Member Info for mac4671

How to value an asset 101 from a DFS. An example of needed numbers -

THE DEFINITIVE FEASIBILITY STUDY (DFS)
The question ‘To mine or not to mine?’ is resolved at this stage.

By now all processing parameters have been through detailed and accurate metallurgical test-work has occurred.

While inevitably some will be assumed, these are usually realistic because they are dependant on all mining, processing and other considerations taken at and before this point.

As an example, Arafura Resources’ (ASX: ARU) Definitive Feasibility Study for its Nolans project in the Northern Territory forecast average annual production figures of 4,356 tonnes of Neodymium-Praseodymium oxide and and 135,808 tonnes of merchant grade phosphoric acid.

The mine’s life will be 23 years and average annual pre-tax earnings at A$377 million EBITDA, although the project would require just over $1 billion in capital and up to 650 employees at the peak construction phase.

The company used the study’s release to proclaim to investors, “the Project is financially and technically robust to support a long life operation”.

https://stockhead.com.au/primers/your-guide-to-mining-feasibility-studies/

And all assets are planned to go to production via relevant EPCF, that covers the finance aspect!

GLA

They even told us all that production volume from said Rosgeo JV assets will be separately announced when they released the initial 5 year mining plan a very long time ago -

"· Phase One annual metal production has now been calculated to be equal to 128 Koz of palladium equivalent, over 70% higher than the volume projected in the FS. This production volume does not include Monchetundra Flanks and Rosgeo JV projects which will be separately announced"

https://www.lse.co.uk/rns/EUA/monchetundra-detailed-mining-plan-vx78wi891a3lpr6.html

All ore is to be processed at the one plant, they have to plan for such things, all part of a DFS!

GLA

Lovelyboy, do tell us all how the engineers will design the processing plant at Monchetundra which is to accept toll treated ore from Rosgeo JV assets if they don't know what ore is coming from said Rosgeo JV assets.

The DFS included the plant engineering and construction plans, all part of costs!

GLA

I'll take things from the budgeting thanks. It was budgeted until November, the only news we've had was the interim and the budgeting was not altered. It has been stated as on schedule, that means on schedule as per the budgeting -

"has budgeted a further £527,000 for statutory reporting on this asset to November 2022"

"The Group has spent £682,419 on a development programme for the Monchetundra asset during 2021 and has budgeted a further £527,000 for statutory reporting on this asset to November 2022, keeping the asset in good standing while strategic options for the project's development are considered."

"The Company continues to progress discussions with regard to the potential sale of its assets, appointing KPMG Russia as agent in May 2022, and has set aside sufficient funds to complete and submit a Definitive Feasibility Study for the Monchetundra project in November 2022."

Until someone can show me any other official schedule, then, well, i'm taking it as on schedule as per the relevant budget and RNS info.

GLA

There's two sides of the table in an FSP, our side will have stated something like 'Well, we believe the project can make X amount over X amount of years and so is worth X price', the buyers side will have came back with something like 'Ok, that sounds great, but, i'm looking at parting with billions of $'s here, you're going to have to prove that it can potentially make X amount and be worth X amount', our side comes back with 'No problem we'll do a DFS'.

Both sides get the most accurate way of valuing the asset/s from the completion of the DFS. All costs, time for construction, yearly ore output, life of mine etc are contained in the DFS, it's the study which ultimately decides whether a project is financially viable or not, which, again, is something which would be highly important to any potential buyer!

GLA

From the initial FSP RNS lovelyboy, Monchetundra has always been for sale.

https://www.lse.co.uk/rns/EUA/statement-re-formal-sale-process-jtwyvaxxdax49q0.html

Without the DFS they don't know what ore processing the project will achieve, if they don't know that then they'll never know the yearly potential turnover figures, without those they'll never be able to do an accurate discounted cash flow valuation, therefore, never be able to make an official binding offer!

This is potentially Eurasia's most important month in its whole existence tbh!

GLA

The DFS will tell all what the potential value of what is for sale is worth, it is only at the DFS stage where a binding offer could arrive due to that scenario. No one has an accurate way to value Monchetundra until that DFS is done!

GLA

NDA's have always been in place for Monchetundra, they will be until the binding offer arrives -

"All existing non-disclosure agreements interested parties have already signed with the Company in relation to the potential acquisition of the Monchetundra asset remain valid."

It is the NDA's which make the entire process so secretive!

GLA

Well it kind of does lovelyboy. "YGK will become a 75% shareholder in Monchegorskoe LLC" -Monchegorskoe LLC must be the junior Rosgeo company.

Replace YGK with a buyers subsidiary due to companies like Eurasia now being able to sell licenses, completing JORC etc would give them the right status for this as they will have confirmed the reserves via JORC - "The process will be organized as follows: the junior company conducts exploration, confirms the reserves"

Or, perhaps YGK is being sold at our side, licenses transferred in completion of JORC and 100% status obtained. Like i say, you can't transfer part of a license, it's an all or nothing move if there is a buyer there wanting to snap up the Rosgeo JV assets also.

We know 6 open pit optimisations have been done, we know that we are selling substantially all of our assets and we know that there is a buyer/s at the table. We can only really sit and wait to see exactly how they sell substantially all of the assets tbh.

By the way, i enjoy the conversations as they've helped pass the time until November nicely, like everyone else i'm hoping news arrives soon at this stage.

GLA

Indeed lovelyboy, perhaps why it's confusing. But the Rosgeo site clearly says that there is a junior rosgeo company, and, as per the other thread currently running, the sale of any licenses is now very straight forward!

GLA

This part right here could explain how Eurasia and Rosgeo will simply sell the Rosgeo JV licenses to a buyer who will take everything to production -

"The process will be organized as follows: the junior company conducts exploration, confirms the reserves, receives a certificate confirming the fact of field discovery, and then can sell this certificate. Then, a mining company, based on the certificate, gets a production license without bidding and pays a one-time fee for it.

Previously, subsoil users did not have the right to sell licenses, you could sell only the company owning the license. Now the rules of the game have changed significantly, and they can take the exploration industry to a new level. A small company due to its finances and competence cannot develop the field it has discovered, but it can sell the license and make money on its exploration. Those regions and subsoil areas that big companies don't want to spend time and effort on exploring will be actively explored by junior companies."

It appears very straight forward tbh imho - "Then, a mining company, based on the certificate, gets a production license without bidding and pays a one-time fee for it."

GLA

No, the Rosgeo junior company holds the licenses, that is how the split currently sits according to the Rosgeo site. Once JORC and the other details are complete and 100% status obtained, they could begin to move the licenses from the Rosgeo junior company to the relevant Eurasia subsidiary/s. It's all very straight forward tbh, it just keeps Rosgeo in control until certain milestones are hit.

We have the ex Rosgeo managing director here, so, there isn't going to be any problems.

I would have liked to have known if 3 more pit optimisations had been done personally, but, we're all in the same boat tbh with the current new blackout situation and we'll all be hoping that the end of the blackout is about to arrive due to us now being in November. Options to consider and also the budgeted funds for Monchetundra only ran until today!

GLA

It may have been this bit of info the entire time -

"According to the Agreement Eurasia Mining in the framework of the pilot project acquires 75% equity stakes in a junior company incorporated within RosGeo for the amount of 0.5 mln."

You have to presume that it is the company which currently holds all Rosgeo JV licenses, passed over when JORC done and 100% ownership for Eurasia arrives. They can't pass a percentage of a license over to out holding subsidiaries you see, it's either a full license or nothing!

GLA

"ROSGEOLOGIYA AND EURASIA MINING IMPLEMENT JOINT PROJECTS ON THE KOLA PENINSULA"

https://rusgeology.ru/en/press/news/rosgeologiya-and-eurasia-mining-implement-joint-projects-on-the-kola-peninsula/

GLA

You put too much focus on the TPI, Rosgeo have held the licenses for a long time, they've been exploring there on top of any other work that has been done -

“Since the beginning of the work started in 2018, we have drilled the wells totaling in 3956,5 linear meters on the ore development," said Oleg Vasin, Managing Director of RosGeo. - All wells have been documented and tested. We have received the first results of 300 core samples. According to drilling data the ore zone thickness increased by 2 times in comparison with mining. The new geological data obtained for the Poaz site confirms the unique resources of the deposit for platinoids."

https://rusgeology.ru/en/press/news/rosgeologiya-podtverdila-perspektivnost-massiva-poaz-na-platinoidy/

GLA

CAW, Rosgeo hold the licenses for Rosgeo JV assets and we're in a Joint Venture with them, the specific task is taking the district to production -

"A joint venture (JV) is a business arrangement in which two or more parties agree to pool their resources for the purpose of accomplishing a specific task."

https://www.investopedia.com/terms/j/jointventure.asp

GLA

CAW, believed to be. There lays one issue, the open pit is clearly visible via satellite, just scroll in fast on sentinel playground and the hammer and pick symbols on a greyed out background appear at all previously operated pits in the area.

NKT has a nice big green looking water body right in the centre of the previously operated area. Take a look -

https://apps.sentinel-hub.com/sentinel-playground/?source=S2L2A&lat=67.89473480083959&lng=32.73101806640625&zoom=12&preset=1_TRUE_COLOR&layers=B01,B02,B03&maxcc=20&gain=1.0&gamma=1.0&time=2022-05-01%7C2022-11-01&atmFilter=&showDates=false

You have read the pit optimisation info i provided CAW? That is the process they go through!

GLA

From moving from the 4 they did due diligence on they asked this simple question - "Is it worth acquiring a neighboring lease?" - Answer was YES, so, 2 more pit optimisations were done - "· Block Modelling and open pit contouring and optimisation complete for 6 of 9 Rosgeo JV projects." - Sept 2021

You merely have to understand the process that mines go through to arrive at production.

Due to the nature of the Rosgeo JV containing both greenfield and brownfield assets they will have ultimately also had to ask this question - "Should one mining area develop before another?"

It all becomes part of a wider district mining plan, there is simply no other way to do it when they are planning to process the ore at the planned site in between the West Nittis and Loipishnune pits on Monchetundra.

They have to know all of the info in order for the engineers to construct the correct capacity processing plant!

GLA

Basically, what they told you in RNS was that they had done the due diligence on the four previously operated pits. 2 at the marked NYUD area, 1 at Sopcha and 1 at Poaz. They then looked at surrounding areas to see whether leases there would be beneficial, they clearly we as another 2 pit optimisations were completed by Sept last year.

I will grant one thing, we currently don't know 100% whether they have done optimisations for 3 more pits on the other 3 rosgeo jv assets however!

GLA

Just as a reminder, NKT, NYUD, Sopcha and Poaz are all BROWNFIELD as have previously operated pits on them.

Cakewalk to take them back into production!

GLA