Do I? Don't I?28 Sep 2019 08:47
This must be one of the quietest boards on LSE - which is a very good thing! Ive been following this share for a while now (Im a Geologist), believe the company may be at a tipping point, and yesterday skimmed some of my 500% profit from IQAI and am looking for my next AIM poker chip punt.
If I were Colin Bird, I would not subject myself to cost and hassle of applying for a mining licence, until I had confirmed offtake deal in hand from JLP. Based on that, I expect one of three possible future RNS:
1. Negotiations with JLP were not successful in securing an offtake agreement, so no point in applying for the mining licence. IN THIS CASE I WOULD EXPECT THE SP TO TAKE A ~30-40% DROP.
2. Negotiations with JLP were successful in securing an offtake agreement, so will now apply for the mining licence. IN THIS CASE I WOULD EXPECT THE SP TO RISE 100-300%.
3. Negotiations with JLP were successful in securing an offtake agreement, and a mining licence was applied for and granted. IN THIS CASE I WOULD EXPECT THE SP TO RISE 300-800%.
Given that Colin Bird is Chairman of JLP, Star Zinc grades very high, and Zambia very mining friendly, I think scenario 1 is very unlikely. The risk reward here is therefore very skewed to the upside - 40% downside vs. 800% upside. My estimates are based very loosely on Colin Birds revenue forecast of $15mln. Im a realist, so my estimates are based on half of CBs forecasts.
Do I? Don't I? Certainly an intriguing opportunity.
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