The latest Investing Matters Podcast episode with London Stock Exchange Group's Chris Mayo has just been released. Listen here.
Hi TMS,
The Pd equivalent figure at MT is not anything to concentrate on as the current Pd equivalent at MT is around 1.3moz as the prices of Pd and Pt have moved relative to each other since the 1.9moz of Pd equivalent was released in the Maiden Resources RNS. There are 1.6moz of Pd, Pt and gold at MT by Russian standard, mainly Pd.
At the time the Maiden Resources were given not all of the 1.6moz was economically viable, since then (as per the more recent detailed mining plan for MT) more has become economical to extract so whilst they are saying they will produce 70% more than they had previously expected it doesn't mean there is 70% more than the 1.6moz.
The C2 amounts which make up the vast majority of what is booked at MT are of value as possibly all of them are now economic to extract.
You can't easily compare a sale of MT and flanks to previous sales of operating mines because there is no operating mine at MT so even a DFS of MT will not be 100% accurate in terms of AISC and average grades per tonne returned, more so because the drill spacing for a predominantly C2 resource is quite wide (50m spaced drills on 100m spaced drill lines from past RNS) meaning what is happening between the drill holes is estimated and it's only when you start producing that you know accurately grades per tonne which set AISC.
I couldn't put any accurate figure on it as EUA are very short in terms of information given but it is much higher than figures you have suggested but my personal view is not billions from MT and flanks but hopefully some money to be made with the JV now in play.
Hi TMS,
Sorry I hadn't replied, I don't follow the board as much as I used to as I don't have much in here currently, just a punt.
I had been a lth but sold out prior to the JV being announced as I saw the MCap having exceeded the value I put on MT and it's flanks at that time and with the information released by EUA at that time.
There have been small changes since then regarding MT and flanks but not enough for me to feel there is a nailed on certainty for MT and it's flanks to give any multiple of the current sp if sold.
Hi TMS,
Something of a lame attempt, I expect better of you.
You are fully aware that EUA has spent 500k to have the right to buy into the Rosgeo JV and that Nyud and Moroshkovoe licenses are in the process of being obtained and that there are 6 JV areas being closely looked at by EUA and that money has been raised to buy into the JV areas.
So whilst suggesting the JV has no value to EUA currently is correct it is entirely misleading as you well know.
Hi TMS,
Whilst I agree with your point ref the ACF report I would say you are very much mistaken regarding what EUA have at MT.
The majority of what is at MT is C2, not an inferred resource but what qualifies as an indicated resource or probable reserve so worth more than an inferred resource but less than a measured resource or proven reserve.
A part of the C2 resources at West Nittis just scrape to a inferred resource level because they are besides the C1 reserves there. That is as per Russian Standard.
They also know both WN and L pits extend beyond what has already been proven so whilst they haven't proven how much more there is there it has more value than simply being inferred because geo and magnetic surveys that form part of a JORC report will take into account that there are extensions of the proven reserves/resources.
4 areas of the JV have proven reserves and resources, again to C1 and C2 levels. From tisnigri reports Mac has posted these areas have 3moz of Pd and 625Koz of Pt. If expressed as a Pt equivalent it's around 6.5moz of Pt equivalent.
What EUA have never revealed is what makes up the Pt equivalent figures that give the c105moz of Pt equivalent, it could include the Copper and Nickel which would up the proven 6.5moz Pt equivalent. EUA should have clearly stated how the Pt equivalent was reached and any JORC report that gave a Pt equivalent would list what was included (Copper, Nickel, Pd, Pt, gold etc) and the prices of each material at the time of the report.
So there is a lot more value there than you believe there to be.
POAZ for example may be P2 inferred resources but being the same source rock and same type of multi layered reef type deposit as MT and being close to it has a bearing on it and it's perceived value which is higher in it's potential for delivering on what may be there than if it was a stand alone deposit away from something proven as MT has been.
I have taken issue with TMS in the past but in relation to the ACF revenue figures for 2023 he is making the same point I have made a few times now.
Just short of £2b (not $2b) of revenue for 2023 is more than 1moz of PGM's needing to be produced that year.
The Sinosteel deal for MT is for a plant capacity of 125koz of PGM's and has not been triggered yet so the chances of having a fully operational mine producing 8 times it's maximum capacity ready for the start of the 2023 season is impossible.
They also value each oz of PGM's EUA potentially has as if they were proven reserves when the vast majority are low value inferred resources.
There seems to be some misunderstanding of what JORC is or what value it has to EUA.
JORC is a system of reporting on reserves and resources just as the Russian system does.
It's not about getting a JORC report, it's about what that report says in terms of what EUA has because JORC (like the Russian system) has different levels of reporting reserves and resources and, dependant on what level they achieve, their relative value.
Resources are reported as inferred, indicated or measured and reserves are either probable or proven and the value chain starts at an inferred resource and ending at a proven reserve.
How you go from one level up to the next etc depends on the level of knowledge of what is in the ground and the more drilling results you have and the closer the spacing of the drill intervals the better that knowledge is.
Having AP's results with nothing else isn't going to give you anything of value in terms of reporting.
The main thing you need to have any idea of economic viability of a project is the grades giving g/t and you get that from drill core samples.
If it's an inferred Russian resource it will be an inferred JORC resource.
As the 4 open pit areas directly adjacent to MT are the 4 areas of the JV that contain the proven reserves then the tisnigri link Mac has supplied is very useful.
The 4 areas closest to MT are Vuruchuayvench plot, Arvarench plot, Plast 330 area, Yuzhnosopchinsky plot.
Go to page 46 of the tisnigri link and there is a table of the resources of those areas with the 4 areas giving 17.69t of Pt and 86.5t of Pd which is 625koz of Pt and 3moz of Pd with the majority proven to C2 level and the rest to a higher C1 level.
Hi CAW1,
Regarding the outstanding commitments, how do we know what they are. We know they have a commitment in relation to Nyud and Moroshkovoe but don't know if they have commitments regarding any other areas as yet.
I wouldn't expect the warrants to be part of it as there is no guarantee they will be taken up.
AP's work would come under the "electronic exploration" mentioned in the detailed exploration for the flanks (at MT) and might have been why Alexei was talking to AP because there is nothing confirmed that they have been working for EUA despite Mac constantly claiming they have.
Hi cj62 and lovelyboy,
I'm up to speed regarding Rosgeo and what they do and I stand by every word I wrote.
Rosgeo have stated that they have a problem, that they identify areas holding resources and undertake some exploration to prove those resources are there but they don't have the finances to undertake any meaningful exploration to properly prove those resources (minimal drilling at Poaz to low level inferred resource level P2 by way of example).
It means they can't sell interest in exploration areas for much, inferred resources are worth far less than proven resources and reserves, so we have a JV with a potential $100b in ground value on offer for $35m.
And yet despite gifting this to EUA you think Rosgeo are going to spend many extra millions on drilling at their cost to benefit EUA ?
What are the actual terms of the JV with Rosgeo regarding who pays the drilling costs and any royalty structure that Rosgeo may receive.
We know there are 9 JV areas but we haven't been told what they are apart from Nyud and Moroshkovoe but do they make up 1 or 2 of the 9 JV areas.
There are 4 areas with proven reserves, how much of the potential 104moz Pt equivalent are these proven reserves and where are they.
Does $35m buy 75% of 9 areas or 100%.
Are EUA looking to buy all 9 areas of the 6 being block modelled.
Does $35m buy 75% of 6 areas or 100%.
Etc.
Hi lovelyboy,
I don't see any mention of who is funding what. Saying Rosgeo will do the geological exploration etc is not the same as saying Rosgeo will be paying for it.
I've never come across a company that has entered a JV and given as little information on that JV as EUA have with the Rosgeo JV.
Mac is still repeating the same post claiming EUA have a potential 40moz that they have first mover advantage on and then Volchetundra to add as well.
21moz of the 40moz is not available as it occurs over a 100km away from MT and over 13moz of it has been bought up by Fedorova Resources who now have a first mover advantage over the remaining 8moz. Volchetundra is one of the JV areas and somewhere that EUA walked away from to concentrate on MT.
All of this should be known by anyone who has done any real research on EUA and as Mac has accepted that Fedorova Resources has bought out 13moz of the potential 40moz then why is he still claiming it's available.
You need to seriously question Mr Research's research and facts.
Quoting from past RNS's without adding what has changed since then is not fact based.
If you go to Mac's first post in this thread and click the tisnigri link and look at page 46 you will see a table of PGM deposits in the Monchegorsky district.
It gives totals of 43.2t (c1.5moz)Pt and 144.7t(c5.1moz)Pd for the area which includes all the Vuruchuayvench areas, NKT, and Loipishnyun. Roughly a third of it is inferred resources at NKT.
It doesn't include Nyud Moroshkovoye, Poaz, Vulchetundra or Western Imadra but does seem to cover 4 of the 9 JV areas where they say there are proven reserves and resources.
Hi RMR,
Possibly expanding on what oldspursfan posted.
I agree with your 3rd paragraph but find the 4th one counters the 3rd.
So yes, BOD broadly happy with the price but that being open to final negotiation based on DD/JORC/Licenses.
But I can't agree that we can conclude the DD was acceptable to the buyer and they wish to proceed.
If negotiations are open dependant on what the DD revealed/JORC etc then the buyer may not be happy to proceed until any discrepancies the DD/JORC may have thrown up are sorted to the point they are happy to proceed possibly pending some renegotiation.
As Mac is repeating his post then I'll repeat my reply.
Additional resources within the wider Monchegorsk district c21moz.
These 21moz are in the Fedorova Tundra area that Mac has very clearly stated has been taken over.
So it isn't anywhere that is being JORC'd etc and there is no first mover advantage on areas held by other companies.
The Volchetundra area is one of the JV areas whereas Mac has been trying to suggest it's an area extra to the JV areas.
Reference valuing mineral resources.
https://www.researchgate.net/publication/303343714_The_valuation_of_an_exploration_project_having_Inferred_Resources