Member Info for observer842

Indeed @tomcat. It's eye watering! Fingers well and truly crossed we can make this happen. :-)))

@news. I am going on estimated timelines that have been officially RNS'd. You are a credible person in my view. If a credible person says something which I don't think is correct, I challenge it, both for their benefit and mine - as it could be me that is incorrect. The RNS is as below:

"Heads of Terms to Acquire Interest in former Anglo American Iron Ore Mine, Amapá, NE Brazil" (21 May 2019)
http://irservices.netbuilder.com/ir/cadence/newsArticle.php?ST=REM&id=2790390
===[
Cadence's investment will provide the initial working capital and will be utilised to complete a detailed recommissioning study and pay some of the historic creditors. The recommissioning study will provide definitive operating and capital expenditure numbers and a timeline for recommissioning. The remainder of the required capital expenditure and working capital is expected to be raised predominantly from project debt. Full recommissioning is estimated to take 12-18 months with mining production targeted to start in 2021.
]===

By my estimate we are coming up to 15 months behind schedule, so mining production is now likely to be targeted in 2023, but could be end of 2022 if the deal is signed in the next few months and shipments start shortly afterwards.

@news: Take a look at page 10:
https://www.cadenceminerals.com/wp-content/uploads/2021/01/Corporate-Presentation-KDNC-JAN-2021-PUBLIC-1.pdf

Recommissioning starts within 6 months of the agreement with the banks, and aims to be finished within 2 years, with new ore potentially from 19 months from agreement with the banks. This coincides with what is in the JRP where new ore is mined and shipped in year 3 (24 months from start of shipping ore at the private port), with a further ramp up in year 4, and full production by year 5.

So EyeGuy is correct to question: "All this is irrelevant UNTIL shipping starts, scoping study done and re-commisioning done which will take another 3.5 years at least. Then, comes ramp up to full production”,

as the ramp up to full production potentially starts from 19-24 months from sign off with the banks.

No one is looking for a quarrel. Keep it civil please.

Ob.

LoL @Barksy. Looks like you are not having a good time with that. But I appreciate the efforts! Might be better linking here:

https://find-and-update.company-information.service.gov.uk/company/05234262/filing-history

This is a decent site to keep an eye on @Fingers:

http://www.asianmetal.com/LithiumPrice/Lithium.html

And I suspect we are going to see increases most weeks for some time to come here:

https://www.lme.com/Metals/Minor-metals/Lithium-prices
===[
(MIDPOINT)
DATE PRICE (US$ PER KILOGRAM)
25 February 2021 10.00
18 February 2021 9.50
11 February 2021 9.00
04 February 2021 9.00
]===

Thanks for reminding me about Ganfeng's expansion plans @jimb2! Do you happen to know whether this "expansion" is to enable expansion of that already agreed? i.e. if it isn't voted through does Sonora still go ahead but at current agreed initial rates of 17.5ktpa (or perhaps 20ktpa), or does Ganfeng essentially have to renege on their contribution to CapEx? Seems unlikely. Seems more likely that this vote on expansion could be to allow greater capacities from the offset, but I don't know, and why I ask! ;-)

https://www.reuters.com/companies/1772.HK/key-developments
https://www.marketscreener.com/quote/stock/GANFENG-LITHIUM-CO-LTD-7844214/news/Ganfeng-Lithium-nbsp-1-PROPOSED-ISSUANCE-OF-H-SHARES-UNDER-SPECIFIC-MANDATE-2-PROPOSED-GRANT-32536067/

Playing devils advocate with myself (!) if we did own 49% of Amapa and were at full production today, it's likely multiyear deals would be nowhere near the spot, probably closer to double our baseline of $61/t, which I conveniently did the calculations for the other day across the road:

===[
The EBITDA of $136m is based on 0.9Mt@$61/t Fe 62% and 4.4Mt@$80/t 65% (JRP document). If a Fe 62% of $122/t was used, the 65% Fe might be expected to be around $140/t in which case the EBITDA would INCREASE by:

($122/t - $61/t) * $0.9Mt + ($140/t - $80/t) * 4.4Mt = $54.9m + $264m = $319m

So a doubling from the conservative $61/t Fe62% to $122/t (spot is currently around $175/t) may lead to the EBITDA increasing from $136m per year to $319m + $136m = $455m
]===

49% of that is £160m. And a 9.3 EBITDA EV multiplier would result in £10 a share (9.3 * £160m / 148,349,098)

And of course the advocate is saying none of this is certain. Not a single penny! Buyer beware. IMHO. DYOR.

My apologies @EyeGuy

Indeed @jimb2. I'm fully expecting lithium prices to rebound equally as strongly as iron ore has over the recent past. Hopefully our BoD recognise this distinct possibility!

There's a couple of years ramp up to full production @EyeGuy

An error! I used yesterday's spot! LoL

http://www.custeel.com/en/csi.jsp
===[
Date Seaborne index 62% Fe fines Seaborne index 65% Fe fines Seaborne index 65% Fe pellets premium
2021-03-04 178.20 202.80 51.00
2021-03-03 177.00 199.80 49.20
2021-03-02 175.40 198.80 49.20
2021-03-01 174.10 198.20 49.20
2021-02-26 176.60 199.80 49.20
]===

Based on today's iron ore prices of $177.00/t Fe 62% and $200/t Fe 65% the estimated EBITDA of the project given what we know and my understanding at full production would be approximately:

$136m + (($177/t - $61/t) * $0.9Mt) + (($200/t - $80/t) * 4.4Mt) = $136m + $104.4m + $528m = $768m

If we owned 49% of Amapa that would be $384m = £275m per year

On an EV to EBITDA multiple of 2.7 this would equate to £5 a share ( £275 * 2.7 / 148,349,098), 5.4 would be £10 a share.

and 11 would be a little over £20 a share. Is 2.7 reasonable? Of course it is. 5.4? Probably. 11? Well, see below:

"Cleveland-Cliffs Stock Jumps 3x In 6 Months; What’s Changed?" (JAN 8, 2021)
https://www.nasdaq.com/articles/cleveland-cliffs-stock-jumps-3x-in-6-months-whats-changed-2021-01-08
===[
Though earnings dropped, CLF’s P/E multiple increased from 6x in 2017 to 8x in 2019 mainly due to higher revenues, the company’s expansion plans, and rising iron ore prices. The multiple dropped in early 2020 to 4x following the outbreak of coronavirus. It has since then increased sharply and currently stands at 15x, as iron ore and steel prices have rebounded post the stimulus announcements. We believe that the company’s P/E multiple will decline to a more realistic level of about 9x in the near term.
]===

We sign this deal off in this economic environment and AIM might not know what hit it. LoL.

Ob.

@news. Are you going out of your way to make it hard to have a discussion? LoL. Please write fewer things and provide links to what you are talking about. All I can say is that different companies are valued differently based on all sorts of factors. The EV's to EBITDA can be quite wide ranging for apparently no reason! :-)

Based on today's iron ore prices of $177.00/t Fe 62% and $200/t Fe 65% the estimated EBITDA of the project given what we know and my understanding at full production would be approximately:

$136m + (($177/t - $61/t) * $0.9Mt) + (($200/t - $80/t) * 4.4Mt) = $136m + $104.4m + $528m = $768m

If we owned 49% of Amapa that would be $384m = £275m per year

On an EV to EBITDA multiple of 2.7 this would equate to £5 a share ( £275 * 2.7 / 148,349,098), 5.4 would be £10 a share.

and 11 would be a little over £20 a share. Is 2.7 reasonable? Of course it is. 5.4? Probably. 11? Well, see below:

"Cleveland-Cliffs Stock Jumps 3x In 6 Months; What’s Changed?" (JAN 8, 2021)
https://www.nasdaq.com/articles/cleveland-cliffs-stock-jumps-3x-in-6-months-whats-changed-2021-01-08
===[
Though earnings dropped, CLF’s P/E multiple increased from 6x in 2017 to 8x in 2019 mainly due to higher revenues, the company’s expansion plans, and rising iron ore prices. The multiple dropped in early 2020 to 4x following the outbreak of coronavirus. It has since then increased sharply and currently stands at 15x, as iron ore and steel prices have rebounded post the stimulus announcements. We believe that the company’s P/E multiple will decline to a more realistic level of about 9x in the near term.
]===

We sign this deal off in this economic environment and AIM might not know what hit it. LoL.

Ob.

Good point @tomcat. It's possible we might have official "claim" over some Amapa iron ore if that was used to secure our credit to them.

Indeed @EV_Bull and If this intent was officially RNS'd it would increase WHI's fair value (valuation today based on $12,500/t LiOH and their estimated project risks) from 129.8p to around £2 as this possibility is currently included in the DCF valuation at 10% risk, whereas it would immediately rise to 50% risk if it were nailed on.

https://www.europeanmet.com/wp-content/uploads/2021/02/20210212-FN-EMH-090221.pdf
Table 1: European Metals Holdings Valuation

£2 a share would value our current holding at around £39.5m :-))))

FSD will be Tesla's USP for many years. IMHO.

@MBW hopefully iron ore! @Nick - we don't know, though given all the delays to date, I'd say it's likely we'll finalise when it sets sail - which IIRC is something @Kiran's mentioned previously.

Thought I'd check how WHI's valuation compares against Rodney Hooper's

"European Metals Holdings Limited – Europe's largest lithium hard rock resource strategically positioned to locally supply the fastest growing EV market globally with high margin lithium hydroxide." (February 2021)
https://www.europeanmet.com/wp-content/uploads/2021/02/EMH-Feb-Report-2021-FD.pdf
===[
European / UK regulations are yet to be reflected in the EMH share price. Several catalysts should rerate EMH relative to its European and US peers. Based on current lithium peer fully funded EV/EBITDA valuations, we have a fair value price range of A$2.91 – A$3.49/share [£1.63 - £1.95] over the next 12 months.

Longer-term we believe EMH's 49% stake should trade on a 10x EV/EBITDA multiple once steady-state production is achieved from 2025. This equates to a A$4.67/share price [£2.61] with a "blue sky" upside assuming 50ktpa of production long-term of A$7.64/share [£4.27].
]===

A$100 = £55.87

Indeed @Fingers. Buy low here, sell higher elsewhere... Easy money.

More rises... NdPr had a tasty 3% rise. Iron ore 65% spot very close to breaking $200/t, with futures continuing to rise instead. Shame we don't own any iron ore. Oh wait a minute, we do. LoL. Down under... ;-)