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Good afternoon guys, hope you're all enjoying the weather - last day until thunderstorms where I am, so trying to enjoy it a bit. However, I thought in the mean time I would share this with you, a response from Bill to some questions I put forward surrounding Donavon 2 and Han****:
HI xxxx #thanks for the contact. I do not have a problem with the Capstone issue as they have now other priorities on a corporate level etc and with the maiden drilling did not get the discovery hole I suppose they hoped for but I have some ideas and we now are back in the driving seat with all the data and work they did in our possession now so all good really, and don't forget its exploration!
For Han**** we have targeted a couple of new areas as well as Sirius so waiting on results etc will update the market soon but again this project looking great, considering it was pretty much unexplored 12 months ago and don't forget we have the Brockman licence to work up as well once we can finalise paperwork...
I am doing a webinar on Wednesday 16th so check it out, on IMC I think 3pm, going to have some cool videos and info that I hope will answer some more of your questions and explain some of our thinking and plans
Cheers and have a great warm weekend
Bill
Agreed BB, would be reassuring to the market to get some clarification. However, I don’t believe it has any weight, the regulations around related party deals tend to be a problem when they are not done “at arms length” I.e. not through the normal routes. With Hammersley we have hired someone who is being paid with 50m warrants exercisable at 1.6p for their services. The related party involvement also comes as a result of the party we are doing a deal with being a major shareholder, but they’re major shareholders because we bought 51% of Hammersley off them in exchange for shares, we’re only extending our ownership of the same project for this deal - not an uncommon process to happen, it’s just often done as part of an earn-in agreement all under one contract, where a threshold is passed and paperwork is finalised when that threshold is passed. Fair market value is also of course questioned, but I don’t think anyone would disagree that this isn’t an obviously unfair market value, I believe both sides got a good deal out of this and see it as mutually beneficial (as deals should be). Plus, it’s not an easy feat to put a value on an asset without a resource estimate (as we know).
In general from reading regulations I simply don’t see any issues arising from this, though I am not a legal professional in any way.
Charts aren't always the most reliable or trustworthy, especially on AIM, but just for reference for those who are interested:
https://s3.tradingview.com/snapshots/9/9epOSPxv.png
Looks like intraday support came in yesterday from the inclining trend line, and we found support into the close at 0.68 -0.7p horizonal line. Today so far, attempting to make a move up, but rejected by the 200 day MA. Hopefully the trend is up from now, but there will be a lot of resistance lines/zones ahead with 0.75 - 0.8p being the first one. GLA.
Exactly right, Tim isn’t lying when he says it’s very encouraging to be hitting multi-gram gold grades in 5/8 drill holes on a maiden drilling campaign.
As you say there are too many self-qualified “experts” spouting their opinion on the internet. And I suspect many lazy investors who haven’t checked out the mapping of what the company thinks they have found based off these drill results. They have purposely drilled roughly perpendicular to the ore veins to intercept them - there was never any intention to drill through them and get results of 2g/t x 80m which they had the potential to do judging by their understanding of the deposit, but what use would that be in finding out the bigger picture about these veins? This is early stage exploration and an attempt at mapping out the deposit and broadening understanding. For anyone who hasn’t looked, look at the bottom left image here: https://www.rns-pdf.londonstockexchange.com/rns/7180B_1-2021-6-13.pdf
GLA, hopefully see a slight recovery today.
As Max said, we have a bigger proven resource then most explorers first of all. That is a very high grade mine - average grade >2000g/t, with areas of up to 30,000g/t (almost pure silver). The tailings are also high grade and more significantly, if they are proven to be economic (which is not unlikely at 472g/t), they will likely only need leaching which will be relatively easy. Not sure anyone grasps how significant making a few million £ is for a company at this stage - reduces the chance of dilution, and creates value internally for the company - organic growth.
I'm not sure how familiar you are with the website, but it states that "it is apparent that there remains both underexplored resource potential within the existing 'mine' as well as an 'open pit' surface resource and extensions of the deeper mineralisation". Also of note is that "Grid power and groundwater are available on site, and the area has an abundant skilled workforce nearby - this can often be a struggle for mining companies, but all are local. These benefits extend to the Munni Munni complex, which as Max said we are in possession of 3.5km of the 8km strike - the current Munni Munni Project contains 2.1moz of PGE's - I think it is the southern extension that we own? Further to this, at Munni Munni East (south of EH), alongside the Munni Munni fault we have an area that contains mineralised gossans (oxidised/weathered/decomposed ore which signify subsurface ore deposits).
Anyway, I got a touch side-tracked there. The beauty of having EH, as well as the other silver plays in Mexico is that silver is a well-advertised, hyped metal that rides waves of euphoria that could well see huge capital inflows coming here for exposure to its high prices (I suspect we will see north of $30, and likely $40 this year, even if we don't hit ATH's). That will likely result in the share price overshooting, and if the timing is good, and our target prices reached, may give us a nice boost to exit with.
I think we are all in agreement that the Hammersley projects are the predominant contribution to our market cap, but I would not go writing off the silver projects either, plenty still to come this year, and as much as people may say otherwise, based off research around industry costs etc. I believe our coffers are still looking pretty healthy. This moves fast when it gets going, don't count it out.
I don't post here often, but posted here earlier as I think it is times like these where retail investors really question their decisions and may need a bit of reassurance, so here are a few of the reasons I'm not concerned.
Disclaimer: I am not privy to anything you guys aren't, and some people may be able to add to this or correct areas of it, it's just my opinion.
1) I saw a few people saying about a rights issue coming soon here. I don't think that is an imminent issue, though the nature of exploration tells us at some point more equity will need to be raised. The financial position of the company does not concern me.
I am going to ignore the £46k rebate and £22-23k upfront part of the sale of our 1.5% royalty for Hasançelebi and Dogala, to make up for small costs elsewhere.
We closed 2020 with £1.75m cash, since then £678k warrants have been exercised, leaving £2.428m before expenses. As of March/April it was confirmed that the $1.56m expenditure was met for 51% of the company, with an additional $1.56m expected to have been met by the end of the drilling programme. Just to convert it $1.56m is roughly £1.1m. Therefore, erring on the side of caution I would suggest that on completion of the drilling program we are likely to still have in excess of £1m leftover. There are over £1.4m warrants outstanding, alongside, $220,000 additional payment for Hasançelebi and Dogala once they reach the stage of mine development and a further $500,000 success fees that Bati Trolsolar will pay Oriole if results from metallurgical testing and Environmental Impact Assessment work are encouraging and a mine development decision is made - this is expected to be paid in 2022 and is equivalent to circa £510,000.
2) This is exploration, amazing intercepts aren't always going to be hit, and are rare on first attempts, that doesn't mean there aren't high grade, good width veins down there.
3) This is a £10-11m company at current market cap - it's not hundreds of million, or billions, bonanza grades aren't needed to create value here.
4) There are other projects ongoing, primarily the JV with IAMGOLD at Senala where they are spending millions developing a project with strong potential. With both projects showing high potential and with 3/4 of remaining prospects for this drilling program (and more promising zones) yet to come, this market cap is frankly a joke. This drop is caused purely by sentiment which started with a drop from IAMGOLD's drilling program where people mistook what was happening (confirmed great results of gold anomalies across a vast area of the project), and their underspend (which has been rectified, and is being made up for this year). Since, delays to results have caused frustration and individuals expectations were evidently a bit over the top, especially if they are not willing to hang around for more results in the next couple of weeks from the likely higher grade areas.
GLA holders, I think this will come good soon en
Lethal, of course I’m only a randomer on the internet so don’t take my thoughts for anything meaningful towards your decision.
However, for me personally I think the grades were okay. They aren’t great, but this is exploration - you aren’t going to hit amazing grades all the time especially straight off the bat. There is mineralisation down there, and I suspect better grades to come. Those grades and widths are worthy of a company with a higher market cap than this, especially with other zones to report in the coming 2 weeks, and another project JV’d with a fairly big player in the mining game.
The company was already undervalued considering historical grades and the projects on the go. Sentiment was shot since IAMGOLD didn’t do the drilling plan everyone thought they were doing and they understand, despite IMO the results being encouraging there (evidence of mineralisation across a lot of acreage), and with them promising to catch up that spending this year. With delays to results, and them not coming back with bonanza grades it’s a perfect recipe for stirring up negative sentiment around a share, however that doesn’t mean that the market is accurately valuing ORR at the minute. Share prices overshoot both ways in market conditions like these, especially in AIM, but at some point I’m sure an accurate representation of true value, and probably an overshoot in value will come here as it did only a few months back.
Good luck, and I hope this turns around soon on the back of more news.
This is exploration, it doesn’t always have to hit amazing intersects, and there are a number of other sections to be reported before the end of June. Anyone selling here, at these levels needs their head checked IMO, this was already undervalued. Perhaps a knock to sentiment without great grades/widths, but this is a fraction of the picture. See you all in a couple of weeks for the rest of the results - plenty to look forward to.
Sorry Shouston, we can have a new threat after this;
Just to add to what Smiller had already said.
Chris, you said “ UFO then issued a placing to fund as well as others Donovan2 drilling programme.” I would advise you read back, Capstone sole funded the drilling program and paid us for the privilege.
The RNS around the funding stated the intent for the fundraise, and guess what - funds were not raised for Donavon 2 having work done to it, as (as I stated above) Capstone were drilling it.
Here the information from the RNS;
Highlights:
· £2,500,000, before expenses, raised through a Placing of new ordinary shares of no-par value
· Proceeds of the Placing to be utilised for high-impact exploration in Mexico and Australia
- Initial and in-fill drilling to define strike and depth potential and grades of known mineralised veins at Los Campos and San Celso Silver Projects in Mexico following finalisation of drill permit applications
- Preliminary Scoping study on the San Celso and Los Campos Silver Projects
- Development of exploration work on Elizabeth Hill High-Grade Silver project to include detailed geological mapping and trenching program, initial drilling and potential re-entering of the historic mine
- Initial drilling on highest priority targets of the Hamersley Iron Ore projects in Western Australia
· Following the Placing, the Company is well capitalised with over £4.3m (US$5.6m) cash available for exploration and working capital purposes
· Funds will also be used to continue to evaluate strategic opportunities and to conduct detailed reviews on prospective new projects.
I appreciate the attempt at backing up what you said though.
I would have agreed with you pre-silver squeeze, BB. After that I'm convinced there is a level of correlation to silver prices, at least past a certain point, because after $30 the silver space gets a whole lot more exciting, and anything with a reasonable level of exposure could be very profitable.
Would also be great if we could get a drill in a Mexican silver project so there's something going on there that gives the market some hope.
I know HH is interested in the psychology of other investors, not sure on others.
I was just wondering if anyone knew of any research surrounding investors (retail), and their tendency to sell on the way down and euphorically buy on the way up?
Of course as humans we have fear and hope are in many ways two of the most influential feelings on our lives and actions, but why are so many incapable of separating emotion from their investing lives?
No wonder so few retailers make a profit.
Wouldn’t call you a ramper, FG - probably guilty as the rest of us holders of seeing the brighter side of everything - otherwise wouldn’t be invested.
Tbh still a lot of good things going on, only down on sentiment and a lack of forthcoming news right now.
EH and silver projects in Mexico could have announcements at any point really, but Hanc0ck at least 4 weeks until we’re likely to hear anything. Perhaps POW for Brockman will be granted, who knows.
Won’t catch me selling at these levels, the premise is buy low, sell high. That’s what I intend to do, not panic with the weak hands. A lot of potential in these projects, with sentiment returning to the mining sector everywhere but LSE so far it seems.
Haha, well the board isn’t looking too fun today.
Will just add that related party transaction only need to be declared when not conducted under normal market conditions - we haven’t actually had any deals done outside of normal market conditions.
Also, Stevomining - don’t know if you saw my message earlier but would you be able to forward on contact details to contact the relevant Mexican authorities?
I agree on leaving Donavon 2 behind, at the very least for the time being, until we can fund development without much concern (or unless another JV partner step in, which I consider unlikely).
EH does already have a JORC resource, and is likely open on strike I believe in multiple directions - this is part of the works of the POW - trenching to uncover if this is the case due south of the existing deposit, while they are drilling to test for further strike extensions. Tailings are already processed ore waste - the inefficient running of EH previously has meant that there is a significant portion of silver left behind in the tailings, all we need to do here is find the most economic way if there is one to extract the silver from this - the most likely method will be leaching. Exploration across the 117km^2 tenement should continue, and hopefully drilling on priority targets, depending on what results are received from sampling.
I would also like to see drilling being done on at least one of the Mexican silver projects, the knowledge surrounding the resources is more extensive than D2 I believe, and will likely give strong grades, and maintain UFO's status as a multi-resource, multi-location play as well as potentially giving those projects value - at the minute they are worth next to nothing to our market cap - it may only take a small modern day drill program to attract JV partners here.
The focus, as a number of people have said however, really does need to be on getting Hanc0ck a JORC resource, getting the drilling permits on Brockman and getting drilling there.
Thanks for sharing that, HUFC.
Overview:
- Combination of initial drilling didn't meet their standards, and are targeting assets further along the development curve, despite suggestion of further ideas from our end.
- All the data will be provided, including the induced polarisation carried out last year and drilling information.
- Got the project back with ideas of what to do next, been working alongside them all along anyway so may carry on with our ideas - currently costing, working out timelines and looking at availability of people and equipment.
- Haven't thought about another partner yet, but open to it. Will be reviewing all the data and deciding where to go next.
- Sample taken last week (picture shown in RNS) shows visible copper - clear mineralised system down there, but need to find the source of it.
- Hopefully investors will see their belief in the project - remember this is exploration and you won't always hit the sweet spot first time. Sometimes it needs a bit of extra work, and sometimes a bit of luck.
I like hearing both sides of the story, because it gives me more to consider but lets face it, Chris has contributed nothing of substance, even when he was an excited shareholder.
Funny that he said yesterday he might look at buying in - "not buying at these levels but not far off" and today we fall... The contrarian indicator strikes again, but the wrong way this time.
Anywho, I'm happy to hear a contrary, educated opinion, whether that comes from Chris or anyone else.
Interestingly Richard has shared some Alien Metals articles on LinkedIn, including this post 2 weeks ago:
"Listed on London Stock Exchange AIM, stock code: UFO. Some excellent high grade silver and DSO iron ore projects in Western Australia. Drill results expected soon #mining #exploration #australia #silverprice #ironore".
He managed to sell Aztec Resources (with a market cap of $3 million) for $300 million and Redport (market cap of $2 million) for $125 million.
Hats off to everyone on their research, the more we know the better - thanks all for sharing. I like the sound of having him on board (I think?), but I'm sure we will uncover more information on capital structure over the coming weeks.