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When looking at flow rate presented by other listed Helium players such as Royal Helium, Blue Star, Avanti and Desert Mountain Eenrgy, the calculated flow rate presented by HE1 today looks a bit light.
I guess we have to wait to Q3 to get more firm numbers.
The calculated flow rate looks light when compared to rates from US and Canadian wells.
Palladium up 10%, platinum up 2%. The catch up rally following the gold rally has started.
THS is the next one to move.
The $10/bench cubic metre is the cost to mine the rock, but this is only a part of cost to get to the SC6 product. Roach have said recently that they are targeting $800/t SC6 cash cost at gate. That number is much more relevant to look at when looking at the economics as you can benchmark it with SC6 prices and its also the cost metric other spod miners are using.
The lack of update is starting to become troublesome
This was pretty thin, negotiating for possible gas supply. Would be better with news on funding, which is the key issues.
On Friday Mr Roach said in the two interviews that it was a matter of hours and most days to sort the initial problem. Both hours and days has passed and no news. This suggest that they are struggling.
Boom278, they never write that they are looking to raise debt, they write that they need to strengthen balance sheet, which always means increase the equity part of the balance sheet. Then they write that they have active discussions with bank and bondholders. Which implies that they are looking for different ways to increase equity, and the one obvious when discussing with bondholders is to convert bonds to equity.
This can only be read in one way, debt for equity swap looks increasing likely.
"Active discussions are progressing with Petrofac’s stakeholders including its lending group, comprising both bondholders and lending banks, and other capital providers."
Jaglith, it works exactly the way I wrote it. Its "prepayment" Canmax have made payment to PREM for over $34m (during the construction of the mine), for which Canmax will get product for what they have pre-paid. Canmax will not pay twice for the prepaid product.
Jaglith, because Canmax is getting 1k to recover the prepayment. From June Canmax is getting 2kt/m.
All as per the 15 Aug 2023 RNS https://polaris.brighterir.com/public/premier_african_minerals/news/rns/story/xje3pgr
I really struggle to see what the bulls see with PREM currently. There are two large issues in my view. First “Travel and arrive” factor, the market has been waiting for a couple of year now for Zulu to start-up and the wait has been extra intense following the failed start up in the spring of 2023. It’s a very typical “travelled and arrive” situation for a hyped stock. The plant is now running according to Mr Roach and only minor tweaks are required to achieve nameplate capacity. This is the definition of having arrived. Travel and arrive situation are very difficult to fight on AIM, the big news is out now, there is no news in the same magnitude to look forward to the next few months. This means that private investor interest in the share will diminish. There are small bits and piece but nothing like the start-up.
The second, but much bigger problem for PREM is the economics. Its rare to start a mining operation with such weak margins from the start. Look at gold miners, most new gold mines coming onstream are on cash operating cost of $900-1300/oz and AISC of $1100-1500/oz while the gold price is around $2090, giving a healthy cash operating margin of 40-55% from the start.
PREM Zulu mine cash cost at gate according to Mr Roach is $800/t SC6 and then shipping cost of $150/t to China. PREM early test indicated possible grade of 6.1%, just marginally above SC6 grade. SC6 is today at $980-1000/t, which means that the cash operating margin right now, if the plant is working at nameplate capacity is almost zero.
Furthermore, PREM have the pre-payment arrangement with Canmax. Canmax is supposed to get 25% of production from start and minimum 1kt/m, and this is production PREM is paying all the cost for. From June 2024 Canmax share of production is increasing to 50%. Due to the delay in the start-up of the mine the pre-payment arrangement has been changed to the worse for PREM.
The 15th Aug 2023 RNS state clearly the marketing terms. Payment for the sold product will be divided in two equal shares, a) 50% sold at Fastmarkets SC6 price with a deduction of an agreed discount for Canmax, b) 50% based on profit share arrangement, which essentially means that PREM is getting even less of part of any gross profit.
What does this all mean? Lets look at the number based on stated assumption:
4kt/month nameplate capacity
$800/t cash cost (Roach guidance)
SC6 product, inline with grade indication of 6.1%
SC6 price of $1000
For simplicity I will assume that all volume is sold under a) which is optimistic.
Canmax discount of 10%
PREM revenue of $2.7m / month (3kt*$1000*90% (10% discount)
PREM cash cost $3.8m / month (4k*($800+$150))
Negative operating cash flow of $1.1m from the start per month. From June when Canmax is getting 50% of the products, the situation gets even worse.
Lithium miners with lower cash cost in Australia is mothballing their mines, why is PREM even starting up its Zulu mine?
Is it only me who is getting the same vibes as when Auctus put out the 17th May 2023 report "Zephyr Energy Plc (AIM: ZPHR): Well test at State 36-2 likely during 2Q23"
A few weeks later Zephyr announced a £3.15m placing.
What is so great with this RNS?
1. Cascadura-2 well had issues and needed to be side-tracked, yes it was solved but will cost money.
2. Cascadura-3 spud, wasn't that very expected.
3. Increased lending, shows again that operating cash flow is nowhere near to cover capex requirement.
What was so good?
Indication so far on
88 Energy reports that they will be removed from the S&P Aussi All Ordinaries index, so index seller will weight on the stock
https://wcsecure.weblink.com.au/pdf/88E/02780432.pdf
Cheapsharesboy,
I would not think so, the sellers was index funds who track the MSCI UNITED KINGDOM INDEX and buyer in these auctions are usually market makers who go short into the index re-weighting date. But market makers are exempted for reported shorts (and long position), because their long or shorts are only meant to facility liquidity.
CapteNemo,
Today was the effective day for the last MSCI re-weight. Petrofac has been deleted from the MSCI UNITED KINGDOM INDEX.
There is always uber large volume on the effective day of index changes if a stock is added or deleted of an index.
Its just index traders in the close.
Look on page 5
https://app2.msci.com/eqb/gimi/smallcap/MSCI_Feb24_SCPublicList.pdf
Its MSCI re-weight index deadline today. PFC has been kicked out an index, which explains the big volume in the close.
In the 15 Dec 2023 Zephyr wrote:
"As a result of the initial encouraging performance of the Slawson wells, the Company's board of directors (the "Board") forecasts that the year-end production run rate from its non-operated asset portfolio in the Williston Basin, North Dakota, U.S. (which includes the Slawson wells) will be between 1,450 and 1,700 boepd, a mid-range increase of 51% versus sales volumes in the third quarter of 2023 of 1,043 boepd, and a 43% increase over the 2022 year-end production rate of 1,103 boepd."
"1450-1700 boepd" now they report 1053 boepd for the quarter and peak rate of 1440 boepd. Its a complete joke.
The achieved preak rate was in late November as per todays rns and still 15 Dec they claim 1450-1700 production, this is pure lying.