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If he's misremembered Mitsubishi for Mitsui, the latter has an equity stake in Binding Solutions Ltd, the pelletising specialist where Trahar Senior (ex AngloAmerican CEO and then Chair) is a shareholder and was a Director for a while...
I believe that ZIOC did some work with them about 6 years ago
https://www.lse.co.uk/rns/ZIOC/pellet-test-announcement-ivf3a91en5p15hw.html
https://bindingsolutions.uk/2022/03/03/binding-solutions-secures-equity-investment-from-leading-asian-
conglomerate-2/
BSL's 2 most recent news shows they're progressing their cold pelletization technology at pace.
These are the other shareholders
https://bindingsolutions.uk/about-us/#strategic-partners
The Director Belleau comes from Champion Iron, where GLEN has a stake and Jyothish George (former Head of Glencore Iron Ore Marketing) is a Director.
'Maybe, baby..?'
GLA
Intriguing how the Advisor to the Mozambican Minister for the Economy & Finance thinks Mitsubishi are specifically involved in the expansion of the Zanaga Iron Ore mine.
Naturally i have no idea but just thinking it is strange we never heard before of mitsubishi. just my personal view
I also dont recall this in the past. the guy posting has been in his role in ministry in mozambique since 2022, so if it is his own article this could be recent. wonder if there is already someone on board.....
Cat out of the bag perhaps..
Great find nibj, I can’t recall Mitsubishi ever being linked with Zanaga. The article was written less than 3 weeks ago!!
Did anyone hear about mitsubishi investing in the past in zanaga? #3 in the link
https://www.linkedin.com/pulse/top-5-japanese-companies-investing-africa-fabio-scala-cav-osi-p5gxe/
.."Now that some numbers at least are in the public domain, let's see what happens!.."
And I see from t'other site (MM) that ' AT has been communicative. I understand that all the Strategics have received the full FS report and recostings *but* under NDAs as you might well expect. Of course this makes them insiders and hence they cannot buy ZIOC shares - at least not yet...'
If they've already been primed to expect the info, we might start to see some newsflow pretty soon.
GLA
Hi Jiving,
Agreed : every buyer will have their own view of what constitutes for it/him a 'risk-free rate of return' - as a baseline - and what non -financial factors to include (and with what weightings) when looking at each investment.
And I'm in absolute agreement with your concluding remark : ' Of course any investor is likely to pay a discount to NPV but it will be a discount to 2024 NPV not 2014 NPV.'.
Now that some numbers at least are in the public domain, let's see what happens!
ATB
Country risk is an important valuation issue, but in the modern world it works both ways. In theory African projects should be discounted for political risk vs Australia/Canada. But China for example wants to strategically disassociate itself from dependence on US allies for essential commodities, so in reality where can they turn for major projects but Africa? China therefore clearly accepts African risk, as it appears do the key ME investors from both public statements & financial commitments. I see even the Japanese trading houses are re-assessing their unwillingness to invest in African projects. Where are the other sizeable high grade iron ore projects that are in at such an advanced development stage they can move rapidly towards production - beggars/choosers.
We have waited a gruelling 10 months for these figures, and at an 80% overall increase in NPV they are way past my wildest hopes of around a 50% increase. They clearly mean nothing to today's market, but Clifford Elphick has made everyone wait for them for a purpose - they are the basis on which he will conclude a strategic investor agreement. Of course any investor is likely to pay a discount to NPV but it will be a discount to 2024 NPV not 2014 NPV.
.."A thought experiment for you extrader...be honest..has your personal notional target for the value for Zioc doubled on today's news ?.."
No, as I said, "I believe folk like us will be squeezed out pretty soon and -all things considered - I think my 200p per share entry in the 'charity sweep' is well under-pinned.." ie unch but more confident.
I think the country risk discount has got worse on various measures - succession; corruption; mis-management; popular dissatisfaction - and (paradoxically, BECAUSE the cake has got bigger) there's greater prospect of 'foul play'. I can't guess what form that might take, but the bigger the prize, the more incentive to figure out how to snaffle it....again, I'd refer you to the shenanigans over Simandou.
Maybe I'm just the tenth man.
https://insightbeforeaction.com/the-tenth-man-rule-principle-explain…
ATB
Hi atg,
.."Ps..if Zanaga was magically in Oz, you would use a different less punitive discount rate . It is implicit..."
You'd think so, wouldn't you?
However, per the April 2011 presentation (p17), ZIOC does its NPV calculation is @10%, see
" If cash offer is rejected by ZIOC pricing defers to independent valuation terms below :
- Feasibility Study technical assumptions
- 10% real discount rate
- CRU/AME forecast prices "
On the face of it, these NPV calculations don't factor in country risk premium (or discount).
AFAICS
Hence my 'thought experiment'.....
HTH
Ps..if Zanaga was magically in Oz, you would use a different less punitive discount rate . It is implicit.
A thought experiment for you extrader...be honest..has your personal notional target for the value for Zioc doubled on today's news ?
I suspect it has not, thus you are discounting (lol) the NPV in your own head. Maybe you still subconsciously think, as many here do, this cannot possibly be worth that much. To good to be true etc..Our mental biases and illusions are immense.
Hi Jiving,
Thanks for quoting 'chapter and verse', setting out our 'theoretical entitlement', which I hope is realised.
NPV is indeed an indicative financial tool, but its use is as a starting point for capital allocation decisions .
As a thought experiment, would Zanaga have the same real world value if it were magically re-located to Australia ?
I suggest not, for obvious reasons.
And for a comparison, rather than a counter-factual, just look at Simandou : AIUI, Rio Tinto has already sunk more than $ 1 Bn in Simandou, no doubt on the basis of an attractive NPV, an exercise crucially dependent on timely project execution.
MM's 'magic of compounding' argument cuts both ways if there's any material delay. Again, the Simandou experience is instructive :
https://www.euronews.com/business/2024/01/09/why-rio-tintos-guinea-iron-ore-project-is-starting-after-27-years
I think - for the above 'real world' reasons - that investors shouldn't set too much store by NPV.
Perhaps I'm being too Eeyore-ish though : I'll be delighted to be proved wrong and see my expectations exceeded!
ATB
Hi Ex
The NPV statement in the April 2011 presentation was post-IPO, so it was a specifically forward looking statement referring to either a buyout or a buy-in - both of which were clearly intended to be based on the increased NPV that would flow from Xstrata's drilling programme. That increased our measured, indicated & inferred resources on that portion of our mining licence that it was focussed upon, with some 40% remaining essentially unexplored. The famous NPV clause in the JV agreement with Xstrata also clearly made the calculated project NPV the actual share purchase price between Xsatrata & ZIOC, should Xstrata wish to move towards full ownership. Again the critical valuation for a takeover recognised by both parties as being the prevailing NPV at a particular stage in the projects evolution.
Right across the mining industry pre-development projects attract in strategic investors based around the project NPV, that was certainly the case with the various blocks that have changed hands in the Simandou project over time, indeed IFC even built in a put option to sell back its stake on that basis.
The only way I can realistically see us PIs being 'squeezed out' is if there was a bid to go private arranged by Glencore/Xstrata, but frankly it looks like we are too late in the game for that. Aside from Glencore owning 100% of the offtake (likely swapped for a small royalty in a takeover), all shares rank pari passu & we will get the same takeover price per share as Glencore/Elphick & if there is a buy-in we will suffer the same dilutive effect per share & the same post-transaction market price as they will.
So all our discussions with strategic partners - both minority buy-in variety & full buyout - will be based on the new 2024 FS based NPV figures. Two qualifications - first, as per 99's post below, project NPV vs shareholder attributable NPV (I suspect the figures are project NPV). Second, potential strategic investors will of course seek a discount to NPV; the extent of that discount is IMO entirely dependent on the degree of competition between bidders.
Hi extrader, just one comment to your comment "The increase in NPV is very welcome"
Imo, is absolutely fundamental and crucial, the pie size determines the return we get, even it is a portion of the possible value. Also, if this does still turn into a full buyout, then our potential percentage return increases hugely due to the NPV increase. We can be far too blasé as to what a monster investment this actually is..
Typo. one fourth of NPV
Ex, I agree with you, we will not get anything near the NPV. But the positive is that we are in same boat as Elphick and Glen, so should in theory get same opportunity to either pitch in cash for the project or sellout. In my personal view, I dont see 300P out of range here, with one third or NPV at 30MT. But would be fine for me
Agree completely 99 - all the key variables from the calculations are missing. It could be this is intended as the appetiser, if an interested party wants details they need to contact ZIOC management.
Regarding project NPV vs shareholder attributable NPV, the final Mining Convention gave ROC a 10% non-dilutive shareholding and a 3% royalty. In the event of a full buyout, my hunch is Glencore will swap their 100% offtake for a small royalty (they have done this before) so say around 2%. How do royalties deduct from NPV - no idea - so I roughly work on around 85% of project NPV being attributable to shareholders.
Hi Jiving,
"ZIOC has complete flexibility in funding obligations
• Takeout at NPV; or
• Dilution at NPV during construction "
That statement was used to support/justify the price of £ 1.56 at IPO stage, in the context of the then NPV. There's a lot of 'hope value' built in.
And I can't see PI's getting a free carry and / or monetising anywhere near the revised NPV.
A project creates value for its owners only when its cost is less than NPV, that's the whole point of the exercise, which is undertaken to determine the most efficient allocation of capital.
The increase in NPV is very welcome, but ZIOC shareholders at our level should not expect anything like the implied per share 'value' numbers being calculated.
I believe folk like us will be squeezed out pretty soon and -all things considered - I think my 200p per share entry in the 'charity sweep' is well under-pinned.
GLA and ATB
I hope at some point we get more detail on this, but it is currently very low on specifics. For example what discount date is used for the NPV. Is it the project NPV or the NPV attributable to shareholders (Congo have a 10% free carry). What have they assumed on the Iron Ore price and margin for Pellet grade etc. etc.
Good news on the costs, but we need more detail.
As a recent investor in HZM I can easily see why institutional investors are reluctant to take the risk.
So npv figures have no effect on shareprice whatsoever!
Like other AIM companies you can publish out of this World NPV figure but without a committed investor they mean nothing.
The big questions are
1-Why ain’t Glencore interested in taking on the project themselves -buy the other half out for circa a billion and they have a multi billion NPV project,They are supposed to create longterm profit streams and capital returns for their shareholders.
2-Are the directors going to sit on this for another 10 years or actually create shareholder value year -better to accept a £1 billion offer than get nothing and see the company die
Or as our broken market sees it, every $7bn is worth 8 pence a share. Roughly £50m mcap 🤣🤣🤣🤣🤣🤣
Total joke!