Member Info for GeologyStudent

Collectively, prior to admission, we raised �1.80mill via CLN. Since admission, �0.5mill worth of CLN have been converted. This leaves �1.3mill worth of CLN outstanding. Some loan holders will sell for a quick profit, however others will hold until the share price rises to a more reasonable level. Nevertheless, in the near term, I expect news to light a firework under the share price, at which point loan holders selling will not be an issue.

Further to the point, we should have an attributable EBITDA of $20mill for 2018 using my model. As a result, the Debt/EBITDA ratio will stand at 2.25, where 3 would be considered 'normal' and 4+ concerning. In addition, as the company has not elected to distribute dividends, any surplus cash will be used for debt repayments. The company are in a position to capitalise on the reversal in the sentiment regarding copper prices.

On relative terms, the $45mill debt acquired for a 12ktpa operation with the aim to expand to 23ktpa in the next 12 months is exceptionally good.

I understand your point. However, the current share price and the very near-term share price is inconsequential. All that matters is the projected share price upon the release of the financial or operating results in the next few months. If you believe the assets will yield a good return for shareholders, you should hold or buy at these levels.

You can do your own research. Find fellow copper producers with a similar asset and perform ratio analysis. If such companies cannot be found, use larger copper producers and control for production capacity and costs. It's pretty simple. A fellow copper DEVELOPMENT company called MOD Resources have a similar sized asset in Botswana. They are currently in the feasibility stage with production expected in the next 2-3 years. They have a valuation of �60mill. Our poor performance thus far is wholly attributed to a lack of market confidence but this should be reversed when financial results are released. either for Q1 or H1.

A 60% equity stake in a 12ktpa operation with our profit margin should be valued at �50-60mill or 25-30p. This level of operation will be achieved in March 2018. We should see a ramp-up to 22ktpa by Q1 2019, after which we should see a valuation of �140mill or 60p (fully diluted). With the Matala Gold project in production by Q2 2019, the valuation will increase to 70p.

The company will only announce the Open Offer when/if the share price is greater than 10p. Cradle Arc are cash flow positive with total cash costs including finance charges of approximately $2.30/lb. With copper currently trading above $3.10/lb, we have a reasonable profit margin. The share price performance has been lackluster but this will correct itself in due course. I believe the market are not aware of the potential or are delaying buying until they see proof of concept via operating/financial results. This is understandable considering the mine was formerly a financially distressed asset and therefore forced into liquidation due to unacceptably high production costs.

I'm aware of WTI. Their production costs are unacceptably high. Their C1 cash costs are $2.40/lb whereas Cradle Arc's is currently $1.50/lb. Our management team are aiming to reduce C1 cash costs upon the installation of the DMS plant in order to make us a lower quartile copper producer (<$1.30/lb). As it stands, our 'all-in' cash costs are around $2.30/lb and it will be reduced to $2.00/lb with the DMS upgrade.

The funds were raised at 10p as that was the level at which the institutions and other high net worth individuals were willing to pay. I believe this was due to two reasons: (1) the fact that Cradle Arc was delisted at the time (2) the low level of market capitalisation at the time of delisting. Despite the heavy dilution, I am reassured that the team are aiming to build Cradle Arc into a significant copper producer in the next two years.

http://www.proactiveinvestors.co.uk/companies/news/191148/cradle-arc-eying-production-expansion-after-ramp-up-completes-at-mowana-191148.html

the admission document, ramp up equipment is expected to arrive in full by end February, at which point we should be operating at 12ktpa, of which 7.2ktpa is attributable to Cradle Arc.

We are currently operating at 60% of nameplate capacity or 7.2ktpa, of which 4.3ktpa is attributable to Cradle Arc. As a comparison, Rambler Metals are mining at a rate of 5ktpa equivalent. Rambler's production expenses are significantly higher than Cradle Arc's, and have a market capitalisation of �44mill.

The three significant pieces of news that are expected by mid-2018 are: ramp up to 12ktpa; securing finance for Matala and starting construction of DMS upgrades. If the market doesn't respond to these, then we have operating and financial results to look forward too. At the moment, there is a disparity between operational and share price performance. I consider it an 'opportunity' to average down. Let's see what happens.

I believe the new investors that partook in the �2.4mill fund raise will want to retain their shares until they make profit. There were a number of large value sells since IPO, however trade volumes are relatively low at these levels. They will offload their shares at higher share price. As it stands, the MM's only hold stock pre-acquisition and shares sold since IPO which equate to a small percentage of shares in issue.

Our holdings were consolidated to 20p but only constitute 10% of the shares in issue (20mill shares). The remaining 180mill shares in issue were added at 10p, either by CLN, equity placing or shares awarded to Kevin Van Wouw. I believe this could explain the reasoning behind the 10p list price. With respect to demand, I have no idea. We should be trading at a higher valuation, and hopefully the market will realise the potential once the Q1 operating and financial results are released. All my shares are still positioned within my ISA account, however I am aware this is not the case with other shareholders. I don't know why.

The Mowana Mine has been generating revenue since recommissioning in March 2017. Whether it has produced any earnings is difficult to discern due to initial capital costs and satisfying the pre-payment contract with our offtake partner. I believe the short-term catalyst to drive demand may lie in the ramping up to 12ktpa which is expected in Q1 2018, after which we should see 30-40p if fair value is to be achieved. In mid-2018, we should be securing finance for the Matala gold mine and starting construction of the DMS upgrades. We should have two revenue-generating assets producing 30,000 oz of gold pa and 22ktpa by Q4 2019/Q1 2020. At this point, we should see a valuation of 80p, in my opinion.

a good opportunity to accumulate below the open offer price.

Over the past few trading days, a number of high value sells have been executed, however from my calculations, I believe the MM's have a restricted supply of stock. Hence, they are attempting to run down the price to tempt shareholders into selling. Currently, the directors, institutions and clients that contributed to the recent placing hold a significantly amount of shares. And the MM's only hold stock that prior to the acquisition and stock sold over the past few days. I'd hazard a guess and say that they hold approx. 3-4 mill shares. This constitutes <2% of all shares in issue. Any demand will result in a sharp rise in the share price.

We will ramp up to 12ktpa nameplate capacity in Q1 2018. In my opinion, we should be valued at �75mill/37.5p (plus additional value attributable to upgrades) during this phase. When DMS upgrades are installed and Matala is in production in 2019, the valuation increases to �180mill/80p fully diluted.

Consider yourself fortunate. Most shareholders require much more than that to break even. Anyway, our new CEO seem deflated by the market reaction towards our admission. At �20mill, we are heavily undervalued. The Align Research report suggests a 'very conservative' 28p valuation or �56mill Mcap. I think closer to �80mil.