Roundtable Discussion; The Future of Mineral Sands. Watch the video here.
Hi GFD - I tried to cover this in my research report, to provide a 'worst case' scenario for an asset sale at Monchetundra.
Analysing free cash flow over 18 years for the 1.9Moz SinoSteel contract (WACC 7% and 3% Pd increase year on year, it would generate approx. $3bn profit and be worth in region of 34p at current Pd pricing to someone buying. This fully covers repaying the CapEx and seems a safe play.
So no flanks - 7.2p current price could rise to 34p. Bidders may be wise to fire in an early offer before the approval comes through!
I would assign this risk below 5%, getting sign off from Ministries was key step looking at previous applications and in the words of the Chairman Christian :
"2019 proved to be the year when Monchetundra came to the fore as the Company's flagship project, driven by a significant increase in the resource at the project and palladium sector consolidations. We continue to advance development work for the construction of a mine for the two open pit palladium deposits. In parallel, we have applied for a large licence surrounding the deposits under the exclusive right granted to mining licence holders. This application, referred to as the 'Flanks' is well advanced having cleared all ministry approvals, and is now awaiting sign off by SevZapNedra."
HappyScot - I think you hit nail on head, some will sell. To use your numbers, I would suggest selling for 20-30p with an average below 7p (fairly safe to assume we all have this, many below 1p) is far from 'hostile' and you would be more than content with that.
If price does get that high and we haven't had a bid yet - clear the bid would need to be above current SP. so many will hold on for further gains. Indeed fresh II funds will scoop up as many as possible, Global Merger Arbitrage is the fancy term for those who specialise in this activity.
Personally, I doubt anyone would get more than 10% from below 3% without a massive rerate, under the takeover code we would be informed once above 1% or 3% as normal, so their cover would be blown and the rerate happens.
Alfe - its 28m shares approx. for 1% of EUA. Looking back at daily volumes we had around 100-170m around Indaba week. When shares were cheaper late October we saw 600-700m volume but price was in 2-4p range.
Like I said, not a chance of a hostile takeover below 30p, the for sale sign is hanging on the front door now - they have to play by the EUA/UBS rules now.
Reference the concern about a hostile takeover if trading resumes soon.
Worth noting that in the rise from 0.5 to 7.2p we didn't see anyone entity amass over 3%, so should anyone attempt to buy 30% of shares in the coming weeks/months it would propel the share price up massively.
Board have decent skin in the game around 25%, with the LTH having sticky hands there isn't the scope for the hostile takeover at a low price.
On the Takeover exemption for 28 days, that relates to 2.6 and the naming of interested parties and intention to make an offer now the FSP triggered. If someone fires in an official bid we will be informed under 2.7 and 28 days apply for them to PUSU (Put up or Shut Up) regarding the bid details. So see a 2.7 RNS and we are in the final stages...
I think what others are trying to say, is that there is little relevance left in wondering what the conditions may or may not be. UBS were not brought on board to help EUA figure out how to activate the SinoSteel contract. They were brought on board to help secure the best bids and make all genuine investors better off than they could ever have imagined.
Similarly with WK recent production figures, wondering whether we have mined 1Koz, 5Koz, 10Koz or even 50Koz in 2020 doesn’t come into the equations of a sale of 15Moz.
All eyes should now be on how the bids pan out. So try finding a negative angle that actually relates to the process ahead...
Wise words Tiddlor - whatever UBS and BoD decide the next step is will be what happens. They’ve played a blinder so far.
Obviously would be great if tomorrow we got told someone had bid £2 a share for the lot, but if there are a few more steps to get the rewards I’m fully on board with the reasons why.
Hopefully a sizeable premium for those buying in yes. Since February we have seen numerous events in PGM community that have tipped favour towards Russian open pit compared to South Africa. This should be reflected in sentiment and pressurising potential buyers to act sooner rather than later. So suspension been very useful in that regard.
That said, to unlock highest bids, which I care about far more than any other issue, I do firmly believe trading is needed to push up the market cap and ensure full and fair value achieved.
Plenty of funds will want to buy in now UBS on board. Should do the trick
Whether we’d like the suspension to remain until flanks approved isn’t really in our gift - the suspension was relating to CITIC and not flanks so the two cannot be linked sadly. All indications are it is a formality for the local authority to approve. If it is in the RNS ending suspension obviously that is better still.
I have zero worries about someone trying a low take out. They would have to get hold of 30% to trigger an offer in this way.
The share price flew from 4p to 7p and nobody got past 3% in terms of a new TR1. Between the BoD and long term sticky holders, there isn’t the free float to even attempt this. Share price would rocket.. so maybe they should try ;-)
3000 characters not enough sometimes to explain thoughts. Full article in links below if interested.
In summary - I want trading to resume now so share price can rise up - any bidders concerned about Market Cap will be reassured and join those just wanting to buy an asset.
Next rns should set out where things are and see a resumption of trading.
Great times ahead, nice to speculate on positive outcomes and not worry about the next steps. Trust the Board 100% to deliver on this, getting UBS appointed a master stroke that now has Institutional Funds looking to take up long positions too.
https://www.powerof78.com/2020/07/05/eurasia-mining-what-happens-next/
Monchetundra - first mention of an extended plan for the mining operation. Current SinoSteel was for 125Koz approx $250m EBITDA. Now we see the power of the flanks - plans for 1000Koz per year, would imply EBITDA $2bn a year when built.
Let that sink in - EBITDA $2bn - long term valuation will be well over $10bn, someone is going to have to bid big to stop EUA doing this themselves...
Which brings us onto the other big news - one of the world's largest banks UBS now involved. No wonder the relationship with CITIC is taking some explaining. In a year of little M&A activity, they have the pick of the best banks, for perhaps the best deal of the year. A formal sale process under the Takeover Code to follow.
So no point discussing anything else now, this is heading where all genuine investors want it to be.
Congratulations to the Board of Directors on the work so far, so much to look forward to.
Catching up on a few posts in between the banality and poor attempts at disruption from usual culprits. One post stood out though as particularly comical. Always handy to use RNS and open source info to reply to some amusing claims :
To see MT stated as early stage - it already has a licence to build a mine and contract with SinoSteel in place if needed. Way further along than most explorers get, with 13Moz resource addition once local agency formally approves what MOD and FSB already given green light to.
33km of drilling to prove the resource completed, lodged in Russian Cadastre and beyond dispute of mining community.
Then my favourite - the tricky Kola Peninsula and insinuation of unfavourable jurisdiction. Doesn’t really hold back the worlds largest Palladium Miner Norilsk Nickel, does it now?
Also when comparing NAP to MT, let’s not omit that NAP has a much higher AISC and deal was done with Palladium at lower price to current future forecasts.
Palladium ‘boom’ far from over. Structural deficit remains until further notice, increased drive to clean up air pollution in China and India major factors in this.
Hope everyone has a good week ahead.
Sometimes you go above and beyond to find out what is happening in the world today. We all hope that our actions make the world a better place even if unsure at times.
Just have to open your eyes to possibility, fix a smile on your face and be ready for a lovely surprise along the way as the truth hits you from behind.
So I remain very optimistic about the future, more so than ever in fact. Good things await those invested. Those with shorts on will need more than lube to quell the fires.
TDT - seems a bit rich receiving a lecture from someone about being 'intentionally misleading' when they have been proven to post from other aliases/accounts (however innocent they claim it to be) and doctoring images of Eurasia website to suit a narrative that was false.
I only posted the company RNS - if you wish to criticise the content you can pretend you are more of a mining expert than the Board of Directors, than the people at SinoSteel, than Lesego, than CITIC Merchant. Many experts have looked in detail at Monchetundra by now.
Your thoughts and comments will have zero influence on potential buyers of the assets, the same as my thoughts and comments won't either. We can however have an influence on shareholders through our actions. I present thoughtful research and comparisons on previous deals in the Palladium sector for people to look at and assess their thoughts. Ultimately we are all responsible for our own investments.
Mac - yet to see a single argument from the negative side of the fence that is genuine. We've been through them all since last year, nothing stands up to scrutiny, which is why the share price rose so highly, also why there is a lot people with the opinion it will continue to rise when trading resumes.
Have fun everyone, like HappyScot says, beautiful day today
TDT - I do like the way you keep bringing up this C1 argument, it reminds me of a certain keen fisherman on twitter, spookily similar. You seem to be the only people fixated on this aspect.
Same answer as before - the RNS on 4th December gives clear details as to what the Russian Cadastre holds for the area.
So is it your assertion that we shouldn't believe this RNS, that nobody can assign a valuation to Monchetundra?
To summarise, according to the Russian Cadastre, there are potential resources within the existing Company licence and the flanks application of c.15M oz; additional potential resources within 5km of the Monchetundra Mining license of c.7M oz and total potential resources within the wider Monchegorsk district, according to the Russian Cadastre, of c.40M oz of PGMs.
The total potential resources in the Russian Cadastre breaks down as:
· c.15M oz of PGM within the Flanks application for which the Company has exclusive rights, and inclusive of the Company's c.2M oz reserve and resource (A below).
· c.4M oz (in addition to the above c.15M oz of PGM also within 5Km) neighbouring the Monchetundra Project and within 5Km (B).
The total amount potentially controlled by Eurasia and under flanks exclusivity right application is c.15M oz of PGM as per the Russian cadastre of state resources; although this data has not yet been independently verified by Eurasia.
· Further potential resources of c. 21Moz in established and unlicensed resources and reserves in the district surrounding the town of Monchegorsk, that is located 8Km from Monchetundra (C).
(?) Within the Flanks application submitted by Eurasia 80% owned subsidiary Terskaya Mining Company in September 2019:
1. Potential Pd and PGM resources of c.13.1t (421k oz) (as per State Cadastre of Deposits, No. 18 on Murmansk Geological Information Archive Reference Note of 07.03.2019)
2. Potential resources of Pd and PG? c.14.7 t (472k oz) and of gold c. 0.7t (as per State Cadastre of Deposits, No. 20 on Murmansk Geological Information Archive Reference Note of 07.03.2019)
3. Potential resources of Pd and PG? c. 320.1 t (10.2M oz) and of gold c. 10.1t (as per State Cadastre of Deposits, No. 21 on Murmansk Geological Information Archive Reference Note of 07.03.2019)
4. NKT (Nittis Kumuzhanaya Travanyaha) nickel, copper, cobalt, platinum, palladium, gold and silver with the following potential resources: Ni - c. 298,000 t, Cu - c. 229,000 t, Co - c. 11,300 t, Pt - c. 18.5 t, Pd - c. 55.0 t, (Pt+Pd= 73.5t or 2.3M oz) Au - c. 7.6 t, Ag - c. 185t (as per State Cadastre of Deposits, No. 22 on Murmansk Geological Information Archive Reference Note of 07.03.2019).
The total in items 1 to 4 above, which excludes the c.2M oz in Eurasia's current production license is c.13M oz of PGM of which palladium is predominant. The Pd to Pt ratio in Monchetundra production license varies from 1.7 to 5.8 Pd/Pt ratio, a similar range is observed in the Flanks a
Thanks Alto, everything someone would need to find the EUA Investors Channel. Most things get shared on Twitter as well such as the research reports and licence discoveries.
LSE has its place, but the lack of filesharing, media and other features see it lagging far behind many other platforms now.
Pete/Newbie - search for the "EUA Investors Channel" and you'll have the info
Good evening all investors,
Just a quick update if you haven’t already noticed. Eurasia have applied for and received a 3 month extension for their 2019 accounts under the covid19 emergency procedures.
I’ve checked with the company and informed it was down to difficulties with getting the accounts audited as a backlog has arisen due to lack of travel in March, April and May. Nothing sinister, no conspiracy theories please.
Many many firms are in the same position, It is just the way it is this year.
Have a pleasant evening
https://twitter.com/gmf782/status/1275510163416457219?s=21
Regarding WK, they are seemingly making the most of it whilst whatever offers are being sorted out for the business. Makes sense. If they were stood idle we’d be unhappy.
Serves three purposes :
1. Extra $$$ in the pot should it be sold anyway
2. Demonstrates better the potential for WK, pushing up asking price from 2018/19 yields
3. Decent fallback plan if bidders aren’t offering enough yet. “You’re not serious - we’ll keep mining and pocket the money ourselves”
All good and appreciate the images A1ex
Hi Krispy,
In this scenario then the company would have Equivalent of 20pps left as cash in their bank account, say $580m
approx.
Depends what they did with it - further investment in assets could see company worth more than the 20pps, but as a lowest figure it’s not a bad assumption to make imo.
Hi AJ,
Welcome to the board, good to hear you have been reassured since the Nomad was appointed. Definitely a key step and negated an awful lot of the negativity. No doubt many felt worried during the last couple of months, appreciate you coming out to say as much.
I try to stick to a positive narrative as my research kept telling me to be upbeat. I'm still waiting for someone to come up with a valid reason not to be excited about the future!