Member Info for observer842

@Ivy: "Note outstanding balance of £2m+ continuing interest rate of 7.9% until April 2021. This produces a higher cost to kdnc than redemption in Sept 2020."

In terms of nominal cash yes, but almost certainly not in overall "cost" to KDNC. i.e. the benefits to KDNC for a later repayment date, assuming Amapa is in full flow and we own 27% by then, far outweighs this nominal additional few hundred K of interest IMHO - remember, we have to raise $3.5m (CLN / equity / sale) and that's going to be all the easier for the market to swallow without another lump of debt being repayable around the same time.

It was a great RNS whatever way you look at it IMHO. And there was Amapa news on Friday which I have yet to deceiver...

I knew sharing thoughts on here was useful, and fun @tomcat! Got your detective hat at the ready?

We know they crossed the 6% threshold on Monday when on Tuesday they reported they were now at 5.99%. Since our share price didn't go above 12p until Wednesday this was presumably due to repayments in cash from us.

1,835,706 shares is about 1.5% of the company, which means if they did forward sell them on Wednesday or/and Thursday we should see a TR1 notification on Monday - unless they are being sneaky, or have a technical reason up their sleeve to why they don't have to report until a few days later or when the shares are admitted around the 11th (Thursday).

Ob.

@dallas will be able to tell you exactly how many shares were traded above 12p this week. *Very* broadly I make it over 10m - they could easily have sold their 1,835,706 as part of this, and if so explains the drag around 12-13p.

It probably goes without saying, but if the spin of the dice comes good for KDNC it's good for EMH too on several fronts, the most obvious being if they decide to rebuild their holding here as it would likely bump the share price, if it hadn't already been bumped in anticipation of them doing so... ;-)

@tomcat: "they’ve converted 1,835,706 shares at 12p per share... for £220,284.72... which is a 21.82% premium... on tonight’s closing price of 9.85p... d:)"

Surely the sceptic in you, and no doubt many others on here will be thinking that they have already forward sold these shares when the share price was above 12p during the week?

This would technically be a short on the shares above the public notifiable limit of 0.5%, but since they are not *net* short by that amount I don't believe they have to notify.

Now before anyone accuses me of selling out and wanting a lower entry... perhaps they haven't forward sold these shares, and the reason they decided to convert them now was because the alternative is that we would have repaid the equivalent in cash, whereas the repayment extension to April 2021 suggests that they are confident that the share price will rise above 12p again before then allowing them to make a greater profit than repayment + interest today would afford.

Now before anyone accuses me of ramping so I can sell... the reasoning around the April 2021 extension also applies to the less risky strategy for them of forward selling their shares when the share price is above 12p before converting them.

I'd loved to be proved wrong, and that in fact they haven't sold a jot, and don't intend to in the short term on the prospect of a serious multi-bagging from here on the back of Amapa news (another post coming!). Over to you @tomcat ;-)

Ob.

@Barksy Does the large trades you are spotting correspond to those published here?

https://api.londonstockexchange.com/api/gw/lse/download/KDNC/trades

That's a direct download to a CSV file by the way, updated daily. Frankie would have kittens if she accidentally clicked on it!

Link is from:

https://www.londonstockexchange.com/stock/KDNC/cadence-minerals-plc/trade-recap

@Barksy I suspect many came for Hastings but quickly realised the hidden gem they'd discovered was Amapa. We'll probably hear some admit it if we multibag from here in the coming weeks/months if all goes to plan: easier to admit the truth when in profit!

@enteleon: "Given some negative comments on KDNC, is the prominence of Kiran Morzaria (he is quoted as someone to contact on EMH's RNSs) a risk to EMH ?"

To add some balance (for what it's worth!) I'm a long term holder in KDNC and know the company and its history very well, I've got the impression Kiran is a decent guy, and I think the short term prospects could surprise many. If you want to know more information I think it's appropriate we discuss on that board than on here - which is a bit unfortunate for KDNC, as over the years I've shared loads of research on the KDNC board about the company's it has interests in - including EMH! And before anyone berates me, I think EMH is great, just longer term... ;-)

Woman you must be crazy! ;-) Appreciate your comments. Too many unknowns blew a fuse in my calculator - could be a while before I source a replacement to have another go...

I give up. I retract everything I've written today and previously related to Amapa's EBITDA until further notice.

@antelope: only for lithium prices higher than today's.

I'm going by:

"FASTMARKETS MB LITHIUM HYDROXIDE MONOHYDRATE: MIN 56.5% LIOH2O BATTERY GRADE, SPOT PRICES CIF CHINA, JAPAN & KOREA, $/KG (MIDPOINT)"
https://www.lme.com/Metals/Minor-metals/Lithium-prices#tabIndex=1
===[
DATE PRICE (US$ PER KILOGRAM)
28 May 2020 9.75
22 May 2020 9.75
14 May 2020 9.75
7 May 2020 9.75
]===

It's stood up a bit better than the LCE price over the past few weeks:

"FASTMARKETS MB LITHIUM CARBONATE: MIN 99.5% LI2CO3 BATTERY GRADE, SPOT PRICES CIF CHINA, JAPAN & KOREA, $/KG (MIDPOINT)"
https://www.lme.com/Metals/Minor-metals/Lithium-prices#tabIndex=0
===[
DATE PRICE (US$ PER KILOGRAM)
28 May 2020 7.50
22 May 2020 7.50
14 May 2020 7.50
7 May 2020 8.00
]===

Perhaps the table in the JRP isn't based on $61/t? Would that explain it? Has anyone been able to find what it's based on or the exchange rate used?

It worries me they've accidentally double accounted somewhere along the line - perhaps a double conversion. It would be good to get that cleared up.

unintentionally!

What's equally mysterious is the figure they've stated for net revenue after shipping:

"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
===[
At full production and using US$61 per tonne of 62% Fe Amapá is forecast to have:
o an average net revenue after shipping of US$266 million per annum,
o and an average EBITDA of US$136 million per annum.
]===

It's quite clearly stated in the JRP that it's significantly higher than this.

Come on - someone help me unravel this mystery! Is the BoD intentionally playing this down? :-)

The way I see it they might as well do something to try to lower the OpEx whilst waiting for demand to force the lithium price up. As @Fingers noted, it's unlikely the first tonne will be sold for less than $14, which pessimistically could imply a bit of a wait. Personally I'm optimistic prices will recover soon...

According to page 36 of the JRP, the Revenue net of shipping and the EBITDA for the project based on $61/t is as follows:

https://pje.trt8.jus.br/primeirograu/Processo/ConsultaDocumento/listView.seam 20012416350764800000023996777
===[
Year : Revenue net of shipping : EBITDA
2019: 0 0
2020: R$148 R$115
2021: R$148 R$115
2022: R$386 R$200
2023: R$760 R$502
2024: R$1388 R$938
2025: R$1292 R$832
2026: R$1292 R$816
2027: R$1292 R$800
2028: R$1292 R$783
2029: R$1292 R$765
2030: R$1292 R$749
2031: R$1292 R$727
2032: R$1292 R$707
2033: R$1292 R$688
2034: R$1292 R$665
2035: R$230 R$91
]===

I make the average of the EBITDA's in years 2019 to 2035 as R$558.4m. On the date of our announcement on 30 August 2019, the exchange rate was 4.15. This would result in an equivalent EBITDA of US$134.6m. Accounting for rounding errors this is the same as what was reported in the RNS:

"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
===[
At full production and using US$61 per tonne of 62% Fe Amapá is forecast to have:
o an average net revenue after shipping of US$266 million per annum,
o and an average EBITDA of US$136 million per annum.
]===

If you've got this far the point I'm trying to show is that the $136m EBITDA is an average over life of mine, not at full production as is stated. At first full production in 2024 (which will likely be a little longer now...) it is estimated to be R$938m, which using an exchange rate of 4.15 again results in an EBITDA at full production of US$226m, which steadily decreases over life of mine.

If today's spot of ~$101/t were used instead rather than $61/t used in the above calculations, then this would be increased by either around 5.3Mt * $40 = $212m or ~65% * $212m = $137.8m

Point being the stated EBITDA is IMHO woefully underplayed, potentially by a factor of 3 in the early years when it matters most. :-))))

Please DYOR, in particular no one has confirmed that I have correctly extracted the above quoted figures from the JRP, which was only made public in the past few months...

Ob.

@Bannor. "I noticed Kiran had no comment of his own re HAS news but just cut & pasted their comment - said a lot to me & now I'm waiting for some news that would explain the daily rises since Monday...."

If I know you, you'll presumably be suspicious that the news could be related to some orchestrated corporate "event" (cough CLN cough). I agree it could be. Problem is we don't know the agreed target, if indeed there is one is, meaning it could be several days before the sustained daily 20-30% rises end. Alternatively, and more likely, AIM is just doing its AIM thing and the BoD may use this their advantage. i.e. dog wagging tail, not tail wagging dog. ;-)

Thanks @Rpks. That article was dated May 22 2020. It included related links which aren't premium. This one caught my eye which confirmed the 2023 date in a few places:

"CEZ is entering the second phase of lithium mining exploration. He solves how to get it out of the rock" (March 27, 2020)
https://www.idnes.cz/ekonomika/podniky/cez-lithium-tezba-cinovec-krusne-hory-geomet.A200327_092133_ekoakcie_fih
===[
"The results of our research, which we consulted with domestic and foreign experts, show that the project can be profitable for us. The project is a potentially very interesting opportunity for our company Severoceské doly, which is the largest mining company in the Czech Republic. However, we must first test the procedures tested in the laboratory in pilot operations, ”said CEZ CEO Daniel Beneš.
...
ENA analyst Jirí Gavor told CTK today. He pointed out, however, that this is a complicated deposit with higher costs for mining and subsequent separation of lithium. "Nevertheless, I welcome the fact that the state has taken this opportunity - after all, German neighbors are doing the same just outside the border," he added

Finlord analyst Boris Tomciak also described today's decision as expected. "Lithium mining will not start until five years later. A significant increase in the number of electric cars on the roads is expected from 2025 and the demand for batteries will be huge. From an economic point of view, mining should be profitable. At the same time, the Czech Republic will be self-sufficient in this metal, which is important in the long run, "he said.
...
According to CEZ, the second phase of the project, which is to last until about 2023, will include, among other things, technical verification of the production process in pilot plant conditions and in pilot test lines. The rock will be investigated in off-site test facilities. A final economic and technological feasibility study will also be prepared.
]===

Perhaps it's common knowledge, though if not, I don't blame Keith for not mentioning it! :-)

Ob.