Member Info for DRB83

I'm not convinced that if ncyt were buying shares that it would even appear on that RNS. Seems to be specifically for the liquidity agreement. Ncyt buying would not be for liquidity reasons. Imo

It took some digging but finally found the strip ratio of the Fenix Iron Ridge project.

Ore Reserves were then declared by Mining Plus based on a combined  fines and lump production rate of 
1.25Mtpa with a life of mine waste to ore stripping ratio of 2.86:1.

Ours is 1:1. They have nearly 3x more waste to siff through compared to us. I'm starting to think Bill's scoping study was quite prudent. What did he actually mean by <$60 FOB. I was thinking $59 but could be way lower.

Something else to consider. Below is some drilling results from Fenix Iron Ridge Project.

Fenix  Resources  has  received  the  assay  results  from  the  recently  completed  diamond  drilling 
program at the Iron Ridge Project. New results include: 
o 54.5m @ 66.2% Fe from 106.0m in hole IR1902
o 40.4m @ 65.5% Fe from 67.0m in hole IR1907 
o 61.6m @ 64.9% Fe from 20.0m in hole IR1906
o 51.0m @ 62.7% Fe from 46.0m in hole IR1901
o 54.4m @ 61.4% Fe from 13.0m in hole IR1903
o 51.7m @ 64.8% Fe from 52.6m in hole IR1904
o 63.45m @ 63.2% Fe from 29.3m in hole IR1905

Below are some results from Han****:

47m @ 61.50 % Fe in hole AM21RC002 001 from 2m

o 78m @ 61.20 % Fe in hole AM21RC002 002 from 1m

o 25m @ 61.50 % Fe in hole AM21RC002 003 from surface

o 88m @ 60.60 % Fe in hole AM21RC002 004 from 1m

o 29m @ 59.60 % Fe in hole AM21RC002 005 from 12m

o 19m @ 59.30 % Fe in hole AM21RC002 006 from 15m

o 68m @ 58.50 % Fe in hole AM21RC002 007 from 11m

There's no denying that Fenix have the slightly higher grade ore but what I'm more interested in is the location of the ore. Ours is literally right at the surface.

Thanks Mister positive.

I also noted that Fenix obtained its initial MRE in August 2019 with production commencing December 2020, 17 months. Seems Bill is basing all our numbers on Fenix. I'm sure Fenix will have made some mistakes that we will be able to avoid. Fenix are one to watch.

Thanks Hillseeker and yet more evidence that ncyt are slowly starting to peer from under the rock they have spent much of the last few months behind.

Patience is a virtue

Stampee, there are a number of different ways we could value the Han**** tenement alone. Fenix are a similar size in the same area with similar grades. They are currently valued at $60m but have been as high as $120m. On top of this they gave dividend of $25m about 3weeks ago.

Based on that you could say our Han**** tenement as it stands is worth 3p-6p with a 1-1.5p dividend. Not too shabby. Then throw in there the other 90% of the tenement and it's anyone's guess. Crazy really.

I also feel Fenix is massively undervalued given they had 90% of their mcap sat in cash.

Are Chill in a position to compete with the big boys just yet on price. Unlikely without eating significantly into the bottom line. Mass production will help bring the price down and that will come eventually. People may have to be prepared to pay a little more for an extra 10-20 years of life. Not a bad trade off really. I get your point though Vas but I just think we are not there just yet. Soon though.

Let's also not that in the first year accounts to Jun21 of Fenix with their Iron Ridge project being fully operational Fenix returned a $49m after tax profit on $114m revenue. That's 43% to shareholders. That is with Production starting in December 2020 and sales starting in only Feb21.

A full year equivalent would be around $230m revenue with a 43% after tax profit giving about $100m.

Let's not also forget that the Fenix model is happening, it is live. We will follow suit. We or I am forecasting around $40m profit in a full year for Alien. Very very conservative when you compare to what is actually happening out there.

The Iron Ridge from what I can gather is all Fenix have and it's approx 10mt like Han**** currently. As a result most the cash Fenix generates goes back to the shareholders. A nice big $25m paid out this month. That is half of our mcap paid back to shareholders in half of a year. Wow.

Hedging
On 22 July, Fenix entered into swap arrangements with an Australian top tier financial
institution for 50,000 tonnes of iron ore per month based on the Monthly Average Platts TSI
62 Index converted to AUD for the 12-month period from October 2021 to September 2022.
The price fixed is equivalent to A$230.30 per dry metric tonne (dmt), flat over the period.

That equates to about $170 per tonne.

So some top tier financial institution thinks iron ore could be worth north of $170 in the near future.

Interesting.

Also, please see Max's post on Port Hedland Vs Geraldton Port. Lots of benefits for Alien

According to Fenix their average FOB cost per tonne since the start of the project is approx $64.

Let's review the differences:

Geraldton Port is further than Hedland so Alien costs will be lower.

***Unaudited C1 Cash Costs for the September Quarter were A$86.77 per wmt shipped, in line
with forecast but slightly higher than the previous period due to maintenance and
improvement works on our port storage and handling facility, together with a higher strip
ratio at the mine. The planned higher strip ratio coincided with the receipt of all statutory
approvals for Stage 2 of the Iron Ridge pit and the necessary extension to the waste dump
area.***

Anyone know the strip ratio of the Fenix mine. Is it better than 1:1?

The hedge started October and I see no mention of previous hedges in the June Quarter report. Therefore the $163 sales price was an average of the market over the quarter. Makes sense as we know prices peaked at $230.

So even with a $163 selling price and despite the below extract

***Sea freight costs continued to increase due to a buoyant trading environment for bulk
commodities including base metal concentrates, and port congestion in China that combined
to limit the mobility of the Panamax fleet in the Pacific."***

Freight costs averaged $34.

There is also a timing lag between the Freight costs and ore prices so if we look at the June Quarter results for Fenix then you will see:

Average selling price $200
Average Freight cost $30

Therefore, still happy with my estimate of $9 Freight on a $100 ore price. If anything it's conservative as I expect actual results will more than likely mirror Fenix September Quarter of

Average selling price $163
Average Freight costs $34

This gives a contribution to operating costs of $129. I am forecasting $91 ($100-$9). Plenty of room for error.

Even at current rates of :

Selling price $120
Freight $12.50
That's a contribution of $107.50

Still above my forecast.

Thanks HH, don't always have time to check. The latest quarter was $34/t. So would this be when iron ore was up at $230?

If so then it proves my point further. I will see if I can obtain an average selling price per tonne of ore from Fenix over the same quarter.

Vas, just checked the Chill.com and smokes are $8.99. Still more expensive in comparison but that makes the equivalent in UK around £7. I suspect that the current price of £10 per pack in UK is due to the minimal economies of scale benefits. Once the volumes come Chill should be able to reduce the price. It may not be such a bad thing as initially Chill will hit the market in UK as a premium brand with high quality hemp. Overtime they will be able to reduce their price whilst maintaining their premium image. That would make Chill very appealing to the masses. If we can get the price down to be only a couple of pound more expensive than our competition then I believe the cool branding and lifestyle image will put Chill at the top of the pile.

At the same time TAAT may find it very difficult to keep their prices low and may in fact have to pay additional taxes on the THC element meaning over time they have no choice but to increase prices. Win win for Chill.

HH, agree that it is very difficult to forecast future profits given the volatility and number of variables in play.

However, my main point was that Trumble was using a figure of $20 Vs a sales price of $100. This was a guesstimate based on a $34 for Fenix which I am not sure where that came from. I found that the current price was $12.50 for Freight when Iron ore prices are at $120.

If iron ore demand drops and with it the price to say $100 then the freight demand will drop and with it the price to say $9 (not $20). If the Freight was to rise to say $40 then it is likely that the ore price will also rise to say $200+.

Therefore in a large part the Freight costs for $100 ore I would expect to be $9. Any increase in freight will be more than hedged against by the rise in ore.

I appreciate there are a lot of variables in this as you say but given the information we have I am opting to include in my forecast $9/t for Freight against the $100 ore price and the $60/t operating costs. Gives me $31/t profit on 1.25mt pa so I'm forecasting $40m approx profit in year 2, $20m in year 1. Based on just a 10mt JORC at Han****.

For every 10mt additional we find at Han**** I would expect we would increase output and not just the LOM. Therefore I will be forecasting $80m pa profit on a 20mt JORC.

I suspect if the ore price is low in 2-3 years say $100 still then Alien may choose to extend the LOM instead of increase production but if the ore is north of $150 then I would expect production to be fully maximised. It is a nice feeling to know we will have some control over this.

I am hopeful and expecting iron demand to increase over the next 3 years.

Excellent post title this. Bump

Let me finish

30 June £77m
Cash generated to 31 Oct £12m
Tax refund receipt £10m
Cash at 31 Oct £99m

Yes Sir Digby. That is also my understanding. I am only treating the £10m as a liquid asset as the rest is all wrapped up in the dispute. The £10m should have been returned by now so assuming no other significant movements in trade debtors, creditors, stock etc then I would expect our current bank balance to be

30 June £77m
Cash generated to Oct

I exclude the VAT element as the only way we get that back is if we have to credit the £40m sales to DHSC from Q1. Where as the £10m tax payment was a payment made upfront for suspected profit this year which I expect has already been returned to NCYT. I could include it all but guess I'm just being prudent.

Let's try and bring some balance to this post and look at what ncyt need to improve on

Comms - very slack with a highly prudent outlook. Does not support sentiment at all. This does not impact whatsoever on the underlying fundamentals of the business. It just assists in causing a huge disconnect between the mcap and fair value. We now have a new captain steering the ship. He's had a couple of weeks and whilst it would have been nice to hear from him by now, I feel something is very close.

Dispute - we will never know just how much impact this has had on ncyt but let me state, it will be hugely significant. GM lost his job over it I believe. However, we are where we are. We have this covered off in the accounts. A company doesn't go from being confident they have there ducks in a row to losing it 100%. Imv worse case is a 50/50 and we have more than covered that off in the accounts already so when the resolution comes it will release the SP.

One trick pony - some might say but imv you focus on your best sellers and we're in a covid pandemic so we focus on covid for now. Simples. Having said that, we are already starting to see whispers of some focus changing to non covid issues. I.e Sepsis. We are in no rush here but covid has allowed us to build a significant springboard to leap into the non-covid world. £100m warchest to grow organically or by M&A. Take your pick. We can afford to attack on multiple fronts. It isn't only the warchest that Covid has enabled either. We have an army of Q machines out there that one day will be crying out to be topped up with a host of non covid tests. An legion of customers that will be begging for economies of scope and scale across an array of various tests. An established distribution channel with an abundance of capacity just waiting to be filled. The world will demand and we will supply.

Marketing - it's been a negative point of late but with a marketeer for a CEO we have already seen a sharp uptick in corporate events getting our name and products out there. Let's remember that we are not business to consumer and won't be advertising on the TV or radio. We sell business to business and will spread out brand by attending these events and shows. I think we have about 4 lined up over the next few weeks. Hopefully DA will partake in regular interviews in a bid to attract institutional investors.

Fix these and it's up, up, up from here