Member Info for Fr.Jack.Hackett

Mr/Ms GLG,
If referring to the posting earlier - it cannot be considered bamboozle with numbers and jargon, the post is clear in where the data has been taken from - and how it has been applied and used.
It is also clear in what the suggested change may be if ACF update their report - absolutely nothing hidden from view. I don't think many posters are prepared to take such positions - and provide the reasoning behind them.

Your statement 'RNSs are the gospel truth ' I agree fully - however some participants on these discussions are also here to identify the possible opportunities before they are publicly known (and priced in) - so a level of prediction is useful to aide investment.

I am certain also that EUA SP will do extremely well - but it does not stop people conducting a level of individual due-diligence when new information is made available.

Overall most investors (private, institutional etc) probably thought the mining plan released last week would include flanks.
MT (Lo&WN) figures look positive - especially when applied to the ACF data.
From the RNS - the statement ' Phase One annual metal production has now been calculated to be equal to 128 koz of palladium equivalent, over 70% higher than the volume projected in the FS '. We have not seen the FS - but confirms MT FS plan producing 75koz at 5 years - which is what ACF also used in report on 3-Feb-20. ACF report on 6-Sep-21 pushed MT revenues out by 2 years but increased max production to 100koz (after 9 years).
So (trying) to apply the latest data from the RNS into the Sept-21 ACF report (as many here like the ACF report) and applying 128koz from year 5 onwards (and 64k & 32k for the two preceding years) achieves a NPV increase from $253m to $495m for the MT (Lo&WN) mine. ACF stated they used WACC of 12% - and that about ties in when a 12% discount is applied. This includes the ACF capex (but is part of the EPCF package). Overall expect ACF to increase NPV for the MT (Lo&WN) mine by approx 1.9x.

Two items to note in the ACF report:
1 - For each year :take the (Revenue - Cash flow pre-tax) / (Revenue / Pd price) = a usable ACF value for AISC (including mining tax).
From the ACF report dated 6-sept-21 : MT (Lo&WN) = $950/oz, FLANKS = $814/oz.
If these look high then maybe more value in the mine - but they are the values used by ACF (use the years without a Capex to check if you want - otherwise will not be representative).
2 - For each year : if you take the NPV / Cash flow after tax = the discount multiple used
For MT = 12% (ACF stated used 12% WACC , when apply 12% discount error is 1.2% so good correlation)
For FLANKS = 14% (ACF stated used 17% WACC, when apply discount of 17% average error is 24%, but if apply 14% the error reduces to 2.1%). So when modelling the ACF data for FLANKS suggest use 14% otherwise errors will be large (surprise this has not been mentioned here by others - so I guess not many are scrutinising the actual figures)

So what to expect for FLANKS and possible update on the ACF report?
As revenue from FLANKS dominates the overall MT mine NPV, Flanks need to be producing revenue quickly. Maybe ACF are optimistic for Flanks producing 1210koz in year 4 as stated in the ACF report - but it would be good to see something close in the mine plan. If cannot - then maybe NPV can still be maintained, even if production revenues are lower & later than that listed on the ACF report, by reducing the AISC stated above. ACF probably have purposely left enough fat in these figures for such events.

In my opinion - the fall this week was possibly mainly due to the RNS not clarifying when the 128koz production would be reached - so the market has assumed a 5 year wait to 128koz/year.
' Phase One annual metal production has now been calculated to be equal to 128 Koz of palladium equivalent '
If there was clarity or further evidence such as year 3 = 60koz, year 4=100koz and year 5=128koz I think SP be in late 30's early 40's.
Sometimes secrecy is not the best option - but then the board of directors are NOT going to sell their shares (as look what happen when the consultant sold earlier this year)

The research note stated they applied a reduced discount of 17% on Flanks (was 22% on earlier note).
Looking at the figures (Exhibit 1: Monchetundra Flanks cash flow model) - would anyone agree it is nearer 14.5% than 17 ?

Also - just for note - the ACF does indicate full production about year 4 onwards - I hope EUA have had discussions with ACF to ensure this is inline with the Flanks plan.

Dowely,
I fully agree - and I am happy if the company does not sell any assets and go into production and have such revenues.
But todays value is based on future cash flow - and applying a discount on these - then if we not see flanks (say discount 17% as used by ACF) for 8 years then we talking 23%.
If anyone is buying a mine - this is the main contribution to the sales price (early production and discount applied).

Ian,
If the phase 2 plan shows Flanks not achieving close to full production (1000koz) within the same 5 years as MT then I suspect things will not be looking good for the SP.
This would also affect any possible sales price. Investors need to see on paper the revenues associated with the 1000koz/year quickly.

Moneymaker2015 - In my opinion there are two items that may have influenced the share price on the release of yesterdays RNS.
1) The general opinion was that EUA would release a mining plan incorporating Mt. Flanks :) this is also stated on the EUA website 'Monchetundra PGM and Battery Metals Open Pit deposits with EPCF contract signed with Sinosteel are being advanced to production with Flanks areas to be integrated into the production plan' . . so some invested parties were looking at production being ramped-up to 1000koz in phase 1 but the RNS yesterday was limited to just MT (128koz).
2) As the plan did not make it clear when the 128koz would be achieved (just stated during phase 1) - then investors may have taken a conservative approach and therefore consider first revenues would not be achieved until year 5 - even with a discount as low as 10%, in 5 years cash flows are at 60% and only on revenues from MT (not flanks).

I was expecting the plan to achieve MT full production approx 3-4 years and Mt.Flanks to be close to reaching full production by the end of the same 5 years.
I am still hopeful this can still be achieved - and this is similar to the ACF report. I also think Flanks information will be released imminently (based on the earlier statement from EUA website).

What I would like to see from the Mt. Flanks :) plan is flanks to be close to full production within the same 5 years as MT.

It was good to see 1.7x increase in grade - may not have an impact on revenue but should increase future free cash flows for reasons I mentioned yesterday.

Tigra,
I think the DFS when (if) issued will be the gamechanger.
Todays RNS is a summary of the 5 year production plan and stated that production is planned to reach 128koz within phase 1.
My question earlier was what exactly is phase 1 ?
- does it cover the full 5 years (in which case markets may take conservative view that 128koz in year 5)
- does it cover 2 years (with maybe phase 2 for years 3-5 etc)?
DFS shall indicate timeline the 128koz shall be achieved - the earlier the higher the revenues.
DCF needs early revenue to move markets.
If EUA can provide further info this week - things will move.

you just a factor of 10 out - easy mistake
256m to be dead-on balls accurate !!

Mr Tillywhiz,
I responded to the thread and then it disappeared. As the EUA website states 'Monchetundra PGM and Battery Metals Open Pit deposits with EPCF contract signed with Sinosteel are being advanced to production with Flanks areas to be integrated into the production plan' . . then I do expect further information to be released as imminently as feasibly - to ensure Flanks are included.
In addition - I notice the RNS indicates throughput is greater and at a higher grade than the ACF study.

And I had a question to the experts - the mining plan (covers 5 years) and mentions phase 1 : does phase 1 cover 5 years or could the period be lower (say 2 years)? - this could make real difference to the mine NPV.

Mr GAZALA69,

It is not just 70% more - it is 70% higher grade - higher grade means (to me) improved DFS & NPV by:
- less time to get up to full production
- less production equipment to achieve full production
- less risk (less equipment, less time, less to go wrong . . )
result - higher NPV by more revenue earlier, less costs (AISC) and lower applied discount (on DCF).

Ibizamatrix1998 :
What makes you so sure I not also on sofa in sunny island?
What the company controls - a) AISC and b) rate to achieve full production : the lower and quicker for these are the major players controlled by company.
Discount applied - is more of an opinion (the lower the higher value). PGM price is outside of company hands - but will be needed to put value on the asset.

Agami :
Interesting items you raised - and will take note (points do look very valid in general terms).
Just for information - EUA already have a finance option available at least to cover production development. I also think they have monies available for additional resource grade updates if required. There is also a stream of income from existing mining operations (West Kytlim) which could be available for funding of future exploration if ever required. Based on this I think therefore the risk of needing to raise funds is diminished.
One other point - some (maybe all) the assets of EUA may be sold off in near future - so consider your position quickly - and I suspect this company is not a subject to the wranglings of Quad Witching (but I am sure there will be lookouts on deck for it).

Suspect the company will not release the mining plan - but there is nothing stopping providing certain information in an RNS statement - and I would think the following would be considered acceptable:
AISC, NPV (discount used, PGM price), first 5 years production rates - if cannot supply this then we all blind.

With the knowledge and wisdom of many posters - I was hoping more contributes to this post from Ibizamatrix1998 - as (I find) its an interesting topic of discussion. I have provided what I look forward to and expect (but it is limited) - i also find other viewpoints of interest.
Its not my question - but its an interesting question (its gotta be to get me typing on here) - I have contributed and would like to compare with others if they like to contribute.

Ibizamatrix1998
Hi all, with the mine plan expected to be the first of a series of positive news flow and RNS which could drive the SP to all time highs, can someone explain what metrics/targets/ we should expect to see in that plan, which the market will view as great news and push us higher? Alternatively, what we don’t want to see which would negatively impact the SP.

Forgot to say :
If anyone disagrees or have a differing opinion - please let me know the specifics - and I may be able to update my model in line with their opinion.
The main contribution to the mine valuation model I find is 1) speed of revenue 2) discount applied
Item 1 - will be detailed in the plan - but I have taken 3 year for full production
Item 2 - this can change on peoples risk opinion.

The mining plan - wow - I will be looking at the cash flows and shall extrapolate for a 10 year DCF model.
- need to blow the dust off my model and make a few tweaks (to simplify it).

I assume the plan shall cover the actual mining licence area at MT only (not incl flanks) which EUA have already stated target production of 130koz/year.
All values are NPV with discounts applied.
If the plan shows production can reach 130koz within 3 years - then I have MT (not incl flanks) valued at £458m = 16p/share (Discount 15%, PGM = $2300, AISC = $400).
If full production takes longer - then value will drop, if earlier then rises.

Adding speculation on Flanks into this:
Assume Flanks then comes online 2 years after MT full production - and MT + Flanks are at 1000koz/year
MT & Flanks = £458m+£1000m = £1458m = 52p/share (using discount on Flanks of 25%).

But I think there may be also be additional resource information on Flanks released - which could justify (to me) to reduce discount to say 20% - thereby
MT & Flanks = £458m+£1500m = £1958m = 69p/share (using discount on Flanks of 20%, PGM = 2300, AISC = 400).

And additional - if it is thought NN are the primary purchasers - then reason to reduce the discount on MT & Flanks even lower (all Russian !!):
MT & Flanks = £600m+£1600m = £2200m = 78p/share (using discount 10%MT & 18%Flanks).

The above is what I value for EUA (80%) ownership of the MT mine and Flanks exploration.
The plan I suspect uses lower discount for MT (say 8%) in which case MT (only) valued = £720m.
None of the above includes any Rosgeo JV items - as the above is enough speculation to justify the investment anyway.

On a similar worded thread heading earlier in the weekend some amature guidance was provided as a minimum (see below) to such legitimise such fag-packet calculations - but that advice was not considered or, if it was, then rejected.
Suggest author revisits and if necessary - re-calculate (especially with respect to share price)
- consider practical size of mine and timescale for commissioning
- consider future cash flow discounts to be applied

mugwump083,
it be nice if the SP figures you presented become reality. Not sure the extent of the pd/pt ratio - so will not comment on the $2500/oz
Overall - I think back of fag packet cals are as good as Cray supercomputer cals - what you get out is as good as the info you put in.

10 years p/e is reasonably (maybe a little generous) as a cash flow forecast.
Reviewing the share price estimates presented - maybe the following 3 items may need to be reviewed and possibly incorporated:
1) to mine 93m oz in 20 years requires a mine over 35x the size of the existing Sinosteel contract.
2) to commission a mine and processing plant of such magnitude may take up a lot of your 20 years further reducing the time allowed to mine (even the 130koz Sinosteel plant will take 2 or 3 years to commission).
3) consideration of a discount applied to future revenues - as a £1 is normally considered (by accounts) worth less tomorrow than today - however it can also be argued that the metals are worth more tomorrow than today.

If you review the first two items above - you may reach a compromise of mine size, and depending on the discount applied you get your SP value.
In the past - I have used (MT) 130koz and (MT & Flanks) 1000koz - as this is from EUA RNS and between 18% & 30%.
But use what you like - its your opinion (and we should all have one).

Hudson.,
It may be that the company is not only pursuing "one exceptional deal" :
- as maybe the RNS is purposely worded in a way to not state they are focusing on a specific unique offer or deal - but they are focusing on the specific "asset sale".
The RNS wording is that the asset sale is "of substantially all of Company's assets".
In the last sentence - by concentrating the wording on the "the asset sale" rather than the credible party - then this does not rule out multiple offers/deals.
From RNS 12 May:

"...the Company has now received several proposals including a proposal from a credible party for the potential acquisition of substantially all of Company's assets. The Board has decided to focus on this potential asset sale."

De-ciphering the above statement has driven me to DRINK.

I just doing little due diligence on the info I used earlier - and I am incorrect.
If SSW were to make the 51% ownership of Marathon mine - they need to make the payment of approx C$440m of capital costs (not C$871m i said earlier - i thought it was all not stacking up).

As they have not taken up on the option - I wonder if they are more interested in obtaining something a little more robust - with lower AISC and longer mine mine life (I think MT fits both these requirements).

I applied the MT data into the same model used for Marathon (but correcting for MT production rates and lower MT AISC value only) and the figures for MT are still very encouraging.
note - the actual NPV for MT operating at 130koz will be higher than I stated earlier (nearly 2x higher) - as the Marathon mine capital costs used in the comparison are a lot higher than for the Sinosteel.
So alls looking good still.
I think that lower AISC is the real winner - Marathon is also open pit but has US$809 compared to MT $350.