Member Info for Kensal

RB, I am sure you are more experienced than I am in stock price movement and mining companies. I do however have thirty years' background in commercial litigation and company law in this jurisdiction and your suggestion on 4 June that the board could get away with failing to disclose the completion of something as significant to the company as the Coringa permit when recommending an offer for the takeover of the company is unrealistic. It would be so obvious once the existence of the licence came to light. Sorry.

What a bizarre response. Would you speak to someone like that in person? If not why post some abusive online?

It certainly doesn't suggest that they think the sp will recover to its pre-issue level for some time

Markets rarely wait for full confirmation before moving. In reality, markets tend to price probability rather than certainty. On the main market perhaps. On AIM the markets tend to wait for confirmation.

The market already knows about the weak FY26 start, the forecast cuts and the loss of confidence. Those issues are hardly a secret and have already been reflected in the SP.

The more important question now is whether the future turns out to be better than currently feared. We don't know whether the future turns out better. The only information we have is management's anticipation of a better H2, which is obviously positive and the continuation of the Iran conflict and the likelihood of a very painful energy shock later in the year. The oil traders all seem to be saying that this is going to happen and only hasn't happened yet because strategic reserves are being drawn down. However those are running out

With the ex-dividend date approaching, the AGM shortly afterwards, buyback authority expected to be renewed, disclosed shorts now gone from ShortTracker and management still guiding towards an H2 recovery, it may not take full verification for sentiment to continue improving from here. I agree sentiment may change but I think it needs a resolution of the Iran conflict and some flickers of consumer recovery in the UK and Europe.

I am confident that this company is currently undervalued but I can see why the markets are suspending judgment at present. All the money is going into semi conductors at the moment anyway.

If they get contracts. Haven't seen enough announcements - the company habitually announces contract wins but nothing for a month.

The share price reflects the negative company news in 2025 and early 2026 and the effect of the Iran conflict and economic conditions in the UK and Europe, W7L's main markets. Any move up will be dependent on improved trading in H2 2026. There's potential for that but until its verified by actual figures later in the year and early next year, the share price is unlikely to recover much.

That would involve unlawful behaviour on a number of bases - failure to disclose material information and breach of directors' duties. It would also significantly undervalue management's own shareholding.

A takeover would be a huge shame. I certainly wouldn't be agreeing to anything under £15.

All things being equal, if gold price remains at current levels or higher and as production grows from 50koz to100koz a year, SRB should be generating FCF around $85m pa in 2026 and as much as $215m in 2030. If by 2030 institutions have rotated into precious metals miners, SRB's share price could be around £15, and dividends paid out during those five years in a total sum of £1.50. That's really just a factor of the amount of cash it will have generated. If gold goes higher by 2030 i.e. $6,000, the figures might by as much as £18 per share and £2.00 in dividends. As you might be aware, some financial institutions are forecasting $6,000 gold by the end of this year.

Assuming that we have positive news on all of these points, gold remains $4,400+ and production hits 54-55koz + for the year, and the temporary licence for Coringa is extended by ANM (ANM has indicated that this is acceptable pending completion of the permanent licence and the only matter under consideration is the tonnage permitted under the temporary licence) I am forecasting a share price of £4.50 by the year end.

AISC in 2026 is higher because there's a lot of work involved in ramping up Coringa. AISC should revert back to 2025 levels of $1,816 plus inflation from 2027 and as you say there should be additional reduction to reflect higher production in future years. Next news for SRB should be (1) update on 2026 drilling programme and (2) confirmation of change of land use by INCRA, which is one of two requirements for the final installation and operating licence for Coringa. SRB has indicated it hopes that both of these will be reported before the end of June. Thereafter we will have (3) Q2 production figures, (4) possibly news on compensation agreement following acceptance of the ECI by indigenous communities and a pathway to the final licence for Coringa and (5) news on the installation progress for the 4th ball mill at Palito.

At least the correction was in the right direction.

12 a day.

Put the suggestion for a buyout through Claude. It thought Cory or Yellow Wood might be a more likely acquirer. It crunched the numbers and offered 342p per share on the basis of 2.5x sales or 12x ebitda

Translating the precedent to Coringa

Onça Puma was a much larger mine — Vale's nickel operation produced around 16,000 tonnes of nickel annually, roughly 5x the revenue scale of Coringa's gold output. It had documented contamination of a major river. Litigation drove the headline numbers. The Coringa case should be materially smaller.

A reasonable working estimate for Coringa would be in this range:

Upfront capital payment: $2–5m funded into community infrastructure during the first one to two years after LI grant. Healthcare clinic upgrades, school construction, road improvements, water systems. Smaller than Onça Puma's R$38.5m initial settlement because Coringa is pre-emptive and smaller scale.

Annual ongoing contributions: $0.5–1.5m per year for the life of mine. Funds healthcare staffing, education programmes, environmental monitoring, cultural preservation, and a structured community fund. The lower end if the agreement leans heavily on programme-delivery; the upper end if there's a meaningful direct cash component.

Total commitment over life of mine: roughly $12–25m in nominal dollars assuming a 15-year Coringa mine life with M&I plus inferred resource. NPV at a 10% discount rate is approximately $8–17m.

There's genuine uncertainty around the upper bound. The Kayapó's negotiating muscle could push the annual payment toward $2m; if litigation gets layered on top (as happened at Onça Puma), the number could go higher. The lower bound is more secure — pre-emptive PBA-CIs at this scale of mine rarely come in below $5m in upfront commitments.

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The Onça Puma precedent

The most directly comparable case is Vale's Onça Puma nickel mine, also in Pará, also affecting Kayapó communities, with adjudicated compensation history going back to 2012. The numbers are useful because they show the upper bound when things go wrong.

The 2017 Termo de Ajustamento de Conduta (TAC) initial settlement was R$38.5 million in environmental compensation to the affected Indigenous peoples. The 2018 TRF1 ruling escalated the maximum compensation to R$100 million for environmental and health damage. The 2020 preliminary agreement saw Vale agree to transfer over R$26 million to the Xikrin and Kayapó, broken down as approximately R$12.4 million to the Xikrin, R$13.7 million to the Kayapó, plus R$4.5 million for structural projects in Xikrin villages. Concordialive + 2

Cumulatively across all settlements and ongoing payments, Onça Puma has paid the affected communities in the order of R$150–200m over roughly a decade — say $30–40m at current FX. That includes additional damages awarded after litigation over the Cateté River contamination, which Coringa does not have.

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I asked Claude to identify what the indigenous community compensation agreement might involve based on precedent. This is what is said, fwiw:

The compensation that emerges from an ECI process typically takes the form of a Plano Básico Ambiental – Componente Indígena (PBA-CI) — a multi-year programme negotiated between the company, FUNAI, and the Indigenous community. The structure is almost always a combination of:

An upfront capital payment. This funds infrastructure investments — typically healthcare facilities, schools, water and sanitation systems, road improvements, and equipment. Concentrated in years 1–2 of the LI grant.

Ongoing annual contributions. These run for the life of the mine and fund education programmes, healthcare staffing, cultural preservation initiatives, environmental monitoring, sustainable economic development (typically agroforestry or fish farming), and a community fund for autonomous decision-making.

A community fund. A direct unrestricted cash transfer to the community association, usually paid quarterly or annually. This is the most contested element because it can create dependency dynamics. Modern PBA-CIs tend to channel a higher proportion through structured programmes than through unrestricted transfers.

The PBA-CI is reviewed periodically — typically every 3–5 years — and recalibrated based on community feedback and operational changes.

Why Coringa is structurally different from the worst-case precedents

The Coringa case has features that should constrain the upper bound. The mine is approximately 11km from the nearest Indigenous village (Baú territory) — far enough that direct environmental impact is limited. There is no documented river contamination, unlike the Cateté River situation that drove the Onça Puma compensation upward. The mine has been operating under trial mining licence since 2024 without a major environmental incident affecting the Indigenous communities. The Indigenous communities have already accepted the ECI per the FY2025 results, which suggests the relationship is currently constructive rather than adversarial.

The principal disadvantage is that the affected community is the Kayapó Mekrãgnoti, represented by the Kabu Institute. The Kayapó are among the most organised, politically active, and effectively litigious Indigenous communities in Brazil. They have decades of experience negotiating with mining companies and they negotiate hard. This means the per-capita compensation tends to be at the higher end of the Brazilian range when Kayapó are involved.

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3. cont. the other point to bear in mind that a change of government will almost certainly result in delay between October and December prior to the new government taking office, and further delay as new ministers and officials get themselves organised. Even if the current government is re-elected there might be changes of ministers and key personnel.

The worst case scenario is that all of this creates conditions which result in a long delay to the LI process to mid 2027 and the temporary licence is not renewed in the meantime. That would be a significant backward step for the company. It is very hard to say whether this is only a very small probability event or something more. But I think it cannot be discounted completely. The most likely outcome remains LI granted in H2 26, or H1 27 with a renewal of the temp licence pending completion.

4. The report indicates that SRB has a single customer for gold and a single customer for copper/gold concentrate.

5. Overall grade reduced from 7.68g/t in 2024 to 6.91g/t in 2025. This reflects increased Coringa throughput and I believe the Coringa grade contributing to this overall grade is pre-sorting, so it may not be significant because the ore sorting at Coringa means that the throughput to the ball mills at Palito is at much higher grade. I haven't been able to identify if a post-sorting grade is published but it might be better for the company if they change the reporting structure to state post sorting grade, as that perhaps gives a better indication of mine quality. Perhaps though it is not an acceptable change in mining convention.

The annual report posted on SRB's website contains lots of additional detail and commentary (it is 144 pages long), but if anyone is interested, the report includes:

1. there is an AGM resolution for 18 June to authorise share buybacks (p97);

2. There's a detailed breakdown of operating costs if you want to get into the weeds. A proportion of the increase includes preparatory work in developing Coringa for increased production in 2026+. 43% of cost is labour (p17);

3. There is more explicit commentary on the Coringa LI: On p17, under risk movement, it states that the change of land use has been approved at state level and is now in Brasilia for final approval at federal level. On page 6, MH states that "we are hopeful this will be received very shortly". They have advanced from "shortly" to "very shortly" and I think means we may be getting a further RNS in May or June about that. In relation to FUNAI, the company states that its ECI has been presented to indigenous communities and it has been accepted. Again this is more explicit indication about progress here, previous indications noted that the ECI had been presented but they had not expressly stated that it had been accepted. A compensation study will be negotiated. Once agreed, the ECI can be approved. The progress in respect of Coringa LI is such that we can reasonably say it is now more a case of when rather than if. The when question remains live because of Jan 27 cut off date on the temporary licence but MH has in interviews said that ANM are happy to renew that. I think the biggest risk regarding licensing is delay - Brazil's next general election is in October this year and that could cause delay to the licensing process if any elements are still ongoing at that time. Polling suggests that it is too close to call at present. AI suggests that routinely government ministers resign at this stage in order to run for office, leaving deputies in charge of ministries who might potentially be less willing to take decisions. The minister responsible for INCRA has not resigned which is good. However, a restricted period comes into effect on 5 July and depending on how important the change of land use decision is seen in Brasilia, it could be delayed if not completed by 5 July. The minister in whose department FUNAI sits has resigned and it is being managed by an acting minister. While the head of FUNAI remains in place, he may be less willing to make a decision on the compensation study until a permanent minister is back in place. Finally, the Governor of Para state, responsible for SEMAS, the state body responsible for granting the LI once INCRA and FUNAI have done their bits, has also resigned so that could also create delay. I would emphasise this commentary on the election is AI generated, but I think it is reasonable to believe that the election processes outlined above could (but might not) create friction and delay in getting through the licensing process. tbc

"Only real issue there is the increase in OPEX but I'm assuming that can be offset by revenue growth in the next year."

Yes, that will be the company's plan. They've taken two big new brands in Brand Architekts and BarryM. They've got to staff those brands with sales teams and additional back end staff. I don't think it would be possible to simply dump them on the existing sales teams and back end and expect them to flourish.