George Frangeskides, Chairman at ALBA, explains why the Pilbara Lithium option ‘was too good to miss’. Watch the video here.
For a rough estimate, however, we can use the CPR NPV10 unit valuations in the previous high case (which looks broadly consistent with the new, best estimate case) of €18.3/bbl and apply it to the updated reserve numbers.
This suggests an implied NAV of US$141.6m in the best estimate case, and just under US$200m in the high case.
We also note the announcement by Zinnwald Lithium (ZNWD LN) with strategic investment Advanced Metallurgical Group (AMG) who are building the lithium refinery in Germany.
This is the most relevant update for ALK as it highlights that AMG intends to vertically integrate to secure feedstock meaning that although this is intended to be the first capacity online in Europe the capacity has already likely been set aside for processing the concentrate from the nearby Zinnwald project.
This further highlights the shortage of available refining capacity for lithium miners and end users and ALK remains the only listed exposure to refining capacity.
It is difficult to not demonstrate considerable upside potential and the latest announcement indicates that major de risking catalysts which we believe will drive a rerating are now significantly closer.
The nature of the process means that market updates and timing is challenging to gauge, however, off the current valuation there is limited downside risk. Correspondingly a feedstock deal with an OEM indicates a major catalyst as it unlocks the project financing process, optionality on structures and potentially direct funding as part of an agreement
Attractive Erfelden commercial Net-back metrics of ~US$58 per barrel @ $80/bbl at peak production*
PBS reservoir 2C net prospective resources of 17.0 mmbbls with a COD of 50%*
• The Buntsandstein reservoir of the Steig Deep prospect has a 2U prospective
resource of 16.0 mmbbls with a COSg of 30%*
https://beaconenergyplc.com/media/1114/20221222_corporate-presentation_v5.pdf
Taken from the BN
Potentially 17mmbls in the Pechelbronner section
The deeper Pechelbronner discovery (c.800m depth) is higher risk but
potentially much larger. Flow was achieved (c.160 bbls/d), but drawdown pressures were high.
If the reservoir can be shown to produce commercially the horizon may contain as much as 17 mmbbls in the 2C case (13-22 mmbbls 1C-3C).
Taken from the rns
The SCHB-2(2.) well has encountered good quality oil-bearing reservoirs in the Meletta-Schichten ("Meletta") sandstones and the Pechelbronner-Schichten ("PBS")
The well has encountered oil bearing reservoir in the Meletta and PBS sandstones, both shallower than predicted with the PBS being a thicker interval with more sand and of better quality than pre-drill estimates. These results imply significant upside to the reserve range assigned to the Stockstadt Mitte segment in the CPR published by the Company in December 2022,
Steig comprises two Tertiary reservoir sections at the Meletta and Pechelbronner stratigraphic levels. The shallower Meletta formation (c.600m depth) is thin, but with a suite of modern wireline logs showing oil saturation, and a well test of c.60 bbls/d proving mobile oil, is low risk.
SGS estimates between 0.5 and 2.2 mmbbls recoverable in the Meletta sands, with a best case of 1.6 mmbbls. The deeper Pechelbronner discovery (c.800m depth) is higher risk but potentially much larger. Flow was achieved (c.160 bbls/d), but drawdown pressures were high.
If the reservoir can be shown to produce commercially the horizon may contain as much as 17 mmbbls in the 2C case (13-22 mmbbls 1C-3C). Together, SGS classifies Steig 2C resources as ‘Development Unclarified’, with a chance of development risk factor of 50%.
Page 11 of the Broker note
Https://beaconenergyplc.com/media/1124/230220_bce-shining-light.pdf
We estimate some US$18m EBITDA in 2024, falling to
US$10m in 2025 (as a result of the accrued earn-out royalty – see transaction details above),
before rising once more to c.US$11m in 2026. We expect the capex programme for 2023 to
total US$9m, which will be covered by the funds from the placing and operating cash flow. Next
year the budget is expected to total US$6m, leaving around US$9m of free cash flow
On an NPV10 basis, we value the 2P reserve base at US$51.6m, or c.US$13.6/bbl, versus the
implied acquisition price of US$5.2m, or US$1.4/bbl. In valuing the 2C resources we have
applied a 25% discount (i.e. risked at 75%), to reflect the fact that these barrels are further from
production, taking our 2C unit value to US$10.2/bbl.
Applying SGS’s commercial chances of success for each respective project results in a risked valuation of US$12m for Schwarzbach South, US$14m for Graben and US$95m for Steig. After corporate adjustments this results in a
Core (2P) NAV of US$52.8m, and a Total (2P+2C) NAV of US$174m
Core 2P = £42m – Total 2P + 2C = £137m
See page 6 on the broker note below:
https://beaconenergyplc.com/media/1124/230220_bce-shining-light.pdf
Read the 3 Oct 2022 RNS - see extract below
Given this interest out of China and the relatively short period to complete this test work over the next 6-9 months the Company has taken the decision to postpone its plans to build an on-site pilot plant facility of 2,000tpa at Orom-Cross. Binding offtake contracts to purchase Orom-Cross graphite would likely remove the need for a pilot plant, as the principal rationale for its implementation was to provide product to would-be offtakers to enable them to assess its viability for their own uses.
A direct impact of this decision is that there is no longer a requirement to raise substantial cash (circa US$10M) in the near term via the equity markets to fund the on-site pilot plant.
https://www.investegate.co.uk/blencowe-resources--bres-/rns/strategic-party/202210030700065047B/
Dr. Heinz Schimmelbusch, AMG’s CEO, commented, “AMG’s investment in Zinnwald is a valuable strategic opportunity. As a partner with Zinnwald, together we will pursue a definitive feasibility study for their project in Eastern Germany. Establishing a raw material base in Germany close to our Bitterfeld operations has obvious logistical and strategic benefits for AMG, and we look forward to working with Zinnwald on this exciting project.”
https://amg-nv.com/investors/press-release/amg-advanced-metallurgical-group-n-v-announces-25-shareholding-in-zinnwald-lithium-plc/
Zinnwald Lithium Plc
@ZinnwaldLithium
#ZNWD is looking forward to the unveiling of the EU’s new #CriticalRawMaterials Act on 8 March aimed at securing the bloc’s supply of critical raw materials needed for #EV production including lithium:
LONDON, Jan 25 (Reuters) - European Commissioner Thierry Breton urged European financiers this week to provide more funding to suppliers of minerals needed for the energy transition, as the European Union prepares its Green Deal industrial plan.
The EU is due to unveil its Critical Raw Materials Act on March 8 to secure the bloc's supply of critical raw materials including lithium, cobalt, nickel, manganese and graphite needed for electric vehicles.
https://www.reuters.com/business/sustainable-business/eu-urges-european-banks-step-up-funding-critical-minerals-2023-01-25/
Or could be
Https://chartwellip.com/staff/mark-d-tindall-cfa/
Mark is a Portfolio Manager for Chartwell’s equity investment team managing the large cap growth strategy. Prior to joining Chartwell, Mark was a member of the equity team at Columbia Partners and served as a co-team leader on their large cap equity portfolios. Prior to joining Columbia Partners.
Https://chartwellip.com/staff/mark-d-tindall-cfa/
could be Mark Tindall CEO of Tana Africa Investment Managers
Tana is managed and advised by a team of professionals with many years of Africa-specific experience in private equity, management consulting, merger integration, and transaction services.
Https://www.tana-africa.com/team/