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Good reading - looking forward to this train leaving the station (fingers crossed)
would expect there's a risk qualification....as we know a successful EIA result and progress here makes SAV Europe's likely largest source of Lithium that is immediately and most readily available extraction following DFS etc - massive wave of investment would follow official approval, larger than just Sprott
GLA
Use the website windy.com; helps track the weather (actually very good in general). From what I saw there was a recent storm that crossed the north of Madagascar and went down the west coast and is sitting in the strait between Madagascar and south eastern coast of Madagascar, think our areas got off relatively Scott free thankfully. So far so good, not as bad as Ana last year, believe bad weather season is typically December-March.
GLA
The EU has awarded European Lithium Strategic Project status in its latest funding round from the Just Transition Fund. It can be awarded up to €50m, though European metal’s capex is well well above SAV’s. €50m would get SAV almost halfway through construction at MdB which as Europe’s largest conventional hard rock spodumene project is just waiting to be classified as strategic for Portugal and Europe’s Green Economy needs imo.
GLA
https://twitter.com/lithiumionbull/status/1619850122170359808?s=46&t=zfb8sWHbUJpQaNESBud3Rg
there was the suggested c.3 year payback by AET at $75/bbl.
Averaging well above 10% over of that price since average effective dat of March 2022 suggest we are about 12 months through, continued higher prices will mean under 24 months left of that payback time, potentially easily sooner the way things are looking.
Remember these metrics will also improve further once the planned upgrade works at the assets kicks off from a 1,000 barrel a day production increase to 20,000, upward further to 30,000 barrels a day etc whuch would give AET around 6,000barrels a day net just from these assets...
interested to see your calcs
Indeed, this article highlights again the opportunity TGR have - the graphite theme ex-China is increasingly gathering pace, TGR could put itself into an extremely prominent position as an ex-China producer of significant scale already at 30,000tpa and non-reliant on Chinese groups for equipment and expertise, if it is up and running by the time global attention fully turns to Graphite. That's so long as TGR delivers which it is in the process of doing, and we will hear more I am sure within the next several weeks.
GLA
https://www.wsj.com/articles/shift-to-mined-vs-man-made-graphite-raises-shortage-risk-for-evs-11674603067
thanks for that coldjoe, I especially like this bit which I think signals intent to the market on a larger transaction to come down the line if AET is indeed to become an operator in its own right:
Generally speaking, Afentra aims to become the operator of producing assets and would be "delighted to replace a company as operator" but is willing to enter an asset as a joint venture partner if the operator intends to farm out after a few years.
B - to be clear in Madagascar there are two mining sites nearby to each other. Vatomina and Sahamamy. At Vatomina there is capacity of 12,000tpa. At Sahamamy there is capacity of 18,000tpa. Together = 30,000tpa. The 18,000tpa is the latest additional module to complete.
yep, 30,000tpa capacity should be achieved this month - then it's a matter of ramping up into the end of January and the rest of this quarter into the next financial year from April - capex will be much smaller now all the work for this module is under TGR's belt and it can focus on refining its operations to the significant 6/7,000MT+ per quarter level of production and sales. Company has mentioned it may be able to increase capacity to 36,000tpa with very little additional spend which would mean capacity would be c.8/9,000MT per quarter. If company can henceforth keep admin costs low and reduce production costs to return margins closer to 50% once again as it was able to the year previous then will be in a v good position.
Once it demonstrates solid numbers it will be in a strong position to leverage debt and fund the next 18,000tpa modules, each one becoming easier and easier to finance as profits increase annually imo. I personally hope Madagascar expansion is fasttracked to 66,000tpa using cash flows and debt before turning attention to Mozambique and downstream by end of 2024, as that will result in v significant cash c.£15m p.a. which provides a serious platform on top of any prepayment/offtake deals.
importantly as well however would be good to know from the average oil price since April effective date for the Sonangol transaction.
INA will have been a nice earner since September 2021 though!
GLA
Although it will cost BRES more money, it’s wise they will be sending samples to the US from the same bulk extract taken from Orom-Cross that they are sending to
China - protects them from the potential partner manipulating the results in their favour to strengthen their already very strong negotiating hand and acts as a control experiment. Expecting cash burn to increase as a result but potentially worth it for a better result. Some will be taken by surprise that the Chinese partner will take “several months” to produce results.
GLA
The US is literally funding its own domestic Lithium projects now - will have a massive headstart and jump on market share vs EU - opportunity exists for EU to begin clawing back some of that industry with SAV providing the foundation for a cheaper, simpler supply chain for the European EV industry
https://twitter.com/alastai85608932/status/1614171293523271680?s=46&t=16YaY5EvH27yNECs6RePDg
Depends on whatever this partner in China might feel like offering and/or is after, and they've got a lot of negotiating leverage imo as other BRES will be a bit stuck:
From the annual report:
With regards to future capital expenditure on the Orom-Cross Graphite Project, the Company may need to raise additional capital beyond the Working Capital Period to fund additional exploration work for the future development of the Orom-Cross Graphite Project.
Investors should also note the risk involved mentioned in the paragraph below the above in the report:
The Group has been approached by potential strategic partners who may eventually provide an offtake, funding or development scenario for the Orom-Cross graphite project. If this is not successful, the Board may consider stopping the project until further cash can be generated.
If you are concerned about financing you should pay attention to that last sentence. Investors should look to see how other offtake agreements in other companies have been structured. A lot depends on just how much material this one potential "strategic" partner may be after - rarely (never) does a single offtake prepayment pay the whole CAPEX needed for a project, just something to beware of, as timelines do tend to take much longer in mining than expected.
I would work on the assumption that any equity investment at the project level will give this potential partner over 50% of Orom-Cross, see GGP and Newcrest as an example imo. Very strong Graphite market however might mean something good can come for BRES shareholders.
GLA
The effective date of the INA deal is end Sept. 2021. Initial payment - $9 mill -> upwards to $25 mill. 15 months of c. 780 bopd. Brent avg. $95. Netbacks of $55(???). Deal has generated $20 mill? Deal already paid for itself? ?? Wow. #AET
https://twitter.com/Even_reven_/status/1613477105605677056?s=20&t=rxOSnwlLqjUEjESpI3Bocg
AET to go from strength to strength as each deal is completed and the next deals line up?
Excellent news this morning with 1st deal done! Sets up for the second extremely nicely also to complete this quarter imo
GLA
Indeed A_clabb - take NextSource Materials as an example. A company with a Madagascan mine under construction in the south of the country. Good deposit and great BoD and a fancy website. But it's only about to complete construction of a 17,000tpa module, which as we know can be more difficult in operation than it sounds. They have some supposed offtakes and un-funded plans to build downstream plants. No revenue to date. Mcap = $206m vs TGR's mcap of c.$43m , despite 30,000tpa capacity coming online and positive cashflows likely from this quarter with huge resource increase due any day now on completion of Suni Resources Mozambique asset acquisitions- crazy disparity in market valuations...
GLA