Member Info for observer842

For those who might have suspected I was losing it earlier. LoL!:

https://what3words.com/lobster.supposed.rider
https://what3words.com/expert.poet.panther

The satellite views are high resolution and fairly recent. Over to ETR and MB to select better names for these locations. Once we've got to 20% I might link to the mine, unless someone beats me to it! ;-)

Ob.

@MLQ. That page seems to lag this one:

https://serveporto.com.br/macapa/

Both have a gap between now and 28th August...

If we pull this off and if iron ore remains strong, I can easily see us selling for a price which takes us over £1. IMHO. AIM might even recognise this and begin to price in the possibility... ;-)

Good question @Cause. I wonder if it is in the public domain? Seems unlikely, but perhaps someone, or some syndicate has spotted it and are piling in on the back of if? Come on now, share and share alike. LoL! Seems unlikely, but I do like a good theory now and again - surely it must be more than AIM anticipation hype underlying the recent rise? Have the MM's been instructed to ready us for launch? We know it's coming. And we could be talking intercontinental if iron ore prices continue to increase! etc, etc. LoL. LoL! For balance we could yet skid off the runway into a hedge if past experience is anything to go by. :-(

But I'm very optimistic we won't! ;-)

According to:

"Approval of Judicial Restructuring Plan - Amapa" (30 August 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.
]===

which means at today's spot of $127/t, and all else being equal, the project would net:

$60m + ($127/t - $80/t) * 1.39Mt = $60m + $65m = $125m

In some presentations that $60m was reduced to $30-40m, possibly because the shipping costs were perceived to have increased, though that was questionable, so perhaps $100m is more realistic? Either way, it's a LOT towards debt repayment and CapEx!

Ob.

If I'm reappraising my de-risk points on the back of this news, you can bet your bottom dollar others who hold decent holdings are! ;-)

And I think this is beginning to dawn on the rest of the market too...

If the deal closes with the banks, we ship ore, and the scoping study is released, with iron ore prices as they are, there really is no telling how high we might rocket! Seriously - I wouldn't want to even guess at this point. :-)))

This article from the past hour or so captures the recent activity:

"China iron ore: Prices jump to six-year high" (18 August 2020)
https://www.argusmedia.com/en/news/2133271-china-iron-ore-prices-jump-to-sixyear-high
===[
The Argus 62pc Fe index gained $5.85/dmt on day to hit $127.60/dmt while the 65pc index reached $134.80/dmt, up by $6/dmt – both indices hitting the highest level since 2014.
]===

Exciting times!

And for the public port, how about: lobster supposed rider

So many to choose from :-) How about: expert poet panther

Wow! This could be responsible for the rise! The spot increased hugely since yesterday - approaching $130/t

http://www.custeel.com/en/csi.jsp
===[
Date Seaborne index 62% Fe fines Seaborne index 65% Fe fines
2020-08-18 127.05 134.20
2020-08-17 121.25 128.70
2020-08-14 120.65 128.40
2020-08-13 121.45 128.20
2020-08-12 121.95 128.50
2020-08-11 119.95 127.00
2020-08-10 118.75 126.80
2020-08-07 119.15 127.65
]===

If you are new hear, let us know how you heard about KDNC! We sure seem to be recognised today. Presumably you're here for the iron, and hopeful for the Lithium? But did you know the Rare Earth prices have been rising lately? ;-)

Anyone else suspicious we (me at least!) have missed a reveal!? I pity those last week hoping to buy in @15p after news. Even I didn't think we'd be above 15p BEFORE news. AIM you weird thing. :-))))

DCE just closed 1-3.5% up. 1% near term, 3.5% further out meaning the market is reappraising its expectations on iron ore prices upwards for the medium term :-)))

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

Couple of small ships in port yesterday.

===========
Satellite links:
Small ships in port on the 16th August:
https://apps.sentinel-hub.com/eo-browser/?zoom=18&lat=-0.06071&lng=-51.16732&time=2020-08-16&preset=1_TRUE_COLOR&datasource=Sentinel-2%20L2A

High resolution, but unknown date:
https://satellites.pro/Brazil_map#-0.061670,-51.167402,19

Port links:
https://serveporto.com.br/macapa/
https://www.myshiptracking.com/ports/port-of-santana-in-br-brazil-id-6679
https://www.vesselfinder.com/ports/SANTANA-BRAZIL-3030
https://www.marinetraffic.com/en/data/?recognized_next_port_in|begins|SANTANA|recognized_next_port_in=2476
https://www.fleetmon.com/ports/santana_brsan_2955/
http://www.docasdesantana.com.br/index.php/component/content/article/13-informacoes-operacionais/programacao-de-navios/308-ano-2020

The conservative baseline iron ore prices used in the Judicial Recovery Plan are $61/t @62% Fe and $80/t @65% Fe. We don't know what NPV this results in is as negotiations around debt repayment are still taking place, though we are told that the average EBITDA per year is $136m:

"Approval of Judicial Restructuring Plan - Amapa" (30th Aug 2019)
https://www.lse.co.uk/rns/KDNC/approval-of-judicial-restructuring-plan-amapa-i427sb3g1b3sys4.html

I find it useful to have in mind the likely additional EBITDA and NPV that increased iron ore prices bring to the project finances, all else being equal.

According to Custeel:

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

At full production of 5.3Mt per year the 62%, 65% split is 0.9Mt & 4.4Mt respectively. Accordingly if these were used instead of those used in the JRP this would result in an additional EBITDA of:

((120.65 - 61) * 0.9Mt) + ((128.4 - 80) * 4.4Mt) = $53.685m + $212.96m = $266.6m

Full production is expected by 2024, but due to recent delays let's call it 2025, and to last for around 14 years. It's likely to last longer than this in practice as there are substantial resources which can be proved to reserves. Also the 5.3Mt could be increased substantially if the infrastructure and market can support it. Going with a conservative 2025 and 14 years the additional pre-tax NPV brought to the project by the additional $266.6m EBITDA is easy to estimate, making the conservative assumption that the ramp up is zero between now and then (impossible of course!):

https://www.calculatorsoup.com/calculators/financial/net-present-value-calculator.php
===[
Net Present Value (NPV)
Interest Rate: % discount rate per Period: 8.0000
Compounding: times per Period:1
Cash Flows at: of each Period End
Number of Lines: 2
Line Periods Cash Flows
0 (time 0) 1@0
1 4 @0
2 14 @266.60

For the Cash Flow Series
NPV = $1,615.53

Cash Flow Stream Detail
Period Cash Flow Present Value
0 0.00 0.00
1 0.00 0.00
2 0.00 0.00
3 0.00 0.00
4 0.00 0.00
5 266.60 181.44
6 266.60 168.00
7 266.60 155.56
8 266.60 144.04
9 266.60 133.37
10 266.60 123.49
11 266.60 114.34
12 266.60 105.87
13 266.60 98.03
14 266.60 90.77
15 266.60 84.04
16 266.60 77.82
17 266.60 72.05
18 266.60 66.72
Total: 1,615.53
]===

$1.6B is my conservative estimate of the additional pre-tax NPV8% that using today's spot price for the next 2 decades brings to the project. There is zero chance the spot will stay at these values for the next 2 years. They will fluctuate. Historically they have been both significantly higher and lower. Hopefully the scoping study scheduled to be released after various (near-term!) milestones have been achieved will have a good go at unequivocally spilling the beans to the wider market on what some of us have already deduced, including the baseline NPV using the conservative prices! ;-)

Ob.

Cheers @Dallas. I was setting you up to reply: "Terrible". LoL!

I hear what you are saying @Ivy. My belief, and this applies to any AIM company, is that if the BoD have good reason to believe that the share price will remain above the placing price in the short to medium term that they should offer to existing shareholders. However, for the types of recent raise we are talking about which happen *after* news (the potential $3.5m to 27% and potential $24m to 49% are different kettles of fish as they *are* the news) it is acceptable IMHO to follow "normal" AIM operating procedure. Not saying I particularly like this! But I tolerate it. We are on AIM after all...

In my experience it goes like this: company releases news, share price rises on back of it but by an unpredictable amount, BoD sound the market to see what volume and at what price it will support a placing which will naturally be below prevailing prices: those in possession of the sounding should not trade in this period, but some likely do. When terms eventually announced, all involved in the sounding and placing can then trade (either borrow and sell until until they are in possession of the placing shares, or sell existing shares, and eventually this selling pressure, accompanied by those who understand AIM dynamics, lower the share price to just above the placing price. Eventually it sinks below the placing price affording the patient in below it.

How does that sound @Dallas? ;-)

Ob.

@Ivy I think I've mentioned this before, but if you are a sophisticated investor (as defined by the rules) you probably could have partaken had you kept your ear to the ground, or even contacted the BoD as soon as it was announced. My understanding is that someone did just that...