focusIR May 2024 Investor Webinar: Blue Whale, Kavango, Taseko Mines & CQS Natural Resources. Catch up with the webinar here.
I'd just to like re-share this as it seems as applicable here as when I first wrote it about another explorer.
Advancing a mineral discovery through to a producing mine involves resolving many uncertainties and completing many physical, administrative, legal and financial processes. Many of these processes are sequentially dependent and typically rely upon the services, co-operation or permission of several different organisations, sub-contractors or partners. As such even trivial external issues can, and often do, have indirect knock-on consequences for scheduling and budgeting all subsequent internal processes.
With this thought in mind, I often find you can tell a lot about someone's understanding of, and familiarity with, the exploration sector based upon the confidence they keep placing in industry forecasts, company targets and/or broker projections. Even when offered in good faith, such statements typically promote evolving hopes for the latest best case scenario, not an infallible guide to managing the timings and costs of any and all future unknowns.
I've repeatedly seen impatient folk on LSE defiantly and categorically state that "the essential thing is..." or "we only need to ..." or "as soon as we..." as if there is only ever one simple step between where things are and everything they want quickly falling in to place. As months turn to years, those impatient investors repeatedly keep pinning all their hopes on the next news that is forecast as if that one thing will be the critical trigger to the breakthrough they dream of. They then become distressed when it arrives later than hoped for and doesn't deliver the huge move up in share price they anticipated. Most of these then immediately move all their hopes to the next forecast, whilst a few more claim they're selling-up in frustration.
Many here encourage patience and investing for the long term but show little sign of doing so themselves. Much disappointment could be avoided if people stopped treating this industry as a series of mini-sprints from RNS to RNS and saw the bigger picture as a long distance endurance event. Emotional stamina can be more important than speed in a sector where most fail to make it to the end. The whole process of putting a mine in to production typically takes years of problem solving to chip away at an extensive "to-do list". So, is the exact day we tick one more thing off that considerable list really that critical?
Surely the critical thing is that everything does eventually get ticked off that list? Those with realistic expectations based upon knowledge of industry norms should be happy as our volatile share price is higher than when we began exploring this project a few years ago, whilst the evidence suggests it is nudging forward faster than most projects. However, some always seem angry at any period without news or any reminder that in this industry targets and timetables often need to be revised.
I wasn't around yesterday when the RNS came out, but nice to see further mention of the long term potential of EH/Munni Munni even if there was nothing there to make any immediate difference. As for Hanc*ck well it was basically a statement of just be patient...
This sentient seemed to have been re-affirmed by Rod's interview. Without knowing the man personally I would be cautious of drawing conclusions from his body language but he did seem to me to be irritated and distracted in having to spend time answering questions where he could do little more than repeat things that were already public knowledge or just common sense. That said, what he had to say seemed to be about offering re-assurance to the insecure whilst repeating the need to be patient as these projects take time and are dependent upon the speed at which others process admin and paperwork.
He clearly has a plan for Alien Metals and nothing he has said has changed my mind about my investment. I'm still here for the long term potential of EH and Munni-Munni but content for the company to pursue a simpler iron ore project as a means of funding that exploration. 2025 still remains my first date for judging UFO's progress by which point we should know what our total costs for mining the iron ore are and what level of volatility we can handle in iron ore prices whilst still remaining profitable.
I'd just to like re-share this as it seems as applicable here as when I first wrote it about another explorer.
Advancing a mineral discovery through to a producing mine involves resolving many uncertainties and completing many physical, administrative, legal and financial processes. Many of these processes are sequentially dependent and typically rely upon the services, co-operation or permission of several different organisations, sub-contractors or partners. As such even trivial external issues can, and often do, have indirect knock-on consequences for scheduling and budgeting all subsequent internal processes.
With this thought in mind, I often find you can tell a lot about someone's understanding of, and familiarity with, the exploration sector based upon the confidence they keep placing in industry forecasts, company targets and/or broker projections. Even when offered in good faith, such statements typically promote evolving hopes for the latest best case scenario, not an infallible guide to managing the timings and costs of any and all future unknowns.
I've repeatedly seen impatient folk on LSE defiantly and categorically state that "the essential thing is..." or "we only need to ..." or "as soon as we..." as if there is only ever one simple step between where things are and everything they want quickly falling in to place. As months turn to years, a certain type of investor seems to repeatedly pin all their hopes on the next news that is forecast as if that one thing will be the critical trigger to the breakthrough they dream of. They then become distressed when it arrives later than hoped for and doesn't deliver the huge move up in share price they anticipated. Most of these then immediately move all their hopes to the next forecast, whilst a few more claim they're selling-up in frustration.
Many here encourage patience and investing for the long term but show little sign of doing so themselves. Much disappointment could be avoided if people stopped treating this industry as series of mini-sprints from RNS to RNS and saw the bigger picture as a long distance endurance event. Emotional stamina can be more important than speed in a sector where most fail to make it to the end. The whole process of putting a mine in to production typically takes years of problem solving to chip away at an extensive "to-do list". So, is the exact day we tick one more thing off that considerable list really that critical?
Surely the critical thing is that everything does eventually get ticked off that list? Those with realistic expectations based upon industry norms should be happy as our volatile share price is much higher than when we began exploring this project a few years ago, whilst the available evidence suggests it is nudging forward faster than most projects. However, some always seem angry at any period without news or any reminder that in this industry targets and timetables often need to be revised.
Given that the subject is one of endless posts here I'll repeat this that I wrote over a year ago;
I have repeatedly mentioned how conflicted different forecasts about future iron ore prices are. Earlier this year some here were speculating about volatile ore prices being multiples of what they are today. Perhaps as a consequence, I was accused of de-ramping for stating that I personally thought that the price might eventually stabilise below $140/t. I was also mocked for mentioning some more extreme forecasts suggesting that falling ore prices would dip below the rising operational costs of some of the smallest iron ore producers.
Over the course of the pandemic iron ore has run up from $80/t to spike over $230/t only to drop back to around $80/t. At the same time energy/transportation costs have gone through the roof. Consequently all the large iron ore miner's share prices have fallen back and, of late, about half a dozen smaller Australian producers have temporarily suspended operations through their current inability to generate a profit.
However, those that understand how unreliable industry forecasts are and the timescales typically involved in advancing a project will expect many more changes before we go in to production. As such I don't see this negative trend as predictive of where we must end up a few years from now. It simply remains a bearish case in an uncertain range of outcomes where others have repeatedly covered the most bullish possibilities for UFO's iron ore. So, whilst I personally hope that our iron ore may average out to profitability over time, I don't expect the margins will be so large as to always protect us from the extremes of market volatility.
* * *
In the year or so since I wrote the above, ore prices have hit a high above $160/t and a low of less than $80/t and in an increasingly unstable global economy I imagine that they will continue to fluctuate in a volatile manner over the next few years. Given that we are still waiting on permits to mine, and the finance to do so, general trends on long term price charts (if such things can even be identified in such a volatile commodity?) may be of greater relevance to us at the moment than small daily price moves.
We just need a certain somebody to get out their lawn mower and it would be like travelling back in time ;-)
The cynical among SGZ's investors claim that getting coverage on the BBC is a standard approach of their BOD just before any placing and as a good as telegraphing the placement in advance...
Anyway for better or worse I dribbled a little more into SGZ myself this morning managing to get a few more shares at just under 40p on the open market ... so a gnats whisker below the placing price.
@yayay - last week you mentioned possibly going back in to SGZ and I said it might be best to see how they handle their latest need for funding before acting...
They were well over 60p at the end of Jan and were not far from that when we speaking last week ... they just announced a placement at 40p so if you are feeling brave you may see the price fall enough today to tempt you back?
So as expected a further placing at a discount plus the option to extend debts at higher rates of interest.
I presume we can expect a retrace closer to 40p tomorrow?
Well I'm not sure that interview told us anything about fundamental changes at the company or that we are now somewhere different to where we were, yet it seems a lot have been calmed and reassured to know that nothing fundamental has changed...
Sometimes all folk need is the management to come out and speak plainly and honestly about the fact they are still there and still getting on with the job, it's just a slow business in a volatile sector.
I'll chip in my tuppeny worth;
I've said before that precious metals are a narrative driven commodity that delivers wild moves from overly emotional speculative punters on very little but rumour, whilst iron ore is a "boring" commodity for those that like certainty and definite numbers to put in to spreadsheets. We've seen how UFO has spiked in the past and coming after a long period of price stagnation I have also said on more than one occasion that I suspect another spike before the end of 2024. In regard to this I have also said that whilst not a commonly voiced view it is certainly possible that the next big move in UFO's share price could come from unexpected news about EH/Munni-Munni rather than expectations about our iron ore.
So whilst my own expectations may prove no more reliable than anybody else's, I'm expecting it to be a little while before we see our iron ore start to stabilise our SP, leading in to small erratic moves where price rises are met by selling from frustrated holders looking simply to break even and get out. Slightly bigger moves at whatever point we actually have definite revenue coming in, but that any notion of rational pricing may get temporarily knocked sideways at some point should the narrative swing back to precious metals.
@ max - I've no desire to get in to more pointless arguments with you or waste my time defending your endless accusations of me telling lies or being an idiot or talking nonsense or any of the other slanderous comments you've made against me or anybody else that mentions anything that contradicts your promotional agenda, others will decide for themselves what they want to believe.
Kieffy posted a link that helped me and others (presumably including yourself?) find the docs in questions and various of us on this board discussed those docs back in Dec ... perhaps the link they shared wasn't exactly the one you shared, but if it helped folk find the same docs that as a good as in my book, where as Norm says it's really not such a big deal.
@cj - we were discussing those application docs back at the start of December the last time somebody posted links to them. I think back then it was somebody identifying themselves as Keffy or Kiffy or something like that who posted the link ... not one of the names I associate as regulars on the his bulletin board.
I've found a little info on permitting times (below) but without more detail as to exactly what type/class of permits we are awaiting the info isn't that clear as to where we stand ... we only know that GWMO announced the JV to build the plant in July 2022, so it has potentially been about half a year since an application process was started resulting in the meting mentioned in the RNS.
So, lets hope you are right in stating that permission is now a formality providing we address what ever "niggles" they agreed in the recent meeting.
https://ndep.nv.gov/air/permitting/permit-guidance#permit-howlong
Long time holder here but infrequent poster...
I'm surprised to read in the RNS that construction of the plant can begin before formal permitting to operate it.
Anybody know how long things take in Nevada to get permitted? I've read that America is slower than Australia to permit and I'm invested in one project in Aus that have been waiting about a year for administrative clearance to even begin physical work.
The implication from GWMO seems to be that we expect to be operating soon, but countless studies show that most projects run behind schedule and over budget and so I'm wondering if we may be left waiting on red-tape?
@yayay - there was a time ministers were trusted to go more than a week without screwing up something - now you can't give them time to actually do or say anything at all for fear it will prove embarrassing.
@GlenFidrich - there are times that the people active in the precious metals sector start to feel a little too predictable as if you've been around them for too long. ;)
I wonder how long it may be before the tinfoil hat wearing conspi******s among the gold bug community start describing the jobs data as "suspiciously convenient" ... suggesting that at some point down the line when it won't matter a discrete apology may be offered by the US govt. should they "discover" they made a mistake in how they previously calculated their data?
@yayay - a small part of my own "attachment" to SGZ is emotional rather than logical and relates to our family's Scottish roots and connection to the area around Inveraray.
If you've been out of SGZ for a while I'd wait and see how they handle the latest need for funding before deciding how to jump back in. We've just had a little crazy run up on the back of news coverage on the BBC but the price is falling back again so it may be wise to wait ... but waiting and SGZ are fairly synonymous with one another.
For better or worse I'm still with Scotgold as "on paper" the prospects still look good - but if ever there is a company that you could grow old waiting for then that is it.
In my case the one I am referring to is Pure - I could have stuck it out with shares still listed on the TSX when removed from London, and sod's law says it may yet make a comeback in some new form, but I just didn't see it worth waiting around to fight for the crumbs that may eventually be fed to small shareholders after what could be protracted arrangements to re-pay debts.
@yayay - my own "horror story" in terms of being too patient with a junior explorer was one I felt was comparatively safe having already done all the difficult work.
Their license was in a mining friendly jurisdiction and in the midst of many other big mines. They made the big million plus ounce gold discovery at high grade and were open along strike to the potential of several million more ounces. On the basis of this they secured the financial backing of some of the big names in the business so as to start building their mine and processing plant. Then external factors beyond their control delayed progress to the extent that when they should have been generating revenue to re-pay loans they were still spending money building. Their lenders were very generous in re-negotiating terms to offer them more money, but then the gold price fell at the point they first started extracting ... To cut a long story short things reached a point where they couldn't service their excessive debts, and with overdue interest owed more than the assets were worth. Consequently they had their lenders pull the rug out from under them.
The administrators came in and announced they were de-listing the company crashing the share price... I got out at more than a 95% loss. Silly thing is the mine was already built, all the gold was still there and without such huge debts to repay would be very profitable for new owner... Indeed there were rumours that their lenders had deliberately kept loaning more cash to push things over the edge as a kind of "underhand hostile take over" and means of acquiring an asset that wasn't for sale.
I should have seen the signs and got out earlier but everything pointed to a very profitable mine supported by very understanding financial backers. The only saving grace was that I never put more in to a junior explorer than I can afford to lose so taking the hit wasn't so hard, but galling to think at one point I was up more than 50%.
Hey ho we all live and learn!