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Pecten everyone should DYOR before investing in any share and not listen to any derampers or rampers on here it’s the worst thing to do and I can say so from experience! Good luck whatever you decide to do
Lol.
Btw - if Sam asks me to DYOR again - what do think would be an appropriate answer? lol
You tease! I understand your disinclination but it doesn't stop me being interested! And actually if there problems were not really about the asset that would remove one of my concerns
Pecten: I agree a better JORC will help, and agree that we do not exactly have the most sparkingly clear narrative about what went awry between October and March. But I think the solutions in the new plan / new hires probably do explain it backwards.
1. They were always going to need more equipment. (If they didn't know that, shame on them for being so clueless about mining. If they did know that, shame on them for still spouting about operational profit in 1-3 months, when that couldn't be likely. But equally, we are where we are.)
2. Personnel. It grieves me to say this because I like Romania and Romanians. But they obviously needed to get a higher skillset in to run the place. I think that speaks for itself.
I think Mineral Mining had a lot of issues that were not really about the quality of the asset. I'm disinclined to elaborate on a forum like this.
Sandy 'Again, though, I don't doubt (personally) that the mine life is there. This is just record-keeping as the company moves forward from historic data to mining now.'
Well yes and no - yes, if they are mining in the right place - no, if they are missing the ore body (cos they just think its 'there'
Sandy re'drilling the ar$e ouf it@
Yeah I get that, and in some ways, I agree that just mining rather than the extra time and cost of drilling holes makes sense - with a caveat - Mineral Mining went bust when trying to produce a multi concentrate - was that because of commodity prices or grades/costs not being what was expected? Could more holes have been appropriate risk management because of the history?
But that doesn't excuse AP for repeatedly and deliberately 'over-egging' the pudding re the actual resource.
I said a few times, when Craig published his original production guidance, that if those numbers were hit (would imply that mining reality was justifying the known data) that VAST would be OK. But for due to 'various operational issues' that didnt happen - was one of them actual ore grade? We dont know - thats why a better JORC would be useful
Pecten: "would it not also be true to say that as the current JORC only supports a 3-4 mine life that NAV figure shoud be more heavily discounted?"
If I may, on this one... Actually, I don't think so. The asset is what the asset is, so mine life is already built into the asset valuation. I don't see why it would need to warp the NPV discount as well. But where I would definitely see it as a limiting factor would be - once in profit - on the P/E ratio. After all, no point expecting a P/E of 10 (as a miner could) when you only have 4 years of mine life. That's just daft. So I think uprating the JORC (e.g. North Antonio skarn) and extending documented mine life, will all help. Not only more asset value; also more room for P/E ratio when there's profit.
Again, though, I don't doubt (personally) that the mine life is there. This is just record-keeping as the company moves forward from historic data to mining now.
GaiasK, Pecten: thanks for the interesting points.
1. Yes, GaiasK is of course right that my approach was conservative by using the October JORC valuation of $104m, and in all likelihood I should update my own valuation. Not sure that it would come out as high as GaiasK's, but I'll have a think at some point about this.
2. To Pecten especially: yes, I've noticed in the past your grumble about Indicated and Inferred (taken as a pair) as against Measured. But in fact, I think the real pair is Measured and Indicated, as against Inferred. It's my understanding that the Indicated category is high enough confidence to be considered bankable. That puts it along with Measured, whereas Inferred is not considered bankable. (So I understand.) So of course, I partly agree that reliance on Inferred doesn't get you very far - but equally, Indicated is good. Measured is always much less and seems always to involve incessant amounts of effort. In the case of BPPM, probably utterly pointless, as the whole exercise was really just to show that the historic data (with cores missing) is an acceptable signal. Rather than incessantly drilling the *rse out of it to get Measured, they are, to be fair, actually mining.
3. But on the point about the impact of confidence level on the market discount to NPV, I'd be glad to learn of any actual data that might ever have been compiled on this. Or is this factor already worked into the valuation provided in the JORC itself? I'd need to re-check that.
Pecten
Little doubt one of the reasons why a 40% figure is inappropriate and the market is presently applying 20% (an 80% discount re Mcap/Npv). However the weakness of the resource assessment does not impact their ability to mine ore/sell concentrate, as present finance covers doing this.....I'm assuming it's there and not mythical.
What I am interested in is how that market discounting and hence value uplift may change ahead. Not only should NPV rise as cashflow nears and past costs fall away but also as certainty of that cashflow materialises so the discount should collapse to at/near zero as is normality for a steady state producer.
If their plan includes a successful removal of a finger that is!
GaiasK - would it not also be true to say that as the current JORC only supports a 3-4 mine life that NAV figure shoud be more heavily discounted?
GaiasK - thanks for trying to use Sandy's base and then utilizing the new mine plan.
Question to both - Sandy used a 40% discount to NAV (whether right or wrong, I agree that seems to be the ballpark discount prevalent for resource companies), however, the NAV figure used is based on a JORC that only has indicated and inferred resources (no measured, obviously therefore no resources) - by definition, that suggests a lower confidence, so shouldn't that NAV figure be further reduced for that reason?
Would genuinely like to hear reasoned argument on this, as it should apply to the wider resource market.
Yes, it has been a personal bugbear, when AP/VAST have repeatedly quoted a measured, indicated, inferred figure or now on the bottom of RNS saying a JORC compliant Reserves and Resources report.
Just state the facts rather than trying to imply something that isn't, at the moment , justified
The drilling this year is only 5 holes (total around 1600m) - in my opinion, that feels insufficient to improve the confidence of the JORC - Thoughts?
NPV Are not BP production costs and output changing as well as the price of copper
EG calculating the NPV based on the 30/3/21 mine plan and the present Cu price reality of $10300.
From the plan the central NPV figure for BP is $107m, this assumes a 10y average price for Cu of $7800/t and a 10% discount rate to get that NPV.
The sensitivity analysis gives NPV of $127m (same discount rate) for a 10% higher Cu price. The present Cu price is 32% higher that the plan's 10y av assumption. That would give the NPV now as $171m.
To follow on from Sandy’s quick sum with this up-to-date NPV figure implies a fair valuation now of £42.1m. 19.8p. So presently this is some 50% undervalued.
Risks remain. It seems more probable to me than not that these are to reduce ahead rather than to rise further. Time will tell. I expect Copper to rise further too.