RE: Current Mcap and future price2 Oct 2023 17:11
Takenorisk,
Just around your point. You said...
'the ABSOLUTE MAX income that ARCM will have within 3 years of commencement of drilling is around the £3.6million mark.'
I'm not sure how you determined this figure.
The cash element of the AA deal alone is 14,500,000 usd. So the 66% (currently) attributable to ARCM is 9.57 million USD. Using a conversion rate of 1usd being equal to 0.82p then it's £7.847 million due to arcm by the end of phase 1 which is over 3 years.
These significant cash payments also exclude any value to ARCM of the drilling capex. You can't discount this value just because it's not cash. The capex for phase 1 alone is 24 million, phase 2 is 20 million and phase 3 is 30 million (USD). So the best part of 75 million dollars.
Think of the dilution and timescales if ARCM had tried to match that sort of exploration. So partnering at a project level means ARCM get an exploration carry, retaining a significant stake in the outcome, and the exploration is taken over by a major.
Going it alone, ARCM would have sunk considerably less into the ground, still had their opex / debt costs and had no cash payments. If they had raised this in the market the dilutionary effect would have been much worse to shareholders.
There is also a strong value element to being partnered with AA, and the deal terms themselves (which I think you'd struggle to find better elsewhere for a junior exploration play) is evidence of their faith in the quality and prospectivity of the assets.
In terms of timescales to make a discovery it won't be overnight but I can say if it's there then AA will find it much quicker and with much less cost to Joe public shareholders than if ARCM went alone.
Ultimately, you can't value the mcap of a junior explorer based on its cash. Like I said earlier the market has valued ARCM in this mcap range for a long time (even before this deal was announced).
As for the debt this is very much in the control of ARCM and connected parties to reorganise if required. Yes this could be through an element of share issuance.
So if ARCM do need to raise money, so be it. Im afraid its part of the journey for this type of investment. It's not for everyone.
I'm not anticipating your acceptance of my view, or seeking to persuade you. It's simply a clarification rather than a gloss over of your comments which don't mention any of this.
I've shared openly my views both positive and negative about ARCM. I don't see the above as shortsighted like you suggest, but I'm comfortable if you view my opinions in that way.
Atb
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