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Hi Prophit
I was not reading your previous as a dispersion, but I was explaining why I am happy with it.. The disadvantage of email is that it misses a friendly tone or intent. You may find most of the companies involved with rare minerals only give the resources in the early stages. Most rare minerals investors look at the REOs, NDPr resources as it immediately identifies if its a big project or not. Take my word for it, there are not many outside China. The second aspect is to see how easy it is to mine out and extract. A few companies have learned many lessons in that regard and were not making monies before. So how the rare elements are dispersed in the resource samples becomes an important lesson as you can end up doing a huge amount of stripping for little product by chasing small veins of rare elements as Rainbow found that out in Burundi early on and then had to change their mining practices. The whole sector is upgrading its mining act and becoming more efficient on processing and so we have the benefit of that arriving at the start of the Pensana project who have also upscaled their processes with a novel patent.
All the best Tony
Tornado: my goal was to point out the technical difference between 'mineral resources' and 'mineral reserves', not cast aspersions on the quality of the Angolan prospect, which may well be excellent.
That said, it may be that the company will be able to finance the bulk of it's mine development and processing plant build via loans/debt of some kind - there are some specialist mining lenders out there, and of course the involvement of a development bank certainly can't be ruled out. We'll see. If I was in the business of lending to miners, I'd be happier a) lending for a UK plant over a Angolan mine, and b) if there was a healthy slug of equity capital on board as a buffer. I'd probably want a healthy slice of the upside via some mezzanine financing too.
In all likelihood the company is currently trawling through institutional investors with a presentation of the detail of the much vaunted business plan, trying to drum-up interest with a view to fund raising. This is perhaps why the sp has stalled slightly recently.
The NdPr ore body is still open at depth and in several directions - there could be loads more resource than currently known which will add to mine life over time
Prophit
Presenting data as mineral resources is perfectly adequate. The resources are in excess of 40 years of production. In addition the company identified that the COOLA property licence is rich REO material although it has not been quantified into the resource pool. The conversion rate of resources into reserves is at least 50%. Therefore banks identifying a loan for payback are likely to be satisfied that a 5 year rate of return in paying back debt is more than satisfactory. Of course the business plan gave just 2 years to reach that milestone. Lets assume they spread the cost over 3 to 4 years and had some cost overruns. It would still generate over 16 years of debt free income. The banks are likely to compete for Pensana business. I therefore doubt if premium rates would be charged accept for whatever is given on Angola as a nation state to do business in and that knowledge was always known to investors and probably already factored into share price risk.
I suspect that documenting 'Mineral reserves', i.e. those which are 'valuable and legally, economically, and technically feasible to extract', require a great deal more geological surveying, drilling and assaying (i.e. expenditure) than is sensible for a company of the size of Pensana currently. Companies the size of Rio Tinto or BHP do provide Mineral Reserve numbers.
Obviously/presumably there will be some effect on the kind of financing that the company is able to secure, i.e. a greater tilt towards equity capital, with shareholders demanding effectively a higher cost of capital (i.e. lower share prices).
I’ve seen the resource base but just find it odd how cagey the company is being on declaring a proven / probable (nb in the technical, geological sense of the words) mineral reserve. Perhaps I’m wrong, but I haven’t seen it anywhere to date in any documents.
I note the SRK study is only a *resource* estimate, still no reserve declared
Best go back and read some previous announcements. There is a wealth of information on the Pensana website ( https://pensana.co.uk/archived-announcements/ ) . including all their mineral resource upgrades (14th Sept 2020)
Has the company declared a mineral reserve? Surely this is needed for financing but haven’t seen it