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PFS is a high level study, DEV has then conducted more detailed studies on the plant in more detail which has determined there can be savings made. Best to err on the side of overestimating a cost rather than underestimating at PFS level.
Personally when you look at the past and potential future of Amapa it's very easy to be optimistic especially if producing a 67% concentrate, huge upside imo.
5.3m x $140/t On a 15 year life NPV10 gets me to circa $1.9bn and on a 25 year life closer to $2.3bn. We own circa 35% of that, even if the equity financing dilutes us to 15% then 15% of $1.9bn is $285m and you're getting that for £8.8m ($11m) market cap so fair to say a significant upside potential, I'll take my chances here personally.
Bynoe looking very prospective
https://announcements.asx.com.au/asxpdf/20240314/pdf/061gy7cttqr08r.pdf
As I said earlier 67% is incredible for the project as outlined by Kiran in the interview. Market here is crazy IMO. Shipping to the US would be amazing also. Our time will come. Massive news when this is confirmed in a new PFS.
It's mostly the latter not the former, almost all juniors are down massively, of course that is compounded because the stakes we hold in them have declined. If EMH was at £1 still then it would be a very different story. Hopefully the management are deep in to discussions with strategic investors and there's nothing to promote until those are concluded.
The "one-time payment to settle all outstanding amounts" is also going to form part of that discussion as that will clear the path for further investments.
Https://stockhead.com.au/resources/eye-on-lithium-morgan-stanley-gives-market-a-boost-as-lithium-futures-go-crazy/
“Some local lithium producers in Yichun … have kept their operations suspended. The need for self-inspection may prolong these suspensions in the near term.
“Overall, we think the current supply disruptions and concerns will lift near-term market sentiment as lithium output in Yichun accounted for around 20% of China’s total lithium production and approximately 13% of global supply in 2023, according to SSM.”
Market price is one thing and underlying value is another. Clearly mining and mining investments have not fared well recently.
I will wait for Amapa value to be realised before determining the success or otherwise of the investment strategy and not the current share price.
e.g:
Amapá stake worth more than Cadence
Our risk-adjusted (for its stage of development) valuation of the 5.2Mtpa Amapá iron ore project in Brazil is US$154m/£122m (Cadence share £37m, or 21p/share). This is based on an unrisked valuation US$978m (NPV, 100% basis, 10% discount rate). This project, of which Cadence own 30%, is at pre-feasibility study (PFS) stage, but importantly is potentially a brownfield refurbishment and restart rather than a greenfield iron ore mine. Our valuation is similar to the PFS NPV10 of US$932m and allows for significant capital reconstruction and refurbishment. Cadence has multiple paths to creating additional value at Amapá by continuing to build its stake (it has first right of refusal up to 49%) and continuing to de-risk towards full bankable feasibility study (BFS) status, which should be relatively straightforward given its history as an operating mine.
https://www.edisongroup.com/research/a-mispriced-miner/32481/
Easy to be an armchair expert and blame management for everything but not many foresaw the lithium price declining like it has, Mexican nationalisation, massive inflation, higher interest rates, stubborn banks etc, huge UK market outflows and all of that has in turn affected all junior mining equities, I can't name many junior miners that are up over the past year.
Sure with hindsight some things could have been done better (selling EMH at the peak would have been nice) but as things stand we have a solid asset there in Amapa and our holding is in my view worth multiples of the current SP, it would be nice to see that valuation realised in short order.
Disappointing that the commodity prices have declined but these things are cyclical and the cure for low prices is low prices as most mines are unsustainable at this price esp the lepidolite producers in China. High interest rates and inflation reduce affordability for new cars. Once these things subside one would expect a healthy rebound.
I'm saying, get the licenses and then sell (some or all) may be an option management are considering given where we are trading. Say our ~33% is worth something like the £50m-£100m range post licenses but pre DFS then that's obviously got to be considered vs the alternative (more risky) route of us funding the DFS with a loan.
Dropping down to say 10-15% ownership and having £30m in cash in return looks an attractive option at the moment vs another year to DFS and then construction.... see HZM for why!