Member Info for Happyhaddock

@5x5 - Whilst some may offer you calculations for an "in- ground valuation" for Hanc*ck I would say we are still too early to define an exact value and are more still in the territory of gut feeling and "finger in the wind estimates".

There's no doubting that even excluding the potential of what may still be discovered in the future, the ore we've already identified across Hanc*ck/Sirius would still be worth in the region of $1bn on the open market; the big question is how much you discount that for the work, costs, time and risks of trying to get it out the ground and to market.

Just a guess, but even with our backs against the wall, desperate and in a poor market, a value above our current mkt cap still seems likely.

In a dominant position to lead negotiations with eager buyers/partners, willing to bid against one another, then much more.

At the end of the day what we think it may be worth is less relevant than what somebody else may be willing to offer.

@Norm - I'm sure our BOD are looking in to all sorts of options all the time, it's the nature of the explorations business. If anything was formally agreed we'd presumably have been told about it via RNS.

Much as the optimist in me (yes there is one) likes the idea of keeping control of everything so we keep all the profits, the pragmatist understands what has been said here many times before; that in such a risky endeavour getting a small share of something is better than all of what may turn out to be nothing.

If we can offload a lot of the costs and risk of trying to start a mining operation, in exchange for some of the potential profits then that's no bad thing... We'll just have to wait and see if we do get an RNS announcing a JV, and if so under what terms.

@yayay - I can't give up to date statistics for AIM explorers but a 2014 study by Minex consulting looking at junior explorers in Australia highlighted a few points.

Most explorers only had enough cash to fund about one year's work before needing to raise more funds.

Remarkably given the above, two third of explorers in the study proved resilient enough to last in business more then ten years, though the average life span was under 20 years.

The study highlighted that by far the riskiest activity undertaken by explorers was trying to transition into miners; Only about a quarter in the study attempted this and of those that tried roughly half quickly went broke whilst another quarter ended up getting taken over. So that suggests that if only one quarter try, and only one quarter of those that try succeed, then only a little over 5% of explorers in the study successfully managed their own transition to operating mine.

I'd like to re-post this as a lot seems as relevant here as when first written about another company.

Some might cynically say that a junior exploration company's board of directors is only there to keep raising enough cash to pay their own salaries. Those directors might say they are there to keep the markets interested so they can keep raising the funds needed to survive. This isn't easy in a sector noted for endless administrative and practical delays, where most projects fail and where even the fastest projects can take many years to progress.

Without lying to the markets or concealing truths, management repeatedly try to generate enough new enthusiasm to distract from delays, frequent dilution and the impatient market participants who sell up. Good PR highlights any positives by hinting at even distant links to topical ideas or remote chances of near term good news. All this is presented using caveats and words like "hope", "potential", "prospective" or "estimate" that provide wriggle room should people's expectations later fail to be met. In other words, when promoting reasons to be optimistic, directors may be legally forbidden from leading us up the garden path, but they can step to one side whilst informally encouraging others to excitably run ahead on their own.

I've seen many private investors criticise junior exploration companies for misleading markets, or deliberately mis-managing things so that their assets can be taken private "on the cheap" by its creditors. Such critics are often emotional individuals who, in the absence of hard facts and full numerical data, rushed to buy the herd's enthusiasm for a good story. Then without allowing adequate time to either prove or disprove that story, they make losses selling in to the herd's impatience. Such people need to recognise that most explorer's PR translates as "...we can't confirm any facts yet, but please help us by getting excited by our latest narrative".

If your enthusiasm, money and purchases are minimising the share's price decline then the directors and their marketing are succeeding. Consequently every speculator needs the ability to buy, hold or sell shares without being distracted by a company's PR or the emotions of other investors.

You need to understand what is usual for this volatile sector in terms of stated goals and when, or even if, they are achieved. You must then look for reasons why a specific business may be an exception rather than the norm. This is done by analysing their communications to separate definite and actionable facts from distracting superlatives and promotional aspirations. Understanding how others may fail at this helps judge prices in terms of potential upside against possible downside. Yet as you cannot eliminate the risk of future unknowns you must be able to live with the consequences of things not going as hoped for, which typically means not speculating with more than you can afford to lose.

I don't think anybody here is disputing the potential our various projects have ... just when, or even if any of it will be realised.

Our management seem to operate on a revolving door policy of hinting at much, delivering little to none off of it before moving on.

Personally I am still going to keep holding for the potential of our non ferrous metals and would be as pleased as any shareholder here to see UFO deliver on a JV, at least one with favourable terms that doesn't exploit our current troubles. However, much as the interview seems positive, all PR interviews are positive as they focus on future potential. I'd rather read an RNS about what they have made happen, than PR talk about what they are hoping to make happen.

Well I've said before that I joined LSE after the exploration sector's wild spike in 2020 driven by my academic interest in observing the reason resistant irrational faith of the type of speculator who can lead such herd mentality.

Whilst I don't expect to learn much directly about UFO from this bulletin board it is interesting to see how, in such an uncertain sector, the sorts of narrative about what may be possible will often deviate from what the evidence suggest is likely to be probable.

Anyway, whilst the posts here talking about the potential upside tend to get more recommendations than those mentioning downside risk, it is rare for any post to get above a dozen recommendations with anything getting two dozen being really popular.

I note with curiosity that a recent post of max111's, typical of his usual promotional style which is heavy on personal assumption has so far received five dozen (and counting ) recommendations. Whether there is any significance to this I do not know, but it may be an indication that the excitable narrative driven herd of wild speculators are returning? Might Max actually get the massive re-rate he's been claiming is imminent for the last three years?

Well, despite a little volatility along the way our share price has been in steady decline for a few years now where it is easy to plot a general trend line.

For better or worse that trend line hits zero towards the end of this year, which kind of hints that something has to give before then to break the trend... Am I suggesting we will be bust and cease to exist by then as some have suggested ... No, although it is not an impossibility. I am however suggesting that the current rate of decline can't continue in to 2025 such that having set 2025 as my first date to review UFO's performance, I expect to be looking at a company that in one way or another is different to what we've experienced for the last few years.

@Bfd, it's not a case of not believing the study, it's a case that the study has only told us about op-ex costs and they aren't the costs I want to know, I want an indication of total costs when everything not included in op-ex gets added on.

At this point I doubt our management actually know what our total costs will be but I'd be very surprised if there is nothing more to add on for financing costs, legal fees, directors salaries etc. Furthermore as mining is a depletive industry it is always wise to factor in to total costs enough expenditure on exploration (or M&A) to keep replacing the reserves you are using up.

@Bfd ... I don't dispute what you say but we still have no control over the volatile price of iron ore..

Years ago folk here were telling us we would make huge profits because major minors costs were below $20/t... but I pointed out that many small producers total costs were much closer to, some even over, $100/t. When we announced FOB costs of below $60/t there was the same discussions, this bulletin had the same discussions again when UFO announced estimated OPEX AISC of $85/t.

Until we have an idea of our total costs including extras like financing costs, legal fees, royalties etc. we won't know the minimum ore price needed in order for us to break even. What we do know is that every time the price of ore dropped below $100/t, several smaller iron ore miners in Australia stopped production because they couldn't make a profit. If you look at today's iron ore futures prices for over the next year or two we are again back in to sub $100/t territory.

Things are bound to change over the coming months but I wouldn't pretend to know which way they will be moving, if they will continue their down trend as some forecast, or pick back up again as others forecast.

Don't know whether everyone else would call it a serious worry, but a long term concern I've mentioned many times over the last few years is the volatile iron ore market coupled with the long time frames needed to get a mining operation up and running and the relatively high operating costs of small producers compared to majors...

Undoubtedly we are now a bit closer, which makes forecasting a little less of an outright gamble, but I still don't think we can "plan" on Hanc*ck being profitable all of the time, more "hope" based upon the balance of probability being that we may just make a little more than we may spend mining the ore; where at one extreme there may be times where the margins and profits are large, and other occasions where the ore price falls so low as to be uneconomic to mine.

@yayay - or to continue the analogy: somebody arrives to offer us a paddle long after we have lost our canoe and are standing neck high in the proverbial river of excrement!

"All boats rise on a high tide"

...

except those with a big hole in the bottom!

@turbo ... depends upon your perspective ... Can't say it is the case here but I have suffered at the hands of another company whose major shareholder kept "generously" loaning them more and more to, in theory, get to production. However as the major creditor they pushed them in to masses of debt at unfavourable terms and then called in all those loans, saw the company go into liquidation and then seized all the assets on the cheap.

AIM is the wild west of speculation for the brave and the reckless!

@ SSweeney ... Just the first four metals mentioned

Zinc - good grades around 10% ... low but economic around 3%

Lead - good grades around 10% ... low but economic around 2.5%

Silver - good grades measured in kg/t ... low but economic around 100g/t

Nickel - good grades around 2% ... low but economic around 1%

Obviously each project has to be judged on its own merits based upon depth, thickness, accessibility etc. but the above numbers are very rough ball park figures.

Folk here seem very excited by these results as does the market, but how many people here have compared these grades with the sort of cut-off grades typical of a profitable mine?

If you analyse down to a fine enough level of detail you can find just about anything just about anywhere... So how many of these drilling results would other explorers mention in an RNS?

I'm not saying that today's news is bad news, just that I'm surprised by how "good" others seem to be finding these results.

This RNS kind of has the feel of having found a bit of all sorts without having found enough of anything to make a fuss of individually, so simply try to make a positive of the fact there is the potential for all sorts still to be in the ground.

Well, with the proviso that things in the world of junior explorers can change direction on a six pence, I don't see today's news as good news; As others have said borrowing money is all too often the start of a death spiral for small explorers trying to turn in to small miners.

Not once, but twice, I've had companies I've speculated in go bust on me because they were "so close" to generating revenue they only needed to borrow a little more to get them over the finishing line... Both got so far as building and operating their mine but by then had run up too much debt to be financially viable.

We are still along way from there but it does feel like the start of a slippery slope.

I'd be curious to know the extent to which this placing was an opportunistic reaction to an uptick in our share price or if it is something that was in the planning for a while and they just got lucky?

... doubt we'll ever know!

@ cj ... whilst I tend to agree with you that more money will be needed before we go in to production ... I'd never start any statement about a junior explorer with the phrase "there can be no doubt..."

Junior explorers are little more than a bagful of doubt and uncertainty!

@norm ... I've tilted at that windmill a few times and we both know its a waste of time trying to engage Max in reasoned discussion as he only recognises things as facts if they support his promotional agenda.

I'm in a not too dissimilar boat to yourself in that I've now ridden a more or less four year round trip back close to the share price where I first bought in at, and whilst the paper gains that came and went without me taking them off the table would not have bought me a house (at least not one in an area I'd want to live in) they would have built me the new studio/workshop/office I was planning for my business, so they weren't trivial sums.

However I try not to get annoyed with myself or others as I knew when I bought in that all junior explorers are a gamble where the vast majority will lose you lots of cash if you give them lots of cash. Every now and then a good one makes you so much it covers the losses on a lot of bad or unlucky decisions... Things can turn on a sixpence and if you ignore most of what folk on this board predict as well as ignore most of the estimates coming from our BOD and just stick to a basic understanding of how quickly even good companies in this sector advance, then our progress is still more or less within a timescale I'd consider normal, we're just not as early as many hoped for. Similarly our mkt cap has increased noticeably since we both bought in its just that it has not done it in a smooth linear fashion and has diluted away and price gain.

It's not an approach many follow but as I've said before, when speculating in junior explorers I only commit small sums I can afford to lose, then immediately write them of mentally as a 100% loss. I then give them several years just to see what happens and regard any value they still have in the future as a bonus. If you get caught up emotionally in the daily ups and downs it will exhaust and frustrate you.