Member Info for Metalhead25

I’m don’t know another. My other favourite share at the moment is Kavango, but I’m not sure I’d say it was anomalously safe yet (ask me again in late January…)

Happy to tell you all why Kavango is so great if you like, but not now - I’ve done enough typing on this board today!

Bit of new year fun now. In my long post earlier I wrote:

“A good smallcap mining investment should either be anomalously safe (ie priced like it’s very risky, as the sector as a whole is, but actually it’s not risky) or offer stunning upside potential which it’s realistic to think may be achieved. I tend to prefer the latter but that’s personal preference. A truly excellent smallcap mining investment has BOTH anomalous safety AND stunning but realistic upside potential. This is very, very rare. In my view, Alien is such a share.”

So, the question is: anyone think they know another and want to tell us all about it?

Rules are:

1. The phrase is “stunning upside”. Don’t want to hear about shares that might 3-bag but that’s it.
2. You’ve got to be prepared to give some explanation. A load of people just throwing out tickers is boring. Tell us why!

Anyone fancy a go?

Hard to describe a placing as “inevitable” when the recent indications from both the company and the broker are that we will be cash flow positive and not in need of a placing.

Normbeef, exactly. It takes some special negativity to respond to a CEO buy as though it’s a bad thing

What, 6 weeks after the last one? Behave

Could be, but I’d rather we borrowed the capex

I said I’d set out my reasons for having bought another £20k in the past week or two.

A good smallcap mining investment should either be anomalously safe (ie priced like it’s very risky, as the sector as a whole is, but actually it’s not risky) or offer stunning upside potential which it’s realistic to think may be achieved. I tend to prefer the latter but that’s personal preference. A truly excellent smallcap mining investment has BOTH anomalous safety AND stunning but realistic upside potential. This is very, very rare. In my view, Alien is such a share.

Why is it anomalously safe? Five reasons:

1. Jurisdiction. Key projects are in Australia - couldn’t be better.
2. Known resource at Hanc0ck with scoping study in place and low capex. Even if we only get the resource up to 15MT and even if iron ore drops back to $80/t, that still gives us $300m of profit against an mcap barely over a tenth of that (probably a fifth if you allow for the capex). This is not your standard smallcap mining project which looks nice on paper but is never going to happen. This will happen. And it’s not that far away.
3. Share price currently low. We were at 1.2 six weeks ago and nothing substantively bad has happened since. Got to be more space on the upside than the down.
4. We’ve just had a placing (so we’re not about to have another one).
5. The CEO has just bought shares so, if he knows anything we don’t, it’s positive. There’s nothing bad coming along that he knows and we don’t.

Why do I say we have stunning upside potential which it’s realistic to think may be achieved? Three reasons:

1. Hammersley. I’ve already set out my low case. Now let’s say we get Hanc0ck to 30MT, Brockman to 150MT, and assume a price for 60% iron ore of $120/t. Now our profit is $10.8 billion. Stunning upside? Tick. Realistic prospect of happening? Tick tick tick. There is nothing unlikely about those assumptions! Maybe the $120/t iron ore is a bit optimistic. Ok, let’s say $90/t. Only $5.4 billion profit now. Boo hoo. I really don’t think the market has understood Brockman…
2. EH/Munni Munni. The Julimar deposit propelled Chalice from an mcap of next to nothing to AUD $3 billion. Now of course we don’t have a resource like that yet. But we’re heading in the right direction! This isn’t just “highly prospective” like all miners say. We already know there is 2MoZ+ of PGEs. Find some more, find some nickel or copper sulphides, it’s on. And the deposits are pretty shallow, I believe, so attractive to mine. I do think there’s a significantly higher chance of blue sky upside here than is normally the case.
3. The silver price. You’ve all heard people suggesting that silver is going to run up to $50, $100. Will it? Personally I’m not sure. But, if it does, the UFO share price will surely shoot up.

So, those are my reasons. I do think this share is a special proposition.

Great that he’s bought some shares. I don’t really care how much. It’s enough to allow us to say “he wouldn’t have done it if he wasn’t super confident at this share price”. Particularly as he has plenty of warrants and therefore upside protection anyway. I’ve bought more again today. Will explain why shortly

I’ll go for 3p, based on:

- extra tonnage at Hanc0ck (although I don’t subscribe to the view that we’re necessarily going to get to 20-40MT)
- progression of Hanc0ck toward production
- Brockman permit being granted and drilling started, with maybe a first set of results

Obviously in reality any valuation of Hammersley will be sensitive to the iron price.

I don’t think it’s possible to estimate what value we may have attributable to EH/MM or any other projects. Could be barely more than now, or, if we’re on the way to another Julimar, it could be dwarfing Hammersley!

Yes, smiller definitely genuine. Reasonable people can disagree! We have only one troll here and we all know who that is. Nice board on the whole, including at the moment even though some investors not too happy

Smiller, by your logic a multi-project explorer should stop being a multi-project explorer as soon as it identifies a single project which is very likely to make money. Or, to put it another way, an explorer should only acquire new projects or licences at times when it doesn’t have any existing projects which look very likely to succeed. I disagree. Acquiring, developing and realising multiple projects is what the company is supposed to be doing

Stevo, I respect the amount of effort you put into this share, but all this paranoia and conspiracy is really not for me. They’re dishonest, they’re cynical, they deliberately break the rules, they’re out to get you. Some people are drawn to that way of thinking. But myself, I tend to think other people are basically good, although of course flawed, unless I see very convincing evidence to the contrary. A 36hr delay in releasing Hanc0ck results and your mate in Mexico saying there aren’t long delays don’t meet that standard for me. So I believe the board is trying its best in what they believe to be the best interests of the company. Each to their own!

After a rollercoaster couple of months and a lot of passionate debate on this board of late, I thought I would offer a few thoughts on where we are as a company:

1. Alien is a multi-project explorer. This is what it is supposed to do. It is not (or not only) a startup iron ore producer. It is supposed to acquire several promising projects cheaply and work them up to be more valuable, before securing a sale or JV.

2. In 2021 we had successes and failures. The most important successes have related to Hanc0ck, where good drilling results, a maiden JORC and a very promising scoping study have converted a mere licence to a project that is less than two years from being extremely profitable. Things have also gone well at EH: all assays are still awaited, drilling seemed to go well and XRF readings were good. Signs are that the poly metallic halo theory may be right. And Bill has managed to make arrangements to reopen the mine. So EH another success, albeit more work to do. The main negatives were the loss of the Capstone JV and delays to the other Mexico licences. Notably, the positives relates to Aus and the negatives to Mexico, which has undoubtedly pushed the focus of the country in the direction of Aus. Personally, that very much works for me.

3. From May/June to December it has been bad times for the share price (with the exception of a good couple of weeks between the Hanc0ck scoping study and the placing). However, this is not unique to UFO: the whole sector has taken a battering over the same period.

4. In UFO’s case, I think the share price fall is impossible to tie to fundamentals or any negative news (except for the Capstone JV but that was ages ago now). We are on track to make a stack load of money at Hammersly and have a fairly well advanced and already quite large Ni/Cu/Ag/PGE project at EH/MM. I hope I won’t upset anyone by comparing us to another Aus explorer, Rockfire. In the past 6 months, we have had belting results from Hanc0ck and belting XRF from EH. They have had rubbish results from their Copperhead project. Market verdict? Both shares down about the same amount. Doesn’t make sense as a judgment on this company; only makes sense as being a result of adverse sentiment. What does that mean? Well, simply, that we are now VERY undervalued.

5. It’s hard watching the share price struggle. But I really believe we are onto something great here and that 2022 and 2023 will be excellent years for us. Patience is, of course, key.

Merry Christmas, ya bunch of aliens!

Yes, thanks Adam. I have bought some more today but not based on your (very helpful) posts. I just think the valuation here is now bonkers

Or, back in the real world:

- we were told to expect ramp up of diamond production in Q4 2021
- we were told to expect ramp up of tantalum production through 2022
- we were told the HMS licence is expected soon (Poppyseed research suggests already granted and just need to let an appeal period run out)

Today they have confirmed that they have delivered the first of the above on time

They’re stating that because it’s a specific issue they’re required by law to consider - that’s not their choice of words for how the company is doing!

I knew I should have unleashed my buying finger when it went down to 4.80 to buy!

Yes and I hope that continues. Sorry for grumpiness!

In fact, just re-read the RNS and now feel less happy. “The fire escape was broken so we’ve lost six weeks’ production” is hard to take

This is an odd way of looking at it! The delay in clearing the hedge means an extra month of being stuck with a sale price agreed before copper ran up in early 2020.

On its own, doesn’t matter all that much in the long run. However, I am keen that we soon stop being told “production is lower than planned because of X operational issue”. What all these issues are adding up to is a mine that is still not profitable. And yes it’s a turnaround project, but these things do need to stop happening and/or need to stop hitting production. It can’t always be like this