Member Info for EV_Bull

For those that are keeping their eye on the court cases
https://www.tjsp.jus.br/Noticias/Noticia?codigoNoticia=62865
The São Paulo Court of Justice recalls that, due to an essential update in the judicial systems, in the next 7 and 8 the ordinary duty will operate on a contingency basis (Justice Day duty). That is, both the e-SAJ portal and the first and second degree systems (SAJ-PG5 and SAJ-SG) will be unavailable. The update will start on Sunday (6), at 17 hours. However, integration with the Civil Police (SAJ-PG5 - RDO) will be unavailable from 1 pm.
All requests, dealings and communications, internal and external, will be exclusively through the institutional emails of the teams on duty. See how the basic service flow will be in the 1st Degree and the basic flow in the 2nd Degree .

@ob... So coming full circle on this...
Just reading the WH Ireland notice posted on the blue share website (page 46 on KDNC thread).
It says $30/t Ocean Freight and $10/t re handling costs so subtracting those gets us back to the 30-40m esitimated value of stockpile based on the $61/t originally stated $21 profit/t x 1.39mt = $29.19m $70/t gets you the $40m figure - I had underestimated the ocean freight costs. so $145/t - $40 shipping and freight = $105/t x 1.39mt = $145m profit so a significant difference to the $30-$40m estimate and might be why Cadence has been tweeting so much about Iron ore prices and we can forget the other theories e.g Indo Sino Debt playing a part.
I have also had a look at how this affects EBITDA based on info in the Sept19 RNS:
$25m EBITDA @ $40/t
$131m EBITDA @ $60/t
$237m EBITDA @ $80/t
$334m EBITDA @ $100/t
$448m EBITDA @ $120/t
$555m EBITDA @ $140/t
$660m EBITDA @ $160/t
I'd be interested to know if anyone has seen or tried to put an accurate value (NPV) on Amapa accounting for debts, rehab / creditors and current ore prices, extra 21% of ore / mine life estimated? Could be much higher than most people realise based on the above estimates.
One last thing the $3.5m to get the 7% values the JV at $50m ($100m including the debt to indo sino), I wonder what the cost to get to 49% would be given these higher ore values of late.

Yeah, I think this is most likely as it's probably part of the deal with the banks as secured creditors, "Geralds metals" also seems entitled to some of the stockpile. It does indicate a realistic plan to get the mine operational at least.

Indo Sino is an unsecured creditor so the banks would have precedence.

clause 4.5 of the approved plan:
"4.5. Unsecured Creditors. The creditors
unsecured creditors will receive their credits according to
the following conditions:
4.5.1. Seventy per certain (70%) of credits
of each unsecured creditor will be paid
in full according to the following condition:
(i) Monetary correction based on the TR plus
1% annual interest (calculated on the full amount of the
principal, without reduction in the declared value of the asset);
(ii) Five (05) years grace period for
interest payment;
(iii) Seven (07) years for payment of the
main:
(a) Fifty percent (50%) of the capital
remaining balance will be paid in eight (8) annual installments
from the eighth year; and
(b) The other fifty percent (50%) of the
remaining capital will be paid through a
payment in the sixteenth year.
(iv) Payment will be made with the
resources from the Integrated Mining Project
developed by the Debtor, in accordance with
'Waterfall'.
4.5.1.1. Each credit belonging to the
unsecured creditors will be discounted with thirty
percent (30%), with the discount applicable in the tenth
sixth year ”

Appreciate this is going over old ground, presumably we will get to know more once a deal is signed.

Reading through the JRP:
3.1.1.6. Disposal of iron ore. It is premise of this plan what essential part of the resources will come from the sale of iron ore produced by the Integrated Design and will be used for investment in capital expenditure or capital the guarantees already granted.
If you can make sense of that one it may answer the questions.

I don't have all the answers on this one but a few guesses never hurt anyone....
It does say $49m of Debt owed to indo sino in that presentation so potentially Indo sino taking the first $49m would leave $30-40m of revenue in the JV?
A few guesses then...
Take $80/t * 1.39m = $111.2m - $49m to indo sino = $62.2m?
Take away $10m for initial creditors as agreed by courts?
Take away shipping/loading costs (no idea on what these costs would be $10-20m?) but it puts you around those $30m-$40m numbers.
Fair to assume any price increases would be direct profit attributable to the JV at that point then (the extra $50m- $90m you speak of unless something written in any agreement elsewhere if prices go up).
Bear in mind that's a complete guess and most likely totally wrong so thoughts appreciated.

The 15% stake in EMH / Cinovec also has a lot of potential to add value to the SP which in a few months (if/when offtake deals get announced) - look at what happened to Piedmont Lithium. Yes you can invest directly in EMH (I have). The EU is desperate for local lithium resources and prices and demand predicted to rise, personally I can't see this not going in to full scale production.

This is an exact copy/paste of the RNS Title, people should stop reading too much in to post titles and form their own opinions.
https://www.cadenceminerals.com/rns/

http://irservices.netbuilder.com/ir/cadence/newsArticle.php?ST=REM&id=311428203051789039
Cadence (AIM:KDNC), the mining investment company, announces that on the 2 December the following directors purchased ordinary shares in the Company.



Director


Position


Number of ordinary shares acquired


Price paid per share (£)

Andrew Suckling


Non-Executive Director


13,559


0.1475



After these acquisitions, the total notifiable share interest in the Company for the directors is as follows



Director


Position


Total holding of ordinary shares

Kiran Morzaria


Director & CEO


1,112,000

Donald Strang


Finance Director


797,545

Andrew Suckling


Non-Executive Director


221,502

Adrian Fairbourn


Non-Executive Director


571,005

@ob, That's interesting to know - I did wonder what the blurred images at the bottom were.
The one thing I would point out is that doesn't get much mention is that there is a huge political will to see the mine and railway back in action for the jobs and boost to the economy. The judges are surely going to favour a realistic path to get the mine back in action. Which is why they have rejected the banks appeals and any rulings are likely to be in favour of getting the mine back up and running, they will clearly value the local economy over the foreign banks (in my view).

https://www.jusbrasil.com.br/processos/240043561/processo-n-2213966-5120198260000-do-tjsp
12/03/2020
now
Publication • Extracted from page 574 of the Diário de Justiça of the State of São Paulo - Judicial - 2nd Instance
Section III

Subsection V - Dispatch Summons

Appeals Superior Courts Private Law 1 - Extr., Esp., Ord

Dispatch

Nº 2213966-51.2019.8.26.0000 - Digital Process. Petitions for appendix must be submitted exclusively by electronic means, pursuant to article 7 of Res. 551/2011 - Interlocutory appeal - São Paulo - Aggravating factor: Banco Bradesco Cartão S / A - Aggravating factor: Dev Mineração Sa (Zamin Amapá Mineração S / a) - Under judicial recovery - Interested party: Kpmg Corporate Finance Ltda. (Judicial Adm.) - In view of the decision issued by the E. Superior Court of Justice, which rejected the injunction requested (pages 446/447), report to the court of origin. Afterwards, make the case file complete for the admissibility examination of the special appeal. - Magistrate Dimas Rubens Fonseca (President of the Private Law Section) - Advs: Herica Christina Arruda Rodrigues Ribeiro (OAB: 255148 / SP) - Matilde Duarte Goncalves (OAB: 48519 / SP) - Ezio Pedro Fulan (OAB: 60393 / SP) - Luiz Antonio Varela Donelli (OAB: 248542 / SP) - Osana Maria da Rocha Mendonça (OAB: 122930 / SP) - Counselor Furtado, nº 503 - 10th floor

@ob, Thanks for the JRP info.
The stockpiles are obviously very strategic here, it looks to me there there should be enough value there to pay off most if not all of the creditors in the JRP (which is why I don't include the stockpile in my valuations).

Sonora has had promising developments of late with ganfeng investing so I consider my estimates as conservative and any good news here would change my estimates easily 2x what I stated or 5-10x with news of a larger share of lithium coming from the JV area.

The company is difficult for people to value which is why the share price hasn't reflected the true value of the assets, leaving a big potential upside as the directors have indicated.

The bit that got cut off....
Fair value today is around 20-23p IMO based on my workings.

Hey @ob,
I’ve read as much as I can find online and watched the most recent interviews.
As to company valuations and erring on the side of caution and very roughly, here is the way I see it.
Hopefully most can work these out:
15% Stake in EMH 23,259,751 shares x 41p = £9.5m or approx. 6.4p per KDNC share
2% Stake in Macarthur Minerals approx. £0.55m approx. 0.4p per KDNC share
Sonora project approx 4% of initial mining plan attributable to KDNC from what I understand but could grow…. so 4% of NPV of US$1.253 billion is $50m projects usually trade at a discount to NPV due to uncertainties so conservatively 10% of the $50m is $5mn = £3.7m approx. 2.5p per share
Yangibana – Hastings valued at £100m – difficult to value of JV areas but conservatively £1m-2m? approx. 1p per share.
Lithium Technologies & Lithium Supplies – not actively being explored, I attribute no value to this
6.4p + 0.4p + 2.5p + 1p = 10.3p
So far we are at 10.3p per share (~£15.2m market cap without Amapa).
On to Amapa:
Amapa – Conservatively estimating the value of the mine (not expecting any value from stockpiles, not mentioning the extra 20% of Ore that has been found) at £250m - £350m (could easily be double or more once fully restored with the current high iron ore prices). Some money would have to be found for the $3.5m to get the extra 7%.
Taking the lower £250m 27% (not even mentioning the right to negotiate up to 49%) my lowest estimate the stake of this is worth £67.5m call it £65m to pay for the extra 7%. This gives me an absolute worst case value of 44p per share for the stake in Amapa alone assuming it goes ahead.
So without Amapa deal we get our $2.5mn escrow money back (£1.86m) 1.25p per share – this is cancelled out by current debts and operating expenses so lets leave that out.
So what does this tell me, Amapa is being priced in to the current share price at around 4p per share meaning the market is only pricing in a 10% chance of it going ahead.
Very roughly for every 10% extra chance you give it you should attribute 4p to the share price, lets call it 3p to be even more conservative and add even more of a buffer. So if you know Amapa is 100% certain lets say it’s worth 30p to the share price (valuing our 27% stake at £44m)
If you think there’s a 50% chance it happens then you can value KDNC at around 25p per share 10p + 50% of 30p (simple probability).
So complete worst case scenario, all falls through I lose about 30% of current share price and hope for one of the JVs to succeed.
What about a best case scenario 2-3 years time, all goes ahead with Amapa some good news from a JV or two. Strong Iron ore and lithium prices mine restored to full health valued at £500m+ (£135m -27% 91p per share). Sonora expands and produces more from JV areas (worth £50m+? 33p per share). Yangibana is a success (£20m+ 13p /share). Cinovec goes ahead (30-60p?). Best case scenario could see 200p a share which is right around 15x where we are today. Fair value toda

276K

You can't access the documents only what is listed after filling in the recaptcha and clicking continue, use chrome to translate

@mrcautious appreciate your concern, I actually have a significant investment in this company initiated a couple of weeks ago avg 14.8p. The comment was to ivans and regarding who lodged the appeal. It is very clear from the link that it is the banks as could clearly be seen from the link:

Aggravating: Intesa Sanpaolo Spa, Hong Kong Branch
Aggravating: Canara Bank, London Branch
Aggravating: State Bank Of India, London Branch

Too many want things spoon fed. If people do not know this information I'd recommend they don't invest until they have done their research fully.
I have spent a few weeks "lurking" until I was required to register and decided to post on a few things that I found of value that may help others. Too many just skim the surface and write nonsense e.g ivans here on this occasion.
I came across this company after researching and investing in EMH as KDNC is a major shareholder I decided to look at it. My research told me that this company is significantly undervalued hence my recent interest and investment here.
The EMH (and other) holdings significantly reduces the risk of Amapa and I see lots of potential value in this.
The main thing to take away from the court processes (which scares many off) is that things are moving forward well. The other point I’d like to make is that many are sitting on substantial losses due to historical performance and clearly unhappy about the loss making them post their frustrations on here. For someone looking at the company fresh like myself though this is a different story. I’d also suggest people take a long term view and have a bit of patience while legal proceedings are finalised and I’m sure it will work out very well.
If people are investing based on one person’s opinion on an internet forum then they should sell everything and buy an index fund. :-)

click the link and read :-) - google translate may be required

It is common knowledge already here that the approved shipments of $10m iron ore are subject to appeal (since 25/8/20) but it seems to be progressing which i'd take as a good sign as the "virtual trial" is underway and the judges seem to be dismissive of the appeals so far. DYOR!

https://esaj.tjsp.jus.br/cposg/search.do?conversationId=&paginaConsulta=1&cbPesquisa=NUMPROC&numeroDigitoAnoUnificado=2199480-27.2020&foroNumeroUnificado=0000&dePesquisaNuUnificado=2199480-27.2020.8.26.0000&dePesquisaNuUnificado=UNIFICADO&dePesquisa=&tipoNuProcesso=UNIFICADO

Appreciate the sentiment but I would take the lack of constant news releases every touch and turn as a good sign, It would potentially be inapropriate for them to comment until legal proceeding are completed. The BOD have been buying recently so I think there's reason to be optimistic.

It's translated (via google) from Portugese as it's from the Courts in Brazil so not perfect.