The latest Investing Matters Podcast episode featuring Jeremy Skillington, CEO of Poolbeg Pharma has just been released. Listen here.
Mineralex, it would be good to hear your thoughts on the buy out versus move to production debate. Do you have view on which direction the board might go?
Rod, my thoughts are that 1p is a given. 2p is my hope and anything above is icing on the cake. I’m sure there are some intelligent people that can do the proper mcap calculations but the research I’ve done into calculations for mcap on miners goes above my head because I don’t know all the operational costs etc.
Hi Rodster.
My theorising was only based on Terrafin suggesting PC could sell up and walk away a multi millionaire. Which to me, read as selling the whole company.
I was just asking the question about what value do the other projects add to the purchase price in that scenario. Based on you reply, presumably no value. They only have value once permitted?
It would be good to hear your thoughts on what might happen over the next 2-3 years. If CS is sold and the money is used to develop the other projects then it sounds like it might be worth holding the shares longer term to maximise investor return.
Jon.
I was thinking more along the lines of the other Pozzolan and Perlite projects if someone like Boral were to make an offer. Has enough scoping studies been done on those sites for them to add good value to the buy out price?
Also, if someone like Boral came in, would they want the precious metal projects? Stonewall Gold is already held in a subsidiary, could we see a split so that all Pozzolan and Perlite projects are sold and all precious metals move into the subsidiary?
I have no idea how these things work, just playing out different scenarios in my mind.
Hi Safe.
As per the comments yesterday evening with Samspade. Hopefully the product sells itself. Don’t forget that PC mentioned In his interview that unsolicited contact had been made by third parties. That tells you that the people that need to know are fully aware of what we’ve got. A little more patience and hopefully before long we all wake up to an RNS that has us grinning from ear to ear.
https://pubs.usgs.gov/periodicals/mcs2020/mcs2020-perlite.pdf
In 2019 the US imported about 30% of it's consumed perlite. You would think that this would be another indicator that there will be buyers lining up at the gate. Especially, with Trumps focus on domestic production.
Thanks for the links Samspade.
Do you know whether the intention would be for SRES to "pop" the perlite themselves or do you think they are going to sell the raw material? I haven't re-read all the presentations but from memory am I correct in stating that initially, it is likely to be selling raw material with a view to "popping" in the future?
Also found this site. https://www.perlite.org/ which gives a really good overview of all the industries that perlite can be used. This product is so versatile that the number of potential buyers must be massive. I think that Mineralex has stated before that the quality is also as good as it gets so surely we're going to be in a sellars market.
Tottyman,
Yes, the permit has been granted. But there is still a 30 day appeal window. As per the RNS dated 29th July.
“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.”
Personally, I don’t expect an appeal to take place, hence my facetious comment about Reindeer. I’m not sure if you are familiar with the sister company TYM, but they were granted a mining licence in Sweden in February 2016 only for two appeals to be lodged in March 2016. In December 2016 the case was referred to the Swedish Mining Inspectorate for re-assessment. To date a decision has still not been made.
Now I agree with SGD27, because there were no major problems during the public consultation period, I don’t expect there to be any appeals. However, technically, there could be. All I’m suggesting is that could this technicality possibly be a reason that some investors are holding back. This could be one reason albeit a small one, along with the more probable reason of wanting more details about sales contracts etc.
jonjb
The permit appeal period could be holding this back. PC has had a permit rescinded on appeal previously with TYM. Let's hope that lightning doesn't strike twice. I'm not aware of any reindeer in Nevada so I think we'll be OK.
Been doing some digging into mining profitability and found the following: -
https://www.statista.com/statistics/208725/net-profit-margin-of-the-top-mining-companies/
2019 the average profit for mining was 9%. This was based on the top 40 firms by mcap.
Given that these averages will include minerals that are more difficult to extract I'd hope that our open pit mine will mean a higher margin.
The other factor is economies of scale. Do the larger firms benefit from economies of scale and therefore have a higher profit margin than the potential with SRES. Or does being a smaller outfit benefit SRES so that they can keep overheads to an absolute minimum? i.e. they don't have to run large HR departments and have fancy offices etc. In which case being small also increases profit margin?
Thanks Ringworm.
I’m hoping we can get circa 1p. But would be happy with any price in the range you’ve mentioned.
I guess the first couple of announcements from PC will reveal whether we are going to production or not. I believe there are some mou’s in place so hopefully shortly after permit announcement we get some meat on the bones.
Hi Ringwood.
Why the change in your thinking and mcap expectation. Back in Feb you made the following statements. It looks like you previously expected SRES to take this to production. Why not now?
Good placing, last chance now at this price ..14 Feb 2020 14:53
This placing was small enough to not dilute, and just enough for getting us to production, I don't really think we will ever see this price again, next placing at 2p or more and that will be for production and working capital before summer IMHO.
Bounceback19 Feb 2020 08:42
If I had sold at 08:00 I would certainly buy back now, base price will correct to 0.25 before we get the permit, and then its a steady climb. I expect 2p/share this time next year with first production quarter results.
Hi JCDefo,
The million dollar question.
If you read the presentation that SG linked to you will see that they estimate a total of 14.5 m tonnes of Pozzolan and 1.3m tonnes of Perlite. The price guide for each is $90 per tonne if you take the lower figures.
I'd like someone to tell me if I'm calculating this wrong, but to my simple mind the above figures mean that there is potential revenue of $1.4bn over the next 27 years. If Dubliner is correct with his 30% profit margin then we have profits of $426m over the next 27 years.
Current mcap is £5m. I don't know if I'm over simplifying things and the above is garbage but if it's even remotely close to being correct then the upside from £5m mcap must be massive. Unfortunately, I don't know how to take the total figures to then convert to an accurate MCAP. There are going to be various risk factors over the next 27 years such as demand for the product, competitors etc.
So, I don't know what the future MCAP will be but I'm heavily invested expecting to make significant returns. As long as we get the permit!!
Jon
Thanks. Sam. Even though last night was quite entertaining, hopefully the last few weeks of antics on the board are behind us now. It would be good if we get a flurry of positive rns’ over the next month to turn out attention to.
Interesting last night watching the soap opera play out :-). Still not clear though, is PJ actually positive Sres and has a large holding? If he’s the Aviator on advfn then he appears pretty positive.
Was all the negativity just a game. I don’t understand how anyone can buy in fairly recently and be so negative. I understand safetraders position being a lth he’s just seen his money go down year on year. Couldn’t understand PJ’s negativity though as surely the slightest price rise sees him in profit.
Fingers crossed we see a rise next week. Gla.
Thanks for your posts Ageos.
So future share price is very much dependent on finding a buyer of the product. Are you pessimistic on there being a buyer of the pozzolan given the level of competition?
Your prediction on concentrating on the Perlite is backed up by the fact that MOUs have already been signed for the perlite. Presumably these will be acted upon as soon as feasible so that there is some cash flow.
I notice that in one of your previous posts you mentioned the costs of setting the mine up. Is this still a concern to you?
If you do buy back in how bullish are you on this being a multi bagger? Some of the posters are talking multiples of 10 and up which as Min keeps saying could be life changing for some. It certainly would be for me.