Member Info for observer842

Personally I think this is the final all aboard call, before the news flow starts in earnest. But I've been wrong before! DYOR.

"Bacanora Lithium | China Mining Club | EN/??" (21 Oct 2020)
https://youtu.be/FNjRt-HKa2s?t=928
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We can scale it up, we've looked at production profiles from 17,500 to 35,000 to 50,000 tonnes a year of lithium [carbonate] equivalent, and each construction phase is about 18 months. So we could go from, starting work to being a 50,000 tonne a year lithium producer within 4 years. And that is the plan. I mean obviously we're looking at the markets and how quickly they're growing, but, yes, Ganfeng has invested in us because they see us being one of the largest producers in the world within the next 5 years supplying a high grade product that will go straight to the Asian market.
]===

Indeed @jimb. Once everyone has been let in @45p we'll see the "real" news. LoL. 35ktpa for 19 years? Pull the other one! ;-)

75.6ktpa LCE at full production @tomcat - 70ktpa includes the ramp up. ;-)

"Scoping Study: US$2 Billion NPV Valuation of El Sauz and Fleur Lithium Project, Mexico." (22 December 2014)
http://irservices.netbuilder.com/ir/cadence/newsArticle.php?ST=REM&id=1367479
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The NPV is achieved with a constrained optimised pit shell of an average of 69,800 tonnes of lithium carbonate per annum over an initial 20-year mine life, with an average of 75,600 tonnes of lithium carbonate per annum between years 2-19.
]===

So much value to be realised - in time...

@tomcat: " their planned lce production" - key phrase. New 50ktpa+ (verbally planned) production mostly from our JV area could go to Ford ;-)

LoL @tomcat. That 22% (of small creditors) relates to the $2.5m in escrow.

Perhaps... LoL. ;-)

@tomcat I think you are right that the LBO $135m is what is under discussion with the banks since:

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1.1.33. "LBO credit": is the non-competitive credit Credit Facility Agreement: concluded on 06 December November 2013 between Zamin Amapá Brasil S. A. and Intesa Sanpaola SpA, Hong Kong branch (as agent on behalf of certain creditors), in the original amount of one hundred and thirty to five millions of North Americans (USD 135. 000. 000,00), LBO credit is secured by certain fiduciary guarantees and therefore is not subject to the effects of recovery Judicial.
]===

as my understanding is that Intesa Sanpaolo, HK, is one of the three banks we are negotiating with.

It would be beneficial to us if this were included in the "JR Creditors" row, but I just don't buy it. Partly since: "is not subject to the effects of recovery Judicial.", and partly since we know it hasn't taken a hair cut and the amount which did was around R$900 - though I don't fully trust the below!

"Zamin Mineração to resume mine operation in 2021" (Sep 03 2019)
http://www.valor.com.br/international/news/6418273/zamin-mineracao-resume-mine-operation-2021
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Eduardo de Abreu Sodré, a partner at law firm Donelli, Abreu Sodré e Martins Advogados, which helped draft Zamin's recovery plan, explains that the company's original debt was R$1.5 billion, but creditors reached an agreement to cut approximately 30% of that amount to R$900 million
]===

This also means that the "Provisions" is not the amount under discussions with the banks.

Ob.

If the $51.6m provisions aren't anything I mentioned yesterday ($49m to JV or that secured to banks) I wonder if they are the NPV of the interest payable on the various liabilities?

Indeed - don't want to be paying tax prematurely! LoL.

I don't see how that can be the case, the provisions are in the "NON-CURRENT LIABILIITES" section. My take is that the cash flow from the stockpiles are in the profit and loss years 2020 and 2021.

@tomcat Yesterday I had a good half hour or so looking through/comparing the tables to the originals and couldn't spot any obvious mistakes or transcription errors. Much easier to see the bigger picture now! ;-)

@MLQ. Just checking you realise that those timelines are relative to when the 20% is obtained: "Commissioning timeline relative from the fulfilment of the investment conditions:". It could be many months, MANY months, before we get our 20%, though it could be days, tomorrow even...

@HedgeHogarth: "The weakening of the Brazilian currency has to be positive for the Amapa project?". I believe so. If you haven't already I encourage you to take a look back past the FX of 3.6 used in the JRP to what it was when the mine was previously operating - it's moved very much in our favour since, and coupled with high iron ore prices it's currently a very attractive proposition, company defining even. :-)))

If the deal isn't concluded soon then I expect plan B to be executed which I believe is likely to see $10m net of ore at the private port starting to ship so historical debts can be repaid and the project progressed whilst the courts decide how to proceed, one option being to demote the banks to unsecured lenders, likely taking a haircut in the process.

I'm hopeful the deal is simply taking its time to finalise as @Kiran explained at the AGM due to it being multi culture, multi continent, multi banks.

Ob.

That's an impressive job @Tradecraft!

Anyone got any thoughts on what the R$185.8m of "provisions" relates to on the balance sheet, which is $51.6m @3.6 FX?

Perhaps it's the amount owed to the banks outside of the JR value of R$818m ($227m @3.6 FX) under negotiation, and therefore can only be estimated (provisioned)? I presume the $49m of Sino's which will be repaid to our JV (my understanding!) is included in this JR amount as I can't spot it anywhere else, unless the $51.6m is the $49m (with interest?) - but in which case where is the money owed to the banks? And where does the $135m we spotted a while back fit into this? @tomcat!? ;-)

Ob.

@Tradecraft. It is indeed very complicated, especially as we don't know the half of it! LoL. I'm hopeful the scoping study will do a good job of promoting the potential value of the Amapa project for KDNC. In fact I've mostly given up on estimating an absolute NPV and have recently fallen back to additional NPV over baselines. e.g. my post on 15 Aug 2020 14:07 estimated an additional pretax NPV8 of US$1.6B for the following iron ore prices:

http://www.custeel.com/en/csi.jsp
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Date Seaborne index 62% Fe fines Seaborne index 65% Fe fines
2020-08-14 120.65 128.40
]===

when they are now considerably higher - especially the more important 65%! :-)))

http://www.custeel.com/en/csi.jsp
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Date Seaborne index 62% Fe fines Seaborne index 65% Fe fines Seaborne index 65% Fe pellets premium
2021-01-29 157.90 183.20 52.80
]===

Probably more like an additional NPV8 of over $3B now ;-)

Ob.

From your transcribed tables. For example at full production 62% revenues are R$198,720k. We know this is 0.9Mt and @ $61/t therefore the exchange rate is:

FX = R$198,720,000 / ($61/t * 900,000t) / = 3.62 (likely rounded to 3.6)

And once you know that it's easy enough to work out what price was used for 65% Fe:

(R$1,265,184,000 / 3.6) / 4,400,000t = $79.87/t (likely rounded to $80/t)

DIP C financing is $85m and it looks like R$306m in the table. 306m / 85m = 3.6 (in fact I think this is where I first deduced it)

@Tradecraft. I too couldn't find an explicit reference to an exchange rate, but from the tables at the back you can deduce one from the revenues and DIP's stated in BRL, which we also know in USD. I'll take a look.

How are you getting on with your spreadsheets @Tradecraft?

I see the lower quality iron ore prices have come off the boil a little recently, but the higher quality and pellets premium are holding up well!

http://www.custeel.com/en/csi.jsp
===[
Date Seaborne index 62% Fe fines Seaborne index 65% Fe fines Seaborne index 65% Fe pellets premium
2021-01-29 157.90 183.20 52.80
2021-01-28 156.20 181.70 52.80
2021-01-27 165.50 190.00 51.30
2021-01-26 164.70 189.50 51.30
2021-01-25 168.50 192.70 51.30
2021-01-22 168.70 193.50 51.30
2021-01-21 170.40 194.50 51.30
2021-01-20 168.80 194.00 46.30
2021-01-19 170.40 192.50 46.30
2021-01-18 173.40 197.00 46.30
2021-01-15 172.60 195.50 46.30
2021-01-14 171.40 194.50 46.30
2021-01-13 168.90 191.50 45.70
]===

Indeed @tomcat. If the deal doesn't close soon then I'd expect the order of events to be:
1. Court removes the suspension to ship $10m net of ore as this was ruled in our favour at the higher court.
2. Ore starts to ship.
3. Meanwhile the court contemplates relegating banks to unsecured status.
4. Time goes by.

All IMHO.