Member Info for observer842

@Dallas. According to the JRP we can take our 20% ownership at any time which would release our $2.5m from escrow. We are quite rightly not exercising this option until we are sufficiently assured the necessary prerequisites have been met. One of which is resolving the issue of the secured creditors (the banks).

@Ivy. My understanding is that the courts have been operating remotely for some time.

Presumably you include news related to the necessary licences and permits to ship the ore in your "shipping update" @Bannor? It's a close call whether we'll hear news on that front before the bank update, followed by news we've actually shipped the ore.

And I agree, delay is certainly possible, including all other manner of things that might go wrong - our share price isn't being heavily discounted to what it should be if we had all necessary agreements, owned 20% of the project and were shipping ore, for no reason! Lol. Perhaps everything will go swimmingly this time round? Even bigger Lol...

Ob.

Whilst I'm thinking about it. Has anyone worked out when the 60 days expire? We reported on the 14th April, which means the hearing was likely the day before 13th April (Monday). I make 60 days from that Friday 12th June. So news likely before then, or a few days earlier if the hearing was the week before... Does anyone know/remember the date?

Our annual accounts are due by the end of June, though normally we publish towards the end of May. Will we get an RNS today, or is @Kiran waiting for the various pieces of news in the pipeline to land first?

And above 80 out to about a year. :-)))).

Meanwhile lithium prices retreating (7.5) and both BCN and EMH looking like years before revenue gets flowing. Go iron!! Lol. Though BCN did once again mention the possibility of 50ktpa in a recent interview, which if they believe their own recent reporting on long term lithium demand should be the minimum of their expansion plans. IMHO. DYOR ;-)

Could be great for us if it all comes together over the next few weeks.

Though hopefully we do start shipping soon as the spot is very favourable at the moment (High 90's) with futures above 90 out to September. Looking good! :-)

@Theleather1. Personally I think we are more likely to hear about this:

"Amapá Iron Ore Project Given Court Approval to Commence Iron Ore Shipments" (14 April 2020)
https://www.lse.co.uk/rns/KDNC/court-approval-to-commence-iron-ore-shipments-lv899dufpruz5g4.html
===[
In addition, the Court has requested that the secured bank creditors reach an agreement with the JV Partners and DEV within 60 days or the Court might rule on the annulment of the Bank Liens and consider the banks as unsecured creditors. As unsecured creditors, the bank's credit will be subject to restructuring plan limits and discounts and be paid from free cash flow from DEV, which may be over fifteen years.
]===

before shipping news. Perhaps imminently so. ;-)

Cheers @jimb. Worth taking a read of this for Amapa's mineral resource types, tonnage and grades:

https://www.angloamerican.com/~/media/Files/A/Anglo-American-Group/PLC/investors/annual-reporting/2013/other-mining-2012-13.pdf

Cheers @degsie. And @Kiran! I'd hoped it was as simple as that, with the courts continuing to rule in our favour. :-)

What did you make of this @tomcat?

https://www.jusbrasil.com.br/diarios/298399851/trt-8-judiciario-22-05-2020-pg-590

I've taken a look back and I'm still left in a quandary over how:

"Shipping of first iron ore is on target for late Q2 2020 / early Q3 2020"

from the RNS on 01-05-2020, can be consistent with:

"Movement of the stockpile to public port is expected in July 2020"

from the same RNS. It's not a big deal, but I'm left wondering if something else is meant by these statements. Assuming that the BoD didn't' mistake July for being in Q2(!), and July wasn't a typo for June(!), then the only other explanation that springs to mind is for the movement of the stockpile from our private port to commence in late Q2 with completion of movement of the first 45kt batch expected in July 2020.

Also, it's worth noting that now we know the ore is being moved by road, when @Kiran mentioned about probably prepaying some of the charter vessel costs, we now know that comment refers to the 45kt cargo ship(s).

Ob.

Really appreciate that @Barksy and of course @Kiran! I'll have to revisit our discussions over the past week in the light of this. I presume @Bannor is doing the same! :-)

@MLQ - yes, transporting via road isn't great and almost certainly too expensive and undesirable long term - but is a sensible short term option to get the project started, and until our port can be used for barges, and ultimately handmax sized vessels once again.

And perhaps more importantly I hope it doesn't do significant damage to itself if we were planning on using it imminently!

I hope it doesn't do any damage! But if it does at least we currently own 0%, which presumably means 0% of the liability...

lol @tomcat. I'm sure @Kiran does this on purpose, to give us something to talk about. If not, be clearer man! lol.

I think I can unpack the following to be consistent with timescales and what @Bannor is suggesting:

1. Sign contracts with the port and the shippers
2. Start shipping the material
3. Get agreement with the banks, and that will mean we go to 20%
4. Will probably engage with offtaker and that person will offtake the product from the stockpile

1. This mostly refers to our port and our shippers (or the private port). Timescales imminent.
2. This refers to loading the ore from the private port onto the chartered vessel which could take some time. Possibly starting in Q2, with delivery to the public port expected in July (Q3).
3. Once agreement has been made (likely in June - July) we can then arrange for it to be sold.
4. Which means we can then arrange for the ore to be loaded onto the customer's 45kt bulk carrier FOB.

Does that fit @Bannor?

Ob.

What you wrote makes sense @Bannor. I was taking the vessel in "prepaying, probably, the charter vessel", to mean the ocean 45kt vessel (going rate $4-5k a day?), part of me still does, but I suppose it could mean whatever vessel we are using to ship our stock from the private port to the public one.

Though doesn't this mean there is a problem with timescales in the sense we won't be selling the ore until after agreements with the banks have been made? In which case our $2.5m is released so they need the proceeds from the ore less? Somethings not quite right with this scenario...

Actually I'm starting to see how it all might fit together now. lol. No doubt you are already there! :-)

I'm now reasonably confident I should *not* be using pellet premium prices, as, rather obviously in hindsight (why did no-one point this out?) we are supplying pellet *feed* not actual pellets which attract the premium. I've amended my post of 26 Apr 2020 17:09 below in light of this. Note - I've not updated the spot prices to present.

=====[
The EBITDA I estimated at full production rates of $188m appears to be based on a 62% Fe price of $61/t, which appeared to result in an average sale price of our products of $69/t. If we wanted to see what the EBITDA would be using today's spot I think it's a simple matter of adding the additional revenue directly to the EBITDA. At least I can't see why not.

Today's spot according to Custeel:
Seaborne 62% Fe fines = $83.75/t
Seaborne 65% Fe fines = $101.85/t

In the 10 year period 2025-2034 in the JRP the revenues per year are the same:
===[
Spiral Concentrate (62%) R$198m
Pellet Feed (65% Fe) R$1265m
Total Revenue R$1463m
]===

From the RNS the quantities sold are supposedly
===[
4.4 Mt of 65% Fe
0.9 Mt of 62% Fe
]===

If the 62% is sold at $61/t then the BRL to USD in the report can be deduced as:

0.9Mt * 61 * R = $198m
R = 3.6 USD

Using that exchange rate value the price per tonne of pellet feed can be deduced as:

4.4Mt * P * 3.6 = $1265m
P = $80/t

Using today's spot prices the increase to the EBITDA can be estimated as:

0.9Mt * ($83.75/t - $61/t) + 4.4Mt * ($101.85/t - $80/t)
$20.475m + $96.14 = $117m

The average EBITDA at full production of $188m I estimated in my original post in this thread was based on a USD to BRL of 4. If 3.6 were used this would become $209m using the conservative $61/t. Using today's spot this would increase by the $117m calculated above to $326m :-))

I'd take that EBITDA of $326m with a pinch of salt, especially as last time I looked at this there was a question mark over whether the prices should be re-scaled to 100% DYOR!

Ob.
]=====

Well that would be interesting @Barksy. PBA (the JV company) could find itself negotiating with itself for the best possible off-take deal. lol.

As has been pointed out previously, Indo Sino (our JV partner) is such an entity... Which was making me wonder if dealing with them now might prejudice the negotiations with the banks in some way. Doesn't quite fit together well enough for me, but worth pointing out I suppose.

Well remembered @Dallas. And it's an equally credible premise - no point in wasting everyone's time: make sure we can ship; make sure the ore is ours - steps 1-3.