc Mine in northern Queensland Australia), to resource investment banking (including Deutsche Bank and Macquarie Bank), to CEO of private and listed exploration and development resource companies. "
As CEO and Director at Northern Lights Resources they have a gold project in Arizona and a silver,lead and zinc project in Nevada.
Issued shares at 278.5million? Should be double that - after this deal is fully concluded - should it not?
Thanks for the full explanation much appreciated.
...both projects look to be hugely scaleable and the Board couldn't be more aligned. Lets have that permit for Nayega and thats x2 projects in production, for a fully diluted circa £6m mkt cap here, that is quite the upside. Path of least resistance would seem significantly up from here now.
Thanks. Theres barely anything baked into this mkt cap, least of all any revenues/profits from x2 production ready assets. In fact, relative to its peers KRS is materially undervalued in terms of how advanced the projects already sit, literally on the cusp of production - similar stage are atleast £20-30m mkt cap if not more. Nayega is arguably a teir 1 .
Those numbers/assumptions do need a couple of adjustments, but the outcome is still hugely rewarding.
When I get chance, I’ll update them.
For any new or potential investors!
This will give you partial insight into how the company came through this particular earlier transition!
This article highlights the two businesses ( Calidus & Keras ) as seen from the October 2019 perspective!
Continued...Would represent 18x growth in equity value, plus an annual return ~50% the value of shares at today’s price.
Thanks @Devon2 - Nayega workings courtesy @Markyess. It really is a monster, some stunning numbers. Lets be getting that permit!
Right, I promised Prop some back of a fag packet Keras dividend estimations. So here they are. They’re open to huge amounts of challenge as there are a host of assumptions I’ve made. I’ve tried to make all assumptions low ball, to leave upside potential.
In essence, I’m treating the sums as if Keras is a cash shell, and so the economics will be ‘see-through’ as a 75% shareholder/owner of the Nayega project. Keras financial year runs September-August, so I assume that we don’t start producing until September 2020
I’m assuming that 20% of Operating Profit will be reinvested into initiatives driven by Nayega manganese, whether cash investment or servicing debt finance to expand resources or project initiatives. (Production expansion into Ogaro, or progressing silico-manganese initiatives). I have not recognised any upside in market cap, or revenue generation from these investments – leaving upside potential. These investments will be pre-Corporation Tax. Assumes Keras operating costs are settled pre Operating Profit.
I have not assumed any fancy tax efficient corporate structures or transfer price models to repatriate funds into Keras pre-Togolese Corporation tax – leaving upside potential.
Operating profit assumptions for 2021 and 2022 have used conservative estimates om DTMU prices, USD-GBP exchange rates, and high levels of wastage to leave upside on the table. I’ve assumed slow start and ramping up efficiency in 2021, and slow ramp up to the 300k tonnes p/a that continues steadily in 2022
I’ve assumed that the Keras share consolidation of 10:1 takes place, leaving issued shares at 278.5m
Nayega Operating Profit - £11,500,000
Nayega Project Investment - £2,300,000
Net Profit (28% Togolese Corp Tax) - £6,624,000
SGM Cash Dividends (30% Net Profits) - £1,987,200
Of which – Cash to Keras - £1,490,400
SGM retained profit - £4,636,800 (of which Keras ‘owns’ 75%)
SGM Market Cap - £60,000,000
See through value to Keras - £45,000,000 (Market Cap based on Nayega Project)
Keras Dividend (2.5% Market Cap) - £1,117,800
Dividend/Share £0.004 – Year End September 2021
Keras Share Price - £0.16 (based on £45m MCap)
Would represent 10x growth in equity value, plus an annual return ~25% the value of shares at today’s price
Nayega Operating Profit - £21,000,000
Nayega Project Investment - £4,200,000
Net Profit (28% Togolese Corp Tax) - £12,096,000
SGM Cash Dividends (30% Net Profits) - £3,628,800
Of which – Cash to Keras - £2,721,600
SGM retained profit - £8,467,200 (of which Keras ‘owns’ 75%)
SGM Market Cap - £108,864,000
See through value to Keras - £81,648,000 (Market Cap based on Nayega Project Only)
Keras Dividend (2.5% Market Cap) - £2,041,200
Dividend/Share £0.0073 – Year End September 2022
Keras Share Price - £0.29 (based on £82m MCap)
Would represent 18x growth in
A number of points here.
This is year 1 so at this stage they are scaling up from a very low position. No one should be expecting instant high revenue. They have built a suitable access road and are awaiting plant. These are early days. It is already a big step forward from what Falcon could do before and they are building the capability to produce 10 times more. The key point is the FCA Total Cost. This spread all your costs over the product you sell. So with the old operation and its low capability I doubt it would have been able to break even. They needed economies of scale. As this grows it means that in Year 1 at 5 kt the margins are modest -$155K. But by Year 5, at 48kt, you are making very good money as your FCA Total Cost shrinks and the forecast margin is a very healthy $9.5M.
Secondly, yes the phosphate content is excellent but the key point, and the reason why they specifically mention the medical marijuana market, is that the high phosphate occurs with low heavy metal impurities and is consequently organically certified. High Phosphate is not exceptional on its own but combined with low heavy elements is a bit special. It's very appealing and it cuts down your production costs if you don't have to take out the nasties. The organic certification is critical.
Had the project been more advanced, more profitable at this stage and with large contracts in place then Keras would not have been able to get this deal. Full stop. Keras are trying to take the potential that Falcon saw and scale it up to a profitable commercial level.
This is mining so I expect there will be bumps on the road. An organically certified high phosphate product at attractive prices should sell but we'll only know that when we see the contracts coming in. (Personally I'm pleasantly surprised they've already sold 700+ t.)
Also, the market will see the possible 60 years of production but I think we'll need to JORC a decent amount to get SP value for that. Also, currently I believe the organic certification applies to the initial 70 kt being exploited for production so while the JORC needs to be able to add a sizeable amount of high phosphate reserves it critically also needs to confirm they would be organically certified - that is key to the market offering.
Try his post of 11 jun
Markyess - thanks for your extrapolations on the phospate project over the last few days. Very insightful.
If its not too much hassle and when you have the time would you mind sharing the numbers (annual revenues/profit/life of mine/tonnage/npv/irr etc) on the Nayega Manganese project please? I'm trying to familiarise myself since it only requires a permit for production to commence. Apologies in advance to the long term holders very likely you guys will know this but will be very useful to new investors who may have just joined for the phosphate project and don't know much about Nayega and its production ready status. Many thanks
Yeah, phosphate is the only thing that agriculture needs in the product. Higher percentage of phosphate equals higher saleability, more phosphate, more fertility. With the growth of medical marijuana markets (and overseas agricultural needs) there is certainly going to be a market.
The previous guy is a sales guy, but not an exploitation guy, so he has not been trying at this for 2 years. He had the gear, and no idea. You can't sell what you can't produce. We now have both means available to us.
Like any project, margins are lower in the beginning, whether as a result of capital payback, or to break down barriers to enter.
I understand your jaded views (I first bought into Ferrex on 31st July 2011). But I think you are now reaching levels of terminal cynicism - almost to a point of foregoing objectivity.
Don't get me wrong, it's good to have the 'grounding' view represented.
Alright, I'm trying very hard to be positive on this - but these numbers aren't exactly exciting are they? Falcon had a couple of years going at this and yet there's only 700 tons of product which has currently found a buyer - and they have no agreement to take more.
If it's at the same price as lower quality product (in order to 'win market share') is there any actual demand for a higher grade phosphate? Genuinely puzzled - and open to alternate thoughts on this.
FCA Cost: US$229/ton (Yr1) reducing to US$92/ton (Yr5) through economies of scale as production
Average product price of $260/ton in Yr1 and $290/ton from Yr 2 - although this is a premium product and higher grade relative to its competitors, it has been priced to gain market share so there is significant upside in the pricing structure.
July 2020 presentation:
From presentation, product price will average $260 in the first year.
If 5000 t are sold then margin looks like $155,000.
What is the selling price for the phosphate produced at an initial $229 per ton?