The latest Investing Matters Podcast with Jean Roche, Co-Manager of Schroder UK Mid Cap Investment Trust has just been released. Listen here.
You are a real negative Nellie, aren't you ?
Have you ever achieved anything at all in your life, I wonder; as with that attitude it would seem impossible.
It will cost absolutely nothing for EUA to dig it all up because all the expenditure is easily paid for by selling the PGM's to pay for any amount needed to be borrowed from the banks/financiers/investors.
It seems the LSE Censors removed most of this post just now so I will try & repost it again so it can be seen more easily & puts things into perspective.
If I was the sole owner of all the shares in EUA right now with everything going on as it is, what would I want to do to get the best possible result just for me. Sell it all now for a paltry £5 - £15 billions pounds or so or keep all of it and dig it all up for myself alone ?
As there are well over 200 billions of dollars/pounds worth of valuable metals festering in the ground which I can see just by licking my finger & sticking it up in the wind blowing from the Kola Peninsula in the North and the Urals in the other direction, that means digging up an average of about 10 billion dollars/pounds each year of metals over a 20 year life of the mines and gives me a much clearer idea of what someone else would have to offer to buy it all from me now.
Gosh ! Even if someone paid me as much as 20 billion right now it would still be a steal & I would be a complete idiot to sell 200 billion for the equivalent of just two years of revenue.
Hmmmmn ! I wonder what the right decision would be to make ? Take a very few billions right now, maybe no more than ten-ish, or tell them pesky buyers to take a running jump & for me to just get on with digging the stuff up to keep it all to myself. Ten billion in my pocket each & every year on average.
Hmmmmn ! I wonder what the right decision would be to make ? Take a very few billions right now, maybe no more than ten-ish, or tell them pesky buyers to take a running jump & for me to just get on with digging the stuff up to keep it all to myself. Ten billion in my pocket each & every year on average.
The whole point of my post is to stand back and way above the noise & confusion of the many complicated details & all the argumentative conflicts of opinion that obscure the big picture.
Which is that EUA have access to over £200 billion of valuable PGM's & other metals. So what is the best route to take - bearing in mind we are not a gigantic mining company like Anglo or Norilsk Nickel with a vast mining infrastructure to call upon to develop our assets ?
Just because we don't have that vast mining infrastructure doesn't mean we are obliged to give away our assets to any buyer for peanuts. What's the problem about us building our own vast mining infrastructure ? And if it was me, I would build the mining infrastructure we need to fully develop our assets and possibly join the World's biggest miners one day on an equal footing.
And that's exactly what EUA has started as we took over running the mine at West Kytlim and are now building two more mines there. We also have a Director (Neuwenhuys) with plenty of experience building and running mining infrastructure in South Africa mining PGM's in the Bushveld. Why do you think he was invited to join the board ?
We have the ability to go it alone if we want to and can scale up the mining to whatever size is appropriate & financing that is absolutely no problem at all.
Having said all that doesn't mean I wouldn't speed up that process by engaging in a joint venture by letting another investor with mining experience buy into the project- but not by giving it away !
If I was the sole owner of all the shares in EUA right now with everything going on as it is, what would I want to do to get the best possible result just for me. Sell it all now for a paltry £5 - £15 billions pounds or so or keep all of it and dig it all up for myself alone ?
As there are well over 200 billions of dollars/pounds worth of valuable metals festering in the ground which I can see just by licking my finger & sticking it up in the wind blowing from the Kola Peninsula in the North and the Urals in the other direction, that means digging up an average of about 10 billion dollars/pounds each year of metals over a 20 year life of the mines and gives me a much clearer idea of what someone else would have to offer to buy it all from me now.
Gosh ! Even if someone paid me as much as 20 billion right now it would still be a steal & I would be a complete idiot to sell 200 billion for the equivalent of just two years of revenue.
Hmmmmn ! I wonder what the right decision would be to make ? Take a very few billions right now, maybe no more than ten-ish, or tell them pesky buyers to take a running jump & for me to just get on with digging the stuff up to keep it all to myself. Ten billion in my pocket each & every year on average.
EUA Paying £135 millions to raise just £21 million !!!
Share Price Ridiculously Underpriced Or What ?
Shares in issue Monday Sept 20 approx 2.812 billion
Market cap at share price of 26p on opening on Monday morning Sept 20 is therefore approx : £731.12 million
Share price closed on Tuesday evening Sept 21 at 21.2p which is a total fall of 4.8p from 26p a share producing market cap of approx £596.1 millions - a reduction or loss of £135 millions in the EUA’s marketcap.
So raising a paltry £21 million has cost a reduction or loss in the marketcap or total value of EUA of £135 millions - £731 millions minus new lower share cap of £596 millions at close of market on Tuesday Sept 21.
EUA have approx proven minimum 2 million ounces PGM’s at West Kytlim in the Urals which now has three separate mines there now coming into production with an estimated 64 000 ounces of PGM’s to be produced annually. This alone would be worth about £128 millions annually at average current PGM prices.
West Kytlim by itself would indicate a market cap in excess of £731 millions.
In addition to this we have Montechundra and the joint venture with Rosgeo which gives EUA access to 104 million ounces of PGM’s worth about 200 billion pounds.
Clearly the current share price is an absolute joke & would still be significantly undervalued at ten times 21.2p giving a then market cap of still only £5.960 billion.
EUA Paying £135 millions to raise just £21 million !!!
Share Price Ridiculously Underpriced Or What ?
Shares in issue Monday Sept 20 approx 2.812 billion
Market cap at share price of 26p on opening on Monday morning Sept 20 is therefore approx : £731.12 million
Share price closed on Tuesday evening Sept 21 at 21.2p which is a total fall of 4.8p from 26p a share producing market cap of approx £596.1 millions - a reduction or loss of £135 millions in the EUA’s marketcap.
So raising a paltry £21 million has cost a reduction or loss in the marketcap or total value of EUA of £135 millions - £731 millions minus new lower share cap of £596 millions at close of market on Tuesday Sept 21.
EUA have approx proven minimum 2 million ounces PGM’s at West Kytlim in the Urals which now has three separate mines there now coming into production with an estimated 64 000 ounces of PGM’s to be produced annually. This alone would be worth about £128 millions annually at average current PGM prices.
West Kytlim by itself would indicate a market cap in excess of £731 millions.
In addition to this we have Montechundra and the joint venture with Rosgeo which gives EUA access to 104 million ounces of PGM’s worth about 200 billion pounds.
Clearly the current share price is an absolute joke & would still be significantly undervalued at ten times 21.2p giving a then market cap of still only £5.960 billion.
To all dipsticks who are as thick as two short planks & can't understand plain English. My back of fag packet calculation clearly states & means it is an approximate guide simplifying the basic information that EUA clearly has access to huge amounts of PGM's which can result in a greatly increased share price if the company is managed properly.
The figures I mention are approximate and simplified so nobody can realistically argue that EUA does NOT have access to at least this approximate amount of PGM's & anyone with more than one brain cell will also see that over the period of time EUA continues to develop those resources, it is virtually certain further deposits will also be discovered & proved up, thereby further increasing EUA assets and potentially increasing the share price too.
My statement of "15 million oz from West Kytlim etc" is simply a statement of a minimum amount of PGM's fairly reliably to be established from West Kytlim AND Monchetundra etc. Notice that etc there ? It allows for any amount from anywhere else to also be included. So that would include Monchetundra and who knows what else as well.
The back of fag packet calculation shows whether anyone might possibly want to buy such a potentially valuable investment as EUA & sits completely above and before the further more complex & detailed calculations of the sort EUA and possible buyers of the company have been wrestling with these past two years.
Try reading my back of fag packet calculation again. This time, properly.
"75% of 104 million oz pgms from Rosgeo joint venture = 78 million oz of pgms. Add that to about 15 million oz from West Kytlim etc equals minimum total pgms of 93 million oz pgms in the ground just waiting to be dug up by EUA.
93 million oz pgms multiplied by about 2500 dollars per oz equals 232 500 million dollars value in the ground. That'l be 232.5 billion dollars value of pgms in the ground then.
Divide the three billion odd shares into 232.5 billion dollars of in ground pgms and you get $77.5 dollars per share. Allow 20% costs to dig it up and you get $62 per share over a life of mine of say 20 years is about 3.1 billion profit for each of those 20 years.
At a sale price of just ten times p/e that would be a sale price now of about $31 billion dollars or about £22.1 billion. Divide that £22.1 billion by the 3 billion odd shares & you get a value of about £7.30p per share value of EUA known assets per share".
I just fail to understand why shareholders cannot understand the basic factual simplicity that EUA now has access to vast amounts of PGM's and the value of that is immense.
All that has to be done is organise the digging it out of the ground to turn it into huge wealth for the company and it's shareholders. All the complex details of exactly how that is done & whether EUA sells assets to who & when as part of that process are slightly irrelevant to the simple fact that EUA now has gigantically valuable assets & we shareholders actually own those assets.
An approximate idea of those assets is easy enough to work out.
75% of 104 million oz pgms from Rosgeo joint venture = 78 million oz of pgms. Add that to about 15 million oz from West Kytlim etc equals minimum total pgms of 93 million oz pgms in the ground just waiting to be dug up by EUA.
93 million oz pgms multiplied by about 2500 dollars per oz equals 232 500 million dollars value in the ground. That'l be 232.5 billion dollars value of pgms in the ground then.
Divide the three billion odd shares into 232.5 billion dollars of in ground pgms and you get $77.5 dollars per share. Allow 20% costs to dig it up and you get $62 per share over a life of mine of say 20 years is about 3.1 billion profit for each of those 20 years.
At a sale price of just ten times p/e that would be a sale price now of about $31 billion dollars or about £22.1 billion. Divide that £22.1 billion by the 3 billion odd shares & you get a value of about £7.30p per share value of EUA known assets per share.
Just something to ponder on folks !
75% of 104 million oz pgms from Rosgeo joint venture = 78 million oz of pgms. Add that to about 15 million oz from West Kytlim etc equals minimum total pgms of 93 million oz pgms in the ground just waiting to be dug up by EUA.
93 million oz pgms multiplied by about 2500 dollars per oz equals 232 500 million dollars value in the ground. That'l be 232.5 billion dollars value of pgms in the ground then.
Divide the three billion odd shares into 232.5 billion dollars of in ground pgms and you get $77.5 dollars per share. Allow 20% costs to dig it up and you get $62 per share over a life of mine of say 20 years is about 3.1 billion profit for each of those 20 years.
At a sale price of just ten times p/e that would be a sale price now of about $31 billion dollars or about £22.1 billion. Divide that £22.1 billion by the 3 billion odd shares & you get a value of about £7.30p per share value of EUA known assets per share.
Just something to ponder on folks !
West Kytlim in Urals with expected target of 64 000 oz pgms mined annually at 6 mining sites now with three mining sites equals half that at 32 000 oz mined per annum.
32 000 oz pgms at approx fag packet value ex mining costs of 2500 dollars per oz is approx $80 millions annually when dug up out of the ground.
$80 millions value divided by about 3000 000 000 shares equals 2.66 cents per share theoretical annual dividend. Annual dividend of 2.66 times ten p/e ratio equals share price of 26.6 cents and at p/e of 20 equals about 52 cents share price.
A sale price of ten times p/e at 52 cents per share is $5.2 billion just for WK. That's about £3.71 per share just for West Kytlim.
I wonder what the Rosgeo assets will end up being worth & what the share price will be when fully developed by EUA ? Very roughly about ten times as much I would have thought.
Mind you, I'm not quite sure my maths is right as I'm a little bit fisp issed
My watchlist of thirteen best performing unit trusts & investment trusts returned an annual rate of just over thirty per cent from Feb 2019 until about March this year 2021. The overall 29 month return since Feb 2019 is currently 25% today, despite stock markets worldwide being hammered. I have zero investment expertise or background/training etc.
In fact my investments in single stocks have mostly lost me money - with the exception of EUA of course which has more than made up for other losses. And EUA was just a lucky tip - no expertise from me. It could easily have been another loser.
Financial advisers I view with contempt as all the ones I have heard about my friends using have just lost them money.
I am firmly convinced there is no excuse for not bothering to learn enough to invest safely yourself just by taking a close look at things like unit trusts and investment trusts. They do all the work for you & spread the risks. Only idiots & complete suckers use savings accounts currently offering from 0.01 to maybe 2% max.
Back of the fag packet calculation new joint venture worth 78m oz pgms at fag packet pgm price per ounce of 2500 USD = 195 billion USD (before capex).
15m oz original WK pgm assets at back of fag packet price of 2500 USD = 37.5 billion USD
Total value of both = 232.5 billion USD total potential value of EUA assets. Divide this by number of EUA shares and you get a potential value of 82.74 USD per share divide by 1.4 to get GB Pounds and you have fag packet overall value per share of £59.1 before all development costs of approx 10% bringing net shareholder value down to maybe £53 per share.
And there you have it. The fag packet valuation to give shareholders some idea of what their shares might be eventually worth.
Puts things into perspective, doesn't it ?
Frol:
The bottom line is that the funding of the DFS is relatively a trivial amount against the potentially huge profits development of the resource should produce. It would be a lunatic move to fail to get on with it asap & fund it pronto. Which is already precisely what George is doing as he has already announced the initial first step is in hand to be completed by the end of April - vis the establishment of a base camp, plus Bars have been instructed to commence the DFS forthwith..
What more do you want ? Blood !
And it is quite correct for George to seek funding wherever good, appropriate financing is available before considering using his own personal funds. But should he fail to obtain financing elsewhere ( very, very unlikely) he would be bonkers not to fund it himself because that would be an exceedingly profitable move for him.
However you think about it, the DFS will take place and be completed rapidly & on time without any problem finding the money for it.
All this nonsense hysteria about the share price dropping because of a lack of funding for the DFS is complete garbage - presumably engineered by silly little juvenile day traders. Similarly to the way they engineered this myth that George is an incompetent CEO on account of the project being delayed owing to the corruption & incompetence of the Zimbabwe Government.
Wolf
Answer is :
A - I don't have a clue why GR would say it cost $5 million unless he or someone else can be bothered to explain exactly why it would cost $5 million.
B - I don't actually know what the cost might be without some idea of the initial development project cost - all of which information is not readily available to me & presumably other shareholders.
But I rather thought that as $5 million DFS cost indicates a half billion dollar development cost, that seem did seem large. It might be helpful if GR provided some useful information. That, after all, is an intrinsic part of the good management of any company.
Why do you think the Definitive Feasibility Study would cost as much as $5 million. That would imply a project cost of $500 million or half a billion dollars. I would have thought a DFS would only cost no more than about $2 million & that is peanuts in terms of finding that amount of cash which would then lead to development and a vastly increased share price if the company was managed well.
George Roach himself could fund it if he couldn't raise the money from anywhere else. But there are numerous sources of funding just waiting to fall over themselves to lend to enable the development of such a hugely valuable mineral resource; and to lend again after the DFS the even bigger sums needed to build the mine to dig the stuff up & sell it for what will be huge profits.
It's a no-brainer for any competent financier. See the link below about costs of Feasibility Studies.
https://www.google.com/search?client=safari&rls=en&q=how+much+does+a+mining+feasability+study+cost&ie=UTF-8&oe=UTF-8
Steward1Your posts are worthless rubbish. I won't be bothering with you as the appropriate way of dealing with congenital idiots is to ignore them completely.
Steward1 -
You are demonstrating a total ignorance of Africa, Africans & how to run any business intelligently by blaming George Roach for halting production at the RHA mine and for not pouring money into developing Zulu ages ago. No sensible person would continue to pour money into developing business activities in a country with a corrupt, thieving Government clearly demonstrating their intentions to rip off any foreign investors trying to develop mines in Zimbabwe.
They stole 51% of every foreign owned business just for starters, then demonstrated their breathtaking corruption by announcing the granting of the Zulu EPO licence needed by Prem to develop that asset but then refusing to actually issue it - thus completely paralysing the PREM business. The refusal to issue the EPO looked like they were waiting for a bribe in a brown envelope from PREM - disgusting & blatant corruption !
No business in it's right mind would continue to attempt to function in such a Mickey Mouse country; so George Roach was absolutely correct to put everything on 'hold' in Zimbabwe until the Government there was able to demonstrate they would behave themselves a bit more.
to Wolf
"Snowking are you seriously suggesting GR could retain 100% of ZULU at DFS and fund 60/70 million to develop the mine?"
Why not ? It's precisely what any intelligent person would seek to achieve as being the best option if at all possible. Why give anything away when you don't have to ?