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Hi Camper, yes, from that perspective you are correct! As with any small cap listing, an element of faith is required. I too have suffered from the 'pump' scenario on more than one occasion! But for me, the difference here is the open support of the UK gov, which could underpin the entire operation. If the business plan includes some element of taxpayer funded cash, then that support crystalises. Of course risk remains, but compared to some other opportunities, for me, PRE has made great progress and is in a relatively good spot. Hopefully the business plan when it arrives will bear this out for me!!
ATB
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Hi China, totally agree. The only thing that is holding this back is the lack of clarity around monetising the asset. Clearly the business plan will outline this and provide a roadmap to first income streams. Until that clarity around the economics has been given, then there will remain a hesitance from larger investors, who are needed to provide the trading volumes to see the next push in SP. I have no doubt that this is coming and that the project economics will be more than attractive, but until that time, having significant asset value below ground is simply not enough. If we cant get at it economically, then its no good to us! A little more patience should see value realised.
ATB
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Hi Camper, understand your point, but its a little too simplistic.
The current market cap is effectively driven by a combination of potential and positive current market conditions and is indeed far less than some of its competitors in the same space, whilst actually being further advanced towards initial production.
Market demand for Rare Earths is increasing by the week. This, combined with western nations being keen to be able to secure supplies outside of China is one large driving factor. Secondly, the UK individually is keen to establish the North of England as a centre of excellence for the provision and delivery of both green energy components and intellectual property. This is evident by the governments action around the freeport statuses issued and the dedicated 'plug and play' locations available for green energy purposes. The Humber being one and absolutely key for Pensana.
The forthcoming business plan will outline both the economics around the project and the financing behind it. Both points absolutely key, but the second especially for shareholders.
My view is that we will see the financing constructed as a combination of bond issuances and UK gov loan facilities at attractive rates, both at the project level and therefore non dilutive. I would not be surprised to see bond issuance partners being large scale energy players, such as BP, or large scale electric vehicle/energy production companies. This would give them a foot in the door with a UK/European based operation which could service their needs 'locally', thus removing risk around China's export/mining quotas.
There is still some way to go to production, but obstacles are being overcome quickly and efficiently and the supply chain model is taking shape.
On that basis, with the speed that this is moving, I would suggest that the current mcap is very light! As each piece of risk in the process is removed, the inherent value will increase.
D
SP being systematically walked down, clearing out PI's who don't have the patience to wait for value to be realised. Unfortunately this is exacerbated by the continual failure to deliver against published milestone target dates. I have great confidence in the project as a whole, but as I have said on numerous occasions, expectation management is not the BoD's strong suit.
Hi Mike, agree entirely with your post. The problem with announcing dates for deliverables is that anytime those dates are not met, there will always be some who consider that a failure and trade accordingly. With an AIM small cap listed firm which is running a project such as this and the natural risk inherent within it, the impact is often amplified, often irrationally.
There are always bumps along the way, through any critical path. I believe PRE is an excellent proposition within a critical space and over time value will be applied....just need to ride over those bumps!