RedLee,,, RNS21 Sep 2018 05:53
Hi RedLee,,
Many thanks for your time and high quality observations. One thing that does strike me when I digest your input, I tend to get a better understanding of timelines than I do from RY.
I maybe wrong here, but is RY's rationale for a 15yr LOM, anything to do with this, from May 2015,,,,
"Robin Young, chief executive, said he was delighted with the twenty year permit and the licence terms and conditions that he said give considerable leeway to advance the project."
"The new 36 square kilometer licence is valid until December 2034.
Amur will be recovering nickel, copper, cobalt, platinum, palladium, and other minor minerals from the project with 841,000 nickel tonnes equivalent lying within the production license area. In March, the company said the project could sustain a 15-year mining plan." It looks like he was planning to start production in 2019, back then.
From start of production we will have less than 15yrs left on license, without extension. As you can see back then, we only had 841k tonnes, we may well be looking at 2 million tonnes now. So, 6mtpa does not sit right, nor does it return any where near maximum value.
With regard to economic impact, there's nothing I can add that you haven't covered. I have no experience in the mining industry and very limited knowledge of financing in this sector, so I must bow to your superior knowledge from a banking perspective.
Regarding LOM, I'm not convinced we have seen RY's final decisions on all issues that will ultimately impact NPV.
It may well be that his idea of 15yr LOM ("limiting factor") is causing problems and that maybe the reason for some delays and he's seeking solutions in this regard
It does appear to be a fast moving/changing environment at the moment, one that seems to flummox RY on a weekly basis.
Without absolute and complete clarity from RY, it's difficult to do more than speculate on many critical issues.
You highlight a good example of this with your 3 questions on 6mtpa.
As we very well know, RY says one thing today, then something completely contradictory the next.
I guess the major considerations for economics and LOM are for any potential partner/acquirer, as I'm sure, they will leave little value in the ground.
On thing I'm certain of, RY needs to produce the PFS, PDQ, whether that be in a living format or, at the very minimum, the executive summary, showing current state of play, in particular, NPV as it stands.
At least then we would have a base that offers more clarity and allows for better understanding.
If RY is to realise maximum value, then he cannot leave, as you quite rightly point out, "lots of metal is potentially left in the ground, (in mine plan and NPV terms)." but my gut tells me, we will never see maximum value returned for shareholders.
Again, many thanks to you for your time, and sobering insight.
Good luck.
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