Member Info for observer842

@Frankie: "Ob, wot’s the odd spot, pretty please?" The emoticons.

By the way, I'm sure you realise this but decisions won't be made in 8-9 years, it'll be when they raise the CapEx for the mine: if the schedule includes our JV areas, which it currently is anticipated to, we'll be on the hook for some of that.

;-). This link has a supporting image of the anticipated mining schedule:

http://www.cadenceminerals.com/projects/yangibana-rare-earth-project-2/

In terms of "when", there are many possibilities, but that isn't the point I'm attempting to make: the Yangibana project has a certain value to us, and everyone will value this differently - some, me included, relate this value to Hasting's share price or market cap for the reasons given.

Everybody has a different opinion @Bannor. It's what makes a market. To me, if Hasting's share price went to near zero it would indicate the project as a whole is failing, if it doubled or more then it indicates the project is doing quite the opposite and is heading towards full funding and ultimately production. With the former scenario we have near zero chance of being bought out, with the latter a very good one. All IMHO.

LoL - you are right @Bannor! We are the second largest JV holder in the Yangibana Rare Earth region! How does that sound?

It's only a repeat if you say the same thing @Frankie ;-)

Hey @Bannor. We are the largest JV holder in Hastings! ;-) Seriously, if their share price doubled in anticipation of closing their funding this no doubt would reflect nicely in ours :-) especially as not everyone has the facts immediately to hand :-(

Hey @Bannor. We are the largest JV holder in Hastings! ;-) Seriously, if their share price doubled in anticipation of closing their funding this no doubt would reflect nicely in ours - especially as not everyone has the facts immediately to hand :-)

I'd say about $112.5/t since Custeel had it as $109.95/t yesterday:

http://www.custeel.com/en/csi.jsp
===[
Date Seaborne index 58% Fe fines Seaborne index 62% Fe fines Seaborne index 65% Fe fines
2020-07-20 79.90 109.95 120.85
2020-07-17 80.70 110.65 121.95
2020-07-16 80.70 110.55 121.95
2020-07-15 82.70 112.15 123.85
2020-07-14 82.20 111.55 123.55
2020-07-13 81.80 111.05 123.05
]===

DCE just closed 2-3% up. :-)))

This might be of interest @Cause:

https://www.bcb.gov.br/ingles/FinPub/cap7i.pdf

I personally haven't got the will to understand their monetary system, but if someone hand me the dummies guide on a plate I might take a look ;-)

By the way, first I heard this week that something more than 1% was being considered in regards to the historical debt (besides their 30% haircut). I wonder what value the BoD used when they stated this?

"Approval of Judicial Restructuring Plan Paves the way for the Restart of the Amapá Iron Ore Project." (30 August 2019)
http://irservices.netbuilder.com/ir/cadence/newsArticle.php?ST=REM&id=2887382
===[
The JRP schedule contemplates the majority of the historic liabilities will be paid from free cash flow in years 5 to year 17 of operations, which represents a discounted NPV10 debt value of approximately US$106 million.
]===

Perhaps the ruling isn't related to the full amount? Though it does appear to be IMHO. @Kiran?

Ob.

This thread. Repeated:

https://www.jusbrasil.com.br/processos/240043561/processo-n-2213966-5120198260000-do-tjsp

https://esaj.tjsp.jus.br/cposg/search.do?numeroDigitoAnoUnificado=2213966-51.2019&foroNumeroUnificado=0000&dePesquisaNuUnificado=2213966-51.2019.8.26.0000

Presumably some of those who believe it means delays sold today...

Indeed @Cause. We shared the link to the other location which was updated early this morning. From what I see they weren't happy we used 1% + TR which may or may not lead to delays if we are reading this correctly...

Thanks @tradedesk. Couple of points which you might want to know to help improve your back of the envelope calculation:

You are missing approximately $27/t in shipping costs as stated about 7 minutes into:

"RiverFort Global Capital Webinar Featuring Cadence Minerals plc" (20 May 2020)
https://www.youtube.com/watch?v=MgvMSxoJ8R4

(I knew I'd heard that $27/t I deduced earlier mentioned somewhere! The JPR uses $9/t)

which would bring the costs per tonne (OpEx + G&A/Sales + Shipping) up from $23/t to say $50/t.

However, you have underestimated your gross revenues since the majority of what we are selling is 65% iron ore not 62% which is what the $110/t refers to. According to Custeel:

http://www.custeel.com/en/csi.jsp
===[
Date Seaborne index 62% Fe fines Seaborne index 65% Fe fines
2020-07-17 110.65 121.95
2020-07-16 110.55 121.95
2020-07-15 112.15 123.85
2020-07-14 111.55 123.55
2020-07-13 111.05 123.05
2020-07-10 106.15 119.95
]===

Using the prices on the 17th, the gross revenue would be:

$110.65 * 0.9Mt = $99.59m
$121.95 * 4.4Mt = $536.58m

Added together is $636m

The costs per tonne on 5.3Mt @ $50/t is $265m

Which results in an approximate EBITDA of $636m - $265m = $371m

This is slightly lower than the $400m I estimated earlier using a different method as the premium of 65% over 62% is currently only $11/t, where in the JRP it was estimated to be $19/t - i.e. the $400m was based on prices of $111/t and $130/t ($50/t higher than in the JRP).

Having said that, our product is classed as pellet feed, so it might attract slightly more premium than the current $11/t, perhaps the $19/t used in the JRP is appropriate, even today? Might be worth clarifying with @Kiran?

Ob.

Thanks @Cause. The breakdown by quality in the JRP at full production would be:

0.9Mt * 61/t * 3.6 = R$197.64m
4.4Mt * 80/t * 3.6 = R$1267.2m

which corresponds closely with the figures stated in the JRP, the sum of which is: R$1,464.8m (The JRP states R$1,463,...)

A weekend of mistakes for me... This is why it is important to show working out and to challenge anything you don't understand/dispute ! ;-)

The JRP uses an exchange rate of 3.6 (Did you confirm this @Cause? We know what the DIP A, B & C finance is in dollars and this is stated in the cash flows in BRL) and it has shipping costs per year at steady state production of 5.3Mt as R$172,141k which in US dollars @3.6 is $47.8m, which per tonne is:

47.8 / 5.3 = $9/t

We (KDNC) appears to have used something 3 times more conservative in our estimates, corresponding with what was stated in a recent interview if I recall correctly. @Dallas?

Ah, I finally understand the likely difference between the EBITDA calculated in the JRP and that stated in our RNS. The JRP uses a shipping rate of $8.5/t, whereas we appear to have played it ultra-cautiously and gone with a shipping rate per tonne of:

Gross revenues: 4.4Mt * $80/t + 0.9Mt * $61/t = $407m

As stated, net of shipping is $266m which means shipping costs are: $141m ($407m - $266m), which per tonne is:

$141m / 5.3Mt = $26.6/t

This appears to be the rate we've used to arrive at the long term EBITDA of $136m, when we'll be shipping from the recommissioned private port. Seems a bit too conservative to me! I can see how the rates might be that high for the first few years, but long term, from the private port and ultimately handymax to capesize transfer? Over a million dollars per 45kt shipment. @Bannor?

Ob.

I'm not sure how you are defining gross profit @tradedesk, but it's easy enough to estimate how the EBITDA would be expected to increase with increasing iron ore prices, assuming all else being equal:

"Approval of Judicial Restructuring Plan Paves the way for the Restart of the Amapá Iron Ore Project." (30 August 2019)
https://www.lse.co.uk/rns/KDNC/cadence-minerals-plc-approval-of-judicial-restructuring-plan-amapa-omqcte36gtcervm.html
===[
It is estimated that at steady-state production of 5.3 Mt of iron ore and utilising a 62% Fe price of US$61 / tonne (27/08/2019 price Fe 62% - US$90 / tonne) Amapá will have an average :
o US$266 million per annum of net revenue after shipping,
o US$90 million per annum in mine, processing and transport costs
o US$48 million per annum in environmental, sales and G&A expenses
o EBITDA of US$136 million per annum.
]===

I've demonstrated previously that I think the EBITDA is an underestimate as it appears to be a life of mine estimate, rather than an average over steady-state production, but assuming it is a reasonable estimate then if the $61/t used in the calculation above is increased by $50/t for both the 62% grade and 65% grade, the EBITDA would be expected to increase by:

$50 * 5.3Mt = $265m.

i.e. to around $400m ($136m + 265m)

Where do you get your $460m from?

Ob.

Indeed @colombolapd

"RiverFort Global Capital Webinar Featuring Cadence Minerals plc" (20 May 2020)
https://www.youtube.com/watch?v=MgvMSxoJ8R4