Member Info for observer842

Indeed @Ivybush. Long term our JV is certainly worth a lot more to us that what they paid today, but it's worth looking at what it values it at on an in ground resource basis:

Page 122 of:
https://www.cadenceminerals.com/wp-content/uploads/2020/06/Bacanora-FS-Technical-Report-25-01-2018.pdf

Measured+Indicated Total 5,038kt LCE in the LV + JV areas.

Distributed as: 1,570kt + 411kt = 1,981kt LCE to the LV area
Meaning 5,038kt - 1,981kt = 3,057kt to the JV areas.

Ganfeng just paid £21,883,485 for 27.5% of the LV area and 27.5% * 70% = 19.25% of the JV areas.

Price per tonne = £21,883,485 / (1,981kt * 27.5% + 3,057kt * 19.25%)
= £21,883,485 / (544.775kt + 588.4725kt)
= £21,883,485 / 1,133kt
= £19.3/t LCE of in ground value

Meaning our 30% of the JV would be worth on this basis:

£19.3m * 30% * 3,057kt = £17.7m

Usual caveats apply. Let me know of any typos etc or calculator malfunctions. DYOR!

Ob.

Ganfeng's option was clearly a concern to the SP. Now that's gone and KDNC is no longer selling, what's to hold it back?

Indeed @mr.james. Once the market digests the significance of this we could see a re-rate enabling completion of the finance, as discussed at the end of last year on this board. Though it's possible it will shrug and say: I think I'll wait for lithium prices to increase first and that 50ktpa mine plan. LoL. AIM is unpredictable!

A great day for BCN! How long until they announce a mining plan to 50ktpa (and beyond?!) I wonder? They'll surely need to utilise much more of the JV area with KDNC for that ;-)

"Ganfeng Exercises Sonora Option" (13 November 2020)
https://www.lse.co.uk/rns/BCN/ganfeng-exercises-sonora-option-7fez3le8p8ie190.html
===[
On completion of this option exercise, SLL will be owned 50% by Bacanora and 50% by Ganfeng Lithium Co., Ltd. SLL also owns 70% of the El Sauz and Fleur concessions.
]===

Ownership will be KDNC 30%, BCN 35%, Ganfeng 35%.

BCN have mentioned the possibility of 50ktpa in various interviews @Barksy :-))) I think they were hoping we'd fail and be able to take our 30% for peanuts, before announcing the mine plan. Think again. Hopefully! LoL.

Music to my ears!

"Ganfeng Exercises Sonora Option" (13 November 2020)
https://www.lse.co.uk/rns/BCN/ganfeng-exercises-sonora-option-7fez3le8p8ie190.html
===[
On completion of this option exercise, SLL will be owned 50% by Bacanora and 50% by Ganfeng Lithium Co., Ltd. SLL also owns 70% of the El Sauz and Fleur concessions.
]===

Our Sonora JV ownership will be: KDNC 30%, BCN 35%, Ganfeng 35%. They are going to increase beyond 35ktpa, mark my words :-)))

Page 183 explains where Anglo's 2012 valuation of $462m (100% $660m) comes from:

https://www.angloamerican.com/~/media/Files/A/Anglo-American-Group/PLC/investors/annual-reporting/2013/annual-report2012.pdf

That's an in-year asset valuation, whereas I think a multi-year DCF valuation is more appropriate for our purposes ;-)

"Anglo American sells Brazilian Amapa mine to Zamin" (JANUARY 4, 2013)
https://uk.reuters.com/article/uk-angloamerican-amapa/anglo-american-sells-brazilian-amapa-mine-to-zamin-idUKBRE90309O20130104
===[
An internal valuation by Anglo in 2011 put Amapa’s value at $1.5 billion, meaning Anglo’s 70 percent stake would be worth at least $1 billion, but that value is expected to have tumbled as the iron ore price has weakened and prospects for Chinese growth clouded.
]===

This was in a period where the USD:BRL was sub 2, now it's 5.46 which should significantly reduce operating costs when expressed in USD, and with iron ore prices rising a rehabilitated project operating at full capacity, with the potential for further expansion could be worth multi-billion. :-))) Clearly not before the end of December 2020, but hopefully by 2022! ;-)

Ob.

@Olderandwiser If you have the time and inclination, I'd understand Anglo American's $600m 100% project valuation in 2012, and why it differs from their previous valuation of $1.2-$1.5B, how much they likely paid for it, and what a reasonable valuation might be today based on projected exchange rates, iron ore prices and shipping rates. You might find my posts at the beginning of the year of interest. 3rd to 5th of January: https://www.lse.co.uk/profiles/observer842/?page=84 The BoD are playing this very conservatively from what I can see, pretty much all aspects, and they are buying in cheaply on the back of this conservatism - as no doubt are those who have done their own research to the likely true value of this project ;-)

With 144,719,053 shares in issue, £100m mcap is 69p

Further background can be found in my posts of 3rd to 5th of January:

https://www.lse.co.uk/profiles/observer842/?page=84

In particular this one:

03 Jan 2020 14:25
=====[
I haven't found where the $1.5B comes from @Frankie. I was revisiting this:

"Cadence Minerals PLC - Approval of Judicial Restructuring Plan - Amapa" (30th Aug 2019)
https://www.lse.co.uk/rns/KDNC/cadence-minerals-plc-approval-of-judicial-restructuring-plan-amapa-omqcte36gtcervm.html
===[
Before its sale in 2012 Anglo American valued its 70% stake at US $462m in its 2012 Annual Report (100% US $600m)
]===

to see how it is was calculated. I now understand how it is calculated. It's a held for sale valuation based on current (at the time) fair value. This is quite different to what we'd call a net present valuation based on estimates of future revenue flows, and therefore I was wondering how they arrived at their valuation of $1.5B the previous year. As far as I can understand the drop to $600m has nothing to do with current or projected iron ore prices (at the time), it's simply a sum of total current and non-current assets.

I'm currently left concluding that as with other aspects surrounding Amapa, again it looks like the BoD have been quite conservative in quoting the $600m value when they could quite as easily have quoted the $1.5B? Perhaps the latter isn't public? We shall see what google has to say about that :-)

Ob
]=====

Further background can be found in my posts of 3rd and 4th of January:

https://www.lse.co.uk/profiles/observer842/?page=84

In particular this one:

03 Jan 2020 14:25
=====[
I haven't found where the $1.5B comes from @Frankie. I was revisiting this:

"Cadence Minerals PLC - Approval of Judicial Restructuring Plan - Amapa" (30th Aug 2019)
https://www.lse.co.uk/rns/KDNC/cadence-minerals-plc-approval-of-judicial-restructuring-plan-amapa-omqcte36gtcervm.html
===[
Before its sale in 2012 Anglo American valued its 70% stake at US $462m in its 2012 Annual Report (100% US $600m)
]===

to see how it is was calculated. I now understand how it is calculated. It's a held for sale valuation based on current (at the time) fair value. This is quite different to what we'd call a net present valuation based on estimates of future revenue flows, and therefore I was wondering how they arrived at their valuation of $1.5B the previous year. As far as I can understand the drop to $600m has nothing to do with current or projected iron ore prices (at the time), it's simply a sum of total current and non-current assets.

I'm currently left concluding that as with other aspects surrounding Amapa, again it looks like the BoD have been quite conservative in quoting the $600m value when they could quite as easily have quoted the $1.5B? Perhaps the latter isn't public? We shall see what google has to say about that :-)

Ob
]=====

Cheers @Dallas. Seems very confident! And as we know that $600m he mentions is conservative for various reasons :-)))

If I recall correctly, according to the JRP the $136m per annum EBITDA was based on $61/t 62% Fe and $80/t 65% Fe. It's fairly straight forward to estimate how much that would increase by at today's prices.

All sounds about right @tomcat. Once various costs and loans and taxes and discounts and ownership percentages are taken into account, we should still be looking at a relatively large fraction of that coming our way if all goes to plan. :-) We could be looking at an after-tax project NPV in the region of $1-2B at today's iron ore prices, exchange rates, Baltic dry index. Of course until the project has ramped up to full production this will continue to be further discounted for project risk, by how much is anybody's guess - though once our market cap exceeds £100m I'm hopeful dysfunctional AIM dynamics gives way to analyst valuations. We can but live in hope. LoL!

@Bannor. No idea if it was a buy or sell, that's why I was asking someone to own up, you can never know on here for sure as I know you know I know you know, don't you know? LoL. Before posting I looked at the trades yesterday, and my conclusion was that it was worked through the day - the share price being walked up to enable the sell at the desired price, or, more likely IMHO as a consequence of instilled confidence from recent director purchases the share price rose as a consequence of the relatively large buy order being filled. I wonder if we'll see any more of a similar size before news lands?

I'm talking about the £87.08k apparent buy worked through yesterday.

Come on, own up! ;-)

https://www.lse.co.uk/ShareTrades.asp?shareprice=KDNC&share=Cadence-Mineral
===[
Date Time Trade Prc Volume Buy/Sell Bid Ask Value
11-Nov-20 15:26:53 15.20 100,000 Sell* 15.00 15.75 15.20k O
10-Nov-20 16:40:49 15.393 565,700 Buy* 15.00 15.75 87.08k O
11-Nov-20 17:07:27 15.75 29,322 Buy* 15.00 15.75 4,618 O
11-Nov-20 16:35:22 15.75 20,000 Buy* 15.00 15.75 3,150 UT
]===

Of course it could equally be a case of mates out! LoL. AIM!

I don't believe we've discussed the consequences of this yet. Is it fair to say the mine life presented in the scoping study will likely increase from 14 years? By 21% To ~17 years? Also, is the "0.3" likely a typo?

"Updated Mineral Resource Estimate - Amapa Iron Ore" (2nd Nov 2020)
https://www.lse.co.uk/rns/KDNC/updated-mineral-resource-estimate-amapa-iron-ore-hs6zsvh6hytf9fs.html
===[
As announced previously, the operational plan envisages that the mined material will be beneficiated into a 65% Fe Pellet Feed and 62% Spiral Concentrate at an average rate of 4.4Mt and 0.3Mt per annum.
]===

If not a typo, when was 0.3Mt previously announced, it was 0.9Mt last I heard...

I feel an updated estimate of the additional EBITDA and consequential stab at an NPV coming on. It was $2B pre-tax last time I had a go on 2nd September. Mind boggling! ;-)

How I'd love the deal to complete on a rising trend! ;-)

http://www.custeel.com/en/csi.jsp
===[
Date Seaborne index 62% Fe fines Seaborne index 65% Fe fines
2020-11-11 124.80 136.20
2020-11-10 123.10 134.50
2020-11-09 121.60 134.00
2020-11-06 118.10 130.00
2020-11-05 117.20 129.40
]===

Decent read:

"Tesla Just Put The Accelerator Down On The EV And Battery Boom" (Nov. 9, 2020)
https://seekingalpha.com/article/4387131-tesla-just-put-accelerator-down-on-ev-and-battery-boom
===[
Summary

Tesla's battery targets for Tesla and their targets for the global battery industry to support a 100% EV and 100% renewable energy world in 2030.

20TWh pa of global battery demand in 2030 (10TWh EVs, 10TWh storage) will need 55x more lithium (than 2019 levels), 20x more cobalt, 26x more graphite, and 7x more nickel.

All this should mean that the 2020's decade should be a super-cycle decade for battery metal miners, especially post 2023 as demand surges with EV/ICE parity.
]===