Member Info for observer842

Wow! No letting up!

Indeed @degsie, and no doubt many of their associates.

5% surge in spot and futures on DCE last night! Come on BoD, close the deal!

http://www.dce.com.cn/webquote/futures_quote_en.jsp?varietyid=I

"Speculative buying spurs China iron ore futures to contract high" (DECEMBER 10, 2020)
https://www.reuters.com/article/us-asia-ironore-idUSKBN28K0B4
===[
Benchmark iron ore futures in China surged more than 5% to a contract high on Thursday, as speculative buying was fuelled by expectations of continued strong demand for the steelmaking ingredient as the economy recovers.

The most actively traded iron ore futures on the Dalian Commodity Exchange, for May delivery, soared as much as 5.4% to 959 yuan ($146.56) a tonne. The contract was up 4.6% by 0330 GMT.
]===

It certainly feels like the ping to ping all pings is imminent @Barksy!

There was some court movement today, but no details that I can see.

100 days since agreement in principle on Friday. Not that I'm counting. ;-)

Ob.

Nervous excitement anyone? The thought of how this share might react if the deal completes favourably in the current environment is starting to take its toll. I can see headlines. Good ones! LoL.

Spot:
http://www.custeel.com/en/csi.jsp
===[
Date Seaborne index 62% Fe fines Seaborne index 65% Fe fines Seaborne index 65% Fe pellets premium
2020-12-09 150.40 161.90 31.60
2020-12-08 149.20 160.60 31.60
2020-12-07 147.70 160.10 31.60
2020-12-04 145.40 156.60 31.60
2020-12-03 137.90 149.80 31.60
2020-12-02 136.60 148.20 31.60
2020-12-01 132.80 144.50 28.10
]===

Futures:
https://www.cmegroup.com/trading/metals/ferrous/iron-ore-62pct-fe-cfr-china-tsi-swap-futures.html
===[
DEC 2021 117.92
DEC 2022 98.93
DEC 2023 90.29
]===

Of course it might all fall through, but fortunately EMH to the rescue. LoL. But I can wait as long as it takes, into the new year and into Q2 if that is what it takes to get a good deal for us, or tomorrow 7am/11am - you just never know! ;-)

Ob.

LoL @MBW, right answer, wrong reasoning. @MJFMSG claimed 40m shares pre-consolidation. After consolidation, and assuming no trading, those 40m shares became 400k shares. And @14p, they are worth £56k.

Spot 65% Fe now over double that used in the JRP ($80/t) :-)

http://www.custeel.com/en/csi.jsp
===[
Date Seaborne index 62% Fe fines Seaborne index 65% Fe fines Seaborne index 65% Fe pellets premium
2020-12-07 147.70 160.10 31.60
2020-12-04 145.40 156.60 31.60
2020-12-03 137.90 149.80 31.60
2020-12-02 136.60 148.20 31.60
2020-12-01 132.80 144.50 28.10
2020-11-30 132.20 143.50 28.10
2020-11-27 130.30 142.00 28.10
2020-11-26 129.50 141.50 28.10
2020-11-25 128.00 140.00 26.10
2020-11-24 127.50 139.60 26.10
2020-11-23 126.40 139.10 26.10
]===

Futures:
https://www.cmegroup.com/trading/metals/ferrous/iron-ore-62pct-fe-cfr-china-tsi-swap-futures.html
===[
DEC 2021 112.78
DEC 2022 98.93
DEC 2023 90.29
]===

Notice how these have changed since Wednesday :-)))

===[
DEC 2021 101.95
DEC 2022 88.47
DEC 2023 80.52
]===

That's some great research and deduction @EV_Bull! Seems about right to me and ties the various price estimates nicely together. $30/t freight costs seems a little high, but I appreciate that's not your estimate. It's from this:

"Macarthur Minerals buoyed by share spike for major shareholder Cadence Minerals on iron ore deal" (16 Apr 2020)
https://www.proactiveinvestors.com.au/companies/news/917352/macarthur-minerals-buoyed-by-share-spike-for-major-shareholder-cadence-minerals-on-iron-ore-deal-917352.html
===[
The importance of this deal has been recognised by prominent UK-based wealth management and corporate broking company WH Ireland Group PLC (LON:WHI) that states “Cadence is on the cusp of a transformational change”.

In a new research note on Cadence, WH Ireland states: “An easy to ship stockpile of 1.4Mt of 62% iron ore would sell for a current SPOT price of $84/t. Taking in re-handling and port costs (WHIe) of $10/t and ocean freight estimate of $30/t leaves an operating margin of nearly $45/t of iron ore shipped.”

This is “a healthy margin which could be used to pay senior bank creditors (once agreement has been reached) and complete a feasibility study into the reopening of the Amapá mine and pay for some of the new infrastructure required”.
]===

I have shared NPV calculations on here previously, but recently I have preferred to focus on additional EBITDA and consequent additional NPV due to increased prices, as that simplifies matters considerably as you can imagine! Take a read of the post:

"Additional EBITDA and NPV" @ 02 Sep 2020 19:00
(TL;DR Additional NPV8 of $2B off a 62% Fe spot of $128/t over the baseline of $61/t)

Custeel is reporting current spot of $145.4/t:

http://www.custeel.com/en/csi.jsp
===[
Date Seaborne index 62% Fe fines Seaborne index 65% Fe fines Seaborne index 65% Fe pellets premium
2020-12-04 145.40 156.60 31.60
]===

I've included the pellet premiums this time as I've just noticed that's relatively large at the moment. Although we aren't selling pellets, we'll be selling pellet feed, it does mean we might get a little premium on top of Fe 65% prices :-)))

That additional NPV8 $2B estimate can be updated to today's spot very approximately by:

$2B * (145.4 - 61) / ( 128 - 61) = $2.5B

From what I remember that was a conservative estimate too. LoL. And yes I know there is no chance on this Earth prices will stay this high for the life time of the project. They will go up, and they will go down, but I'm sure you will be aware it's useful to get a feel for what orders of magnitude impact that change has! :-)

As to the cost of taking us from 27% to 49%, my best guess is that the minimum cost to us will be the $24m stated in the presentations and JRP. If someone offers more than this we have an opportunity to match it. If someone offers $100m for the 22% presumably that will value our 27% at least $122.7m :-)))

Keep up the good contribution!

Ob.

Indeed @EV_Bull Indo Sino' credit is (probably currently!) unsecured, but note:

===[
1.1.30. "Indo Sino credit" : is the credit held by Indo Bell [Sino] against the debtor, in the amount of USD 49,140,000. 00, currently indicated in the list of creditors in the class of Unsecured claims, but subject to appeal so that it is considered the pledge guarantee of 1.718, 338 tons of iron ore.
]===

My understanding is that once all preconditions have been met Indo Sino drop their (claimed) pledge guarantee over 1.7Mt and the $49m is then owed from DEV to the JV instead, to be repaid on a schedule as outlined in the JRP. Though it's unclear to me whether the 30% haircut applied to unsecured creditors is applicable, and if so was it originally $70.2m and discounted to $49.14, or has it yet to be discounted?

@tomcat, you like looking for number coincidences. Does $70.2m ring a bell? or perhaps $70.2m * 3.6 (USD:BRL used in the JRP) = R$252.72m. Round where necessary! LoL.

Ob.

@EV_Bull: "If you can make sense of that one it may answer the questions."

You are on to something there. That's one explanation that was mooted that I forgot to add to the list: the $60m was reduced to $30-40m on the expectation (at that time) that $20-30m would be used to (part) settle with the banks.

LoL @EV_Bull. Straight to the chase with another "debatable" point. Take a look at this post of mine:

28 Jun 2020 18:47
===[
Original source:
https://pje.trt8.jus.br/primeirograu/Processo/ConsultaDocumento/listView.seam
20012416350764800000023996777

Translation care of @Dallas
https://drive.google.com/file/d/1t_2GNdDBpqXrb9UszfuVFa63N6s_lHIA/view

In the last table (probably clearer in original source) there are four rows above "Total Non-Current Liabilities".

The first corresponds to DIP A+B payments and then return + interest
The second is DIP C payments and then return + interest
The third appears to start at around R$818m in 2019 and stays steady for 5 years with around a quarter percent interest, then goes to zero over 8 years
The fourth appears to start at around R$185m in 2019 and stays steady for 3 years and then gradually reduces to zero over 12 years.

Now I've told you that perhaps you'll have a better chance at seeing it for yourself? Rotate, zoom, squint, correlate.

I might as well tell you the exchange rate I deduced that they used in the JRP: 3.6

Ob.
]===

My current understanding is that the R$185m (might be R$182m) is the approx $49m (@ approx 3.6 exchange). i.e. it is money which is currently owed by the Amapa project to Indo, but on completion of the set of requirements which allows us to go to 27% will be owed by the Amapa project to the JV. IMHO it's what "justifies" 73% of the JV belonging to Indo at that point.

We've debated this a lot on here over the summer so it's quite possible others disagree with this understanding!

Ob.

Here's something worth thinking about if you haven't already.

"Approval of Judicial Restructuring Plan - Amapa" (30th Aug 2019)
https://www.lse.co.uk/rns/KDNC/approval-of-judicial-restructuring-plan-amapa-i427sb3g1b3sys4.html
===[
An independent survey of these stockpiles indicates some 1.39 Mt (+/- 10%) of iron ore in three stockpiles with an average Fe grade of 62.12% (+/ 10%), which based a US$80 per tonne of 62% Fe would net Amapá a forecast US$60 million net of costs.
]===

"INVESTOR PRESENTATION" (July 2020)
https://www.cadenceminerals.com/wp-content/uploads/2020/08/Corporate-Presentation-KDNC-JUL-2020-PUBLIC.pdf
===[
Initial Revenue from US$ 30 - 40 million of Iron Ore stockpile at dock.
]===

There have been a fair few theories on why $30-40m is estimated in recent presentations, rather than the $60m. I believe we first saw this estimate in a presentation towards the beginning of this year when the iron ore price was in the $80-90/t range, but futures were significantly below this. I don't have the stats to hand, but a year out might have been in the $60-70/t range, so the reduction from $60m could have originated from using futures for each month out, rather than the spot. Another theory is related to increased shipping costs, which have pulled back some what. Another is additional unforeseen port costs. Another is the $30-40m might include taxes/royalty payments and the like whereas the $60m didn't.

Thoughts and other theories appreciated! But whatever the reason, if we are to take what was written in the RNS as official. i.e $80/t would net the project "$60m net of costs", then it's straightforward to see that if we could sell all of the ore stockpiles at today's spot price of around $145/t, then depending on exactly what that $60m is we might expect it to increase by:

($145/t- $80/t) * 1.39Mt = $90m

to $150m. Very juicy! And no doubt one of the sticking points in the fine print of the agreements with the banks! How much to them; how much to CapEx rehabilitation?

A fresh pair of eyes looking over this from the likes of @EV_Bull would be much appreciated!

Incidentally, if we used an average futures price of say $115/t over the next 12-18 months rather than spot of $145/t, we might expect the $60m to increase by:

($115/t- $80/t) * 1.39Mt = $50m

to $110m. Still juicy! ;-)

Ob.

@Gaz - what I can say is that when you are on the cusp of signing a company defining deal to mine and sell iron ore, the spot and futures movements in the iron ore market are VERY relevant despite what some might say.

It might go without saying but I'd take my medium to long term prospects with a large pinch of salt! The point about them is that in a favourable market and good execution our current assets could facilitate the £500m goal in a few years when they are fully operational. With the longer term billion pound target facilitated by further growth and expansion - assuming this is still our goal as a company at that time!

As to the short term prospects - I truly believe if the Amapa deal completes in the current market we could be looking at a £100m market cap, and it might happen over a matter of days (perhaps even Monday!), but it might take until the scoping study is published, or until we go to 27% or 49% of the project. But if not over £100m on completion of the deal taking us to 20%, it'll be close! IMHO, DYOR ;-)

Ob.

"Iron ore prices are going ballistic" (December 4, 2020)
https://www.mining.com/iron-ore-prices-are-going-ballistic/
===[
Iron ore prices went ballistic on Friday as unprecedented demand from China, constrained supply from Brazil and strained relations between Canberra and Beijing convulse the seaborne market.
]===

@Gaz_Marsden My opinion is that if the Amapa deal completes and we are able to make good progress in the current market of elevated iron ore prices and favourable shipping and exchange rates, and that Lithium demand and Rare Earth demand strengthens over the coming years (they are starting to now), then not only are the short term prospects of this company eye watering (>£100m mcap) the medium (>0.5Bm cap) to long term (>1Bm cap) are too.

If Amapa falls through, then not so great, but at least not disastrous any more.

All in my own optimistic opinion!

And away! LoL

http://www.custeel.com/en/csi.jsp
===[
Date Seaborne index 62% Fe fines Seaborne index 65% Fe fines
2020-12-04 145.40 156.60
2020-12-03 137.90 149.80
2020-12-02 136.60 148.20
2020-12-01 132.80 144.50
2020-11-30 132.20 143.50
2020-11-27 130.30 142.00
2020-11-26 129.50 141.50
2020-11-25 128.00 140.00
2020-11-24 127.50 139.60
2020-11-23 126.40 139.10
]===

Gone back to holding my breath @Barksy. Research for this share is hard! LoL.

LoL. I missed that trying to decipher that blasted judgement. Directors still confident then and know no more than us! (on Wednesday at least) :-))))

Incidentally which ever way this falls, some here believe it is in KDNC's best interest that DEV don't ship the ore until the deal with the banks is signed... That judgement is a real headscratcher! LoL

Indeed @Cause. Better link though:
https://www.jusbrasil.com.br/processos/242782839/processo-n-2236921-7620198260000-do-tjsp

So has the banks appeal been suspended? Hard to decipher!