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Screening Aim listed Basic Materials companies with net profit greater than £5m you get MCAP multiples ranging from 1.1 (KRPZ) to 36.5 (BREE). So there doesn’t appear to be an exact science to it. I guess mine life etc play a big part, which has been discussed previously on the board.
The average in the list I screened was 7.9. Without going back on the threads, I can’t remember what the consensus was for annual profit over the life of the mine. Was it £25m per annum?
25*7.9 = £197m would do me very nicely as an Mcap but not sure if that is realistic or not.
Anyone understand what the market is doing? I’ve been getting NT to sell anything above 500k all week. Suddenly the bid drops to 0.26 and I can sell 5m?
Not looking to sell, I’ll be holding long term just interested in what the mm’s are doing in the background.
Another thought that I’ve had. I know the main concern is the CS project but there are a few shares that are sending the boards hysterical with positive gold and silver results. Maybe PC wants to go do some drilling because he suspects that he could get similar drill results as other companies and we could see the same impact on sp over here?
Rodster, are you anticipating news next week? I don’t think that this will start climbing again until we have some substantial news about what the plan is now permits are all in place. Doesn’t appear to be much interest in sres, all the money is chasing gold at the moment so we need the big announcement to get some attention.
It would be great if something happened next week but I’m predicting nothing until after the 11th.
Samspade. Good thinking in regard to the precious metal claims needing progress. I haven't had time to fully read and digest because it's a long document but this could suggest that you are correct.
http://minerals.nv.gov/uploadedFiles/mineralsnvgov/content/Programs/Mining/LocatingRecordingMaintainingClaims.pdf
Page 33 has section PART 3836—ANNUAL ASSESSMENT WORK REQUIREMENTS FOR MINING CLAIMS
If you are correct, then hopefully a limited amount of the funding is used just to keep the other projects ticking over with sufficient work being done so that the claims aren't challenged.
A couple of questions, that I think are worthy of discussion.
1 - Is there a logical reason that PC has done the placing now rather than next week after the permit appeal windows had closed or even later in September after the air permit appeal window closes? I'm sure the share price would have continued to climb at a nice steady pace, thus a placing for £1m at a higher share price would have been less dilution.
2 - Gold and Silver. PC keeps talking about taking advantage of strong market conditions for these metals. Do current prices have much impact on the value of a project when that project is still in initial drill phase? No gold is coming out of the ground in the next 2-3 years so why does it matter what the current price of gold is? It could crash again before any gold is coming out of the ground.
Overall, I'm still positive in the direction that this is going. I just don't understand the timing of the placing and the amount of dilution and can't understand why money is getting diverted to exploration at this stage. Get CS up and running and deliver a revenue.
LordB,
I can't see any deramping in the last few posts.
Mine Permit RNS - "parties that are adversely affected by the BLM decision to authorise mining operations can appeal this decision to the BLM State Director within 30 days, as set out in the Decision Record referenced above."
The mine permit was rubber stamped on the 28th July. 30 days is 27th August. So no the appeal deadline is not over for the mine permit or the air quality permit which closes on 11th September.
This is not a deramp it's a statement of fact. Like most other people here I don't expect any appeals. I just don't think that we are likely to hear about any contracts with customers until these dates have been passed. Hope I'm wrong and we get the game changing RNS sooner.
Jon
Thanks for the link SGD, really useful.
The SVS research states "It must be noted that this valuation contains both a 70% funding and a 20% cash flow discount rate given Sunrise’s early, pre- commercialisation, stage of development"
Do you think that the 20% cash flow discount rate stays the same or does it reduce now that we have permitting. Does it them reduce again once sales contracts are know and the spades are on site?
The rate makes a big difference to the calculations. Drop to 15% and then the share price jumps to 2.1p.
0.4p. is an MCAP of £13m. PC owns 7%. Do you think he'd sell up to sail off into the sunset for £910,000?
If that is all that was on offer, if I was him, I'd do my best to take it to production and payout all profits as dividends. £770k per annum for PC.
Sheldrake, yes you would hope that once a revenue stream is established that sres could develop other projects and the 5% dividend yield can be maintained indefinitely. This is why the likes of Rio Tinto's MCAP can be calculated on dividend yield because it assumed that it can be maintained as they develop other projects. However, sres has no experience in bringing projects to production so there would be a big discount due to their inexperience.
I'm not sure that Sheldrake's calculations stack up because they don't take into account the fact that the mine is a finite resource.
In his example, let's pretend that someone buys the whole company for £220m and runs the CS project in isolation. Ignore all other projects. At the end of the 27 years, apart from machinery, there is no value to the business because the resource has been depleted. So the investor does not get his £220m capital investment back. Over 27 years, return on investment is, therefore, only £80m. A 36% return over 27 years isn't good.
I think MCAP needs to be discounted to allow for this.
What are people's thoughts on my logic?
Thanks Bplan.
I personally don't think that we will receive an RNS relating to sales agreements until all the relevant permit appeal windows have closed. This air permit has a public comment period until 11th September so it could be another month before we hear anything.
Would love to be proved wrong though.
Mineralex,
The wording that you have quoted is from the reclamation permit not from the mining permit. The reclamation permit is valid for the life of the project. The project being the 27 years of mining that has been granted.
Jon
My beer mat calculations estimate that annual profit from year 4 onwards would be $20m+. That's based on the pozzolan at $100 per tonne and expanded perlite at $350 per tonne. The latest presentation suggests that these figures could be as high as $120 and $850.
MCAP of £26m would be a good start but I'm sure that once the operation is up and running it will increase significantly from there. If PC then "unlocks" the value in the precious metals which he has alluded to doing....................very exciting times ahead.