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MM my guess is there will be an updated valuation based on the updated cost report. I think the cost report is essential to be able to do a proper valuation as there are so many factors on infrastructure to take into consideration
All and any views on how to value Zanaga much appreciated into here...
Duly recc'd and agreed...I especially liked the ref to 'green steal ' ...
GLA and ATB
In that time since the Edison report the development costs reduced from $7.6bn to $4.7bn. The most recent work on the FS was to reduced by around 20%, so we could be looking at a further $940m to come off the staged development costs.
In 2012 we had a huge increase in the mineral resource
· 57% increase in the overall Mineral Resource to 6.8 billion tonnes at an average grade of 32.0% Fe
· 74% increase in Measured and Indicated resource category to 4.69 billion tonnes with an average grade of 32.5% Fe
And my personal favourite:
· Mineral Resource defined from only 25km of the 47km orebody identified
We could easily be looking at double the Edison figures when you start to factor in the above, let alone green steal and the move to higher grade ore..
That Edison value of $4.3bn is c.£5 a share.
That is what the project was worth in 2011. It should/could be argued that it’s worth more with the DRI capabilities of the mine.
Saying that I’ll be happy with a fiver 🫣
I know you won't laugh MM 😁, but I can see a queue of nay say readers who go "no way", look at the SP yada yada. But as we know the SP is meaningless, it basically values Zanaga at ZERO.
It could indeed be higher the valuation.. but don't want to be accused of ramping 🤣
I don't, not at all! If anything I see w string of good reasons to mark us higher again.
It is funny looking at the old Dec 2011 ancient Edison report, a time when high grade iron ore and green steel were not in strategic demand...
"Our base-case valuation of the Zanaga project is US$4.3bn in current money terms (discounted to FY11 at 10% to account for the opportunity cost of capital). In our valuation we used a 10% nominal discount rate and applied a 25% haircut to ZIOC’s attributable value to account for the lack of control, as the project is effectively managed by Xstrata. It implies ZIOC’s attributable value of US$1.7bn or US$6.0 per share (£3.8/share)."
So don't laugh at the £4bn mcap figure!!
We're very much on the same page, Guffers. I am interested, though, in how investors reach their target valuations for any deal. There's the NPV, of course. Comparative deals don't exist for reference....or do they?
My own view, this worth mcap £4bn easily, so either 20% buy in new investor (ie £800m) or Glencore gives up marketing rights and Zanaga is totally sold, £4-£6bn? A big investor (China) will probably want it all ..??
We should be so lucky to get a total sale 🙏🙂
When it comes to pricing up a deal, who has a methodology they would be willing to share?
If SASAC are indeed involved then a very large amount.
A plausible narrative, yes, we will see. What interests me more than who is the shape of the deal, ie what do we get out of it..
...this is the gameplay as I see it:
ZIOC and our Chinese EPC have completed the recostings and rewritten the 2014 Bankable Feasibility Study accordingly. This has met expectations sufficiently (recall the 20-25% costs reductions etc) to be passed along to what is euphemistically termed as 'peer review'. FWIW I consider this/ese 'peer/s' to be those that hold the investment purse strings and/or have the clout to authorise the substantial investment necessary. (There's also the geopolitics to be juggled).
Given their iron ore activities across multiple West African countries (Simandou being the headline example) coupled with their strategic imperative to secure ore ex-Australia I firmly conclude that said 'peers' are Baowu Steel and SASAC, Boawu's owners and ultimate Beijing masters. Of note at this point is that if this is indeed the case then the amounts involved must necessarily reach the order of magnitude of those employed at Simandou - $15-18bn. SASAC had to approve and sign off Baowu's involvement, including brokering finance from China Development Bank and the AIDB into the deal.
As of Wednesday last week Baowu chairman and execs were in Conakry, Guinea finalising Simandou's finances with Guinea's leadership. Thereafter, and perhaps even now given our by month end timeline, I expect Zanaga to be headlining.
Through 2023 Baowu Steel JVed with Saudi Aramco and the PIF on green steel in Saudi Arabia. Baowu's chairman and Vale's CEO, Eduardo Bartlomeo, also met at least twice and discussed tie ups on green steel and mineral investment opportunities. 2023 also saw Vale sign an MoU with AD Ports on Gulf green steel operations including pellet plants and infrastructure. The intriguing thing for us at ZIOC is that Vale and AD Ports also agreed to look at opportunities to own and manage VLOCs - the huge ships used to transport iron ore. AD Ports signed the MoU to develop at Pointe Noire, and their and Emirati infrastructure investment has been promoted to ministerial and Presidential levels just this month in Dubai. (BTW, did you know that Vale and AD Ports exec have just flown into Brazzaville from Dubai?)
The sweet spot of all the above factors and arrangements is Zanaga.
If the above really do all tie together, and they do all fit, then we could be looking at this dream team:
Vale, AD Ports and PSEI (EPC)
Baowu Steel
CDB, AIDB, PIF and ADQ.