Member Info for observer842

Can't argue with that @Bannor: that's the point, the (potential) market cap contributions from our non-listed assets appear to be inappropriately risk discounted at this current time (discounted to zero? Yeah that makes sense! lol), meaning a pretty epic buying opportunity for the well researched amongst us. It may or may not take an IPO or a sale of asset for this to change, AIM can be a bit unpredictable after all, making it impossible to know, but I'm happy to continue to add at these prices, especially as the risk to reward ratios seemingly continue to improve in our favour as the various projects progress. Quite exciting really. Fortunately I'm a patient sort! And you sure need to be for this share - both types from what I see posted! ;-)

I'm using my latest asset valuations to guide the amount and frequency of adding to this share, along with current market conditions:

https://www.reddit.com/r/CadenceMinerals/comments/vpr5w7/due_diligence_lsekdnc_cadence_minerals_asset/

Way oversold IMHO...

So for me, unless the value of Amapa starts to be reflected in our share price I'll be anticipating an IPO some time after the PFS, potentially after the DFS. To spell it out: imagine if the 22% goes to someone else for $30m and we retain our 27%, valuing it at £30.5m, but our share price doesn't budge... That's the sort of scenario we'd benefit from IPO'ing to spell out the value of our holding to the wider market, and allow us to sell some if necessary to realise it.

@Bannor. @Kiran explained why we MAY want to IPO Amapa no sooner than after the PFS in the last presentation, one reason being if the market is having trouble valuing it in our (KDNC's) share price, as appears to be currently the case: "but I think the most important thing is that often when sometimes assets are stripped out, effectively they are fully exposed to the public market, you may get a better valuation for your shares and you'll certainly have a mark to market valuation of your shares rather than the balance sheet valuation to our shares"

lol Bannor - it's MY "anticipated" order of events - feel free to share yours. I'm torn between IPO then DFS, or DFS then IPO. On balance, I think we'll IPO before DFS, but after the 22% is settled, but we may not IPO at all if something big happens, like we are bought out lock stock and barrel :-)

I reckon there will be many a conversation around our JV's taking place. The South Pit which is fully on our JV land could satisfy this demand from the article: "Bloomberg reported in March that the investment could build an 80 gigawatt-hour factory."

Really is incredible that the market can't see, or refuses to value the potential we have in Sonora. Maybe it's expecting the licences to be declared invalid leading to protracted court cases? Even if you thought this was say 50% likely, that's a 50% discount to any valuation in mind, not apparently near 100% to near zero value...

AIM is weird. lol.

Added a few links related to Ganfeng, but other than that, it's a waiting game!

https://www.reddit.com/r/CadenceMinerals/comments/w1nlw8/weekly_discussion_thread_upcoming_news_icymi_july/
===[
I make the TL;DR on upcoming news as:

Amapa Iron Ore: First right of refusal to increase ownership stake from 27% towards 49% of a project that had discounted cash flow valuations of $1.2B Anglo & $1.66B Cliffs and an initial valuation when purchased by Anglo of $3.2B in 2008.

Anticipated order of events: MRE, PFS, 22%, IPO, DFS.

Shipment of stockpiles recommencing when conditions are favourable.

Sonora Lithium: In conversation with Ganfeng regarding KDNC's 30% JV's. Details on Ganfeng's optimisation and expansion ambitions and potential impact on KDNC of massively increased stage 1 plans to 50ktpa of Lithium hydroxide and beyond forthcoming, including strategic OEM investments, and consequences of recent nationalisation votes.

Anticipated order of events: Confirmation Lithium tenements are valid, publication of expanded DFS, new off take/investors.

Recent events highlight Ganfeng have the funds and are keen to do deals.

Evergreen Lithium: Initial public offering.

Yangibana Rare Earths: Finalisation of agreement to take £5.1m in HAS shares in exchange for our joint venture areas.

EMH Lithium: DFS/partner/offtake/funding announcements for phase 1 of the project.

My Latest valuation estimates suggest the market is currently discounting Amapa and Sonora to near zero contribution to the NAV.
]===

"Despite initially signaling that Ganfeng would not be allowed to advance Sonora, AMLO has said the Sonora concessions will now be respected, as long as the concession contracts are in order."

Sonora 17.5/35ktpa has 100% off-take for at least the first 10 years as noted on page 8 of the latest presentation:

https://bacanoralithium.com/_userfiles/pages/files/documents/bacanoracompanypresentationjune2021.pdf
===[
Ganfeng: Long term 50% off-take for Stage 1 and 75% off-take for Stage 2
Hanwa: 10 year Off-take agreement for 50% initial 10 years of Stage 1 production
]===

"EXCLUSIVE: GANFENG EYES US OEMS FOR “STRATEGIC” STAKE IN MEXICAN LITHIUM PROJECT" (8th April 2022)
https://www.reddit.com/r/CadenceMinerals/comments/tz8dyd/exclusive_ganfeng_eyes_us_oems_for_strategic/
===[
China’s Ganfeng Lithium says major US automakers could make a “strategic” investment in the Sonora lithium mine in Mexico, as they seek to create a North American supply chain for battery raw materials.

China’s largest lithium producer said that an investment by Ford, GM or Tesla would help provide automakers with reliable supplies of lithium that can be easily shipped across the border to plants in the US.

“We are open to having strategic investors in our Mexico project, together with investment we could have an offtake agreement with them,” Wang Xiaoshen, vice chairman of Ganfeng, told Benchmark.
]===

Going to need a bigger mine, meaning our JV areas are going to be required sooner and in greater volume...

https://www.reddit.com/r/CadenceMinerals/comments/vw726k/weekly_discussion_thread_upcoming_news_icymi_july/
===[
Cadence has a 30% Joint Venture interest in several of the tenements in the Sonora Lithium project. The DFS envisages a total of 3.6% of ore associated with Cadence being mined in years 9 to 19 in the current 17.5kt/35ktpa LCE mining plan. Should Ganfeng accelerate production or increase mine life then the Joint Venture areas will be required sooner and in greater volume. Cadence has 839Mt LCE of mineral reserves associated with its Joint ventures which is 18.58% of the total 4,515Mt LCE of that defined.
]===

According to my estimates the market is currently discounting Sonora to near zero.

https://www.reddit.com/r/CadenceMinerals/comments/vpr5w7/due_diligence_lsekdnc_cadence_minerals_asset/

And lithium demand/price outlook looks very strong!

"Fastmarkets' William Adams: Lithium Prices Have Yet to Peak, but Expect Surprises" (15 Jul 2022)
https://www.youtube.com/watch?v=vSyDgOz4aog
===[
This interview was recorded on June 28, 2022.

Lithium prices rallied last year, with strong demand and a bright outlook for the electric vehicle sector supporting prices as automakers continue to seek ways to secure supply.

But after reaching all-time highs, prices have started to stabilize, with fresh COVID-19 measures in China, among other factors, hitting the market.
]===

This comes off I certainly won't be kicking myself for not adding at what appears to be a monumental valuation mismatch!

Ob.

@CBax - DYOR of course, but you might be interested in my latest valuation estimates at:

https://www.reddit.com/r/CadenceMinerals/comments/vpr5w7/due_diligence_lsekdnc_cadence_minerals_asset/

"typically if you were to reconstruct them new you'd be in the billion dollar mark and of course we expect that to be much lower than that as I've mentioned before"

Should lead to a pretty decent IRR.

Indeed @jimb. When it comes to Ganfeng and KDNC, I suspect the wider market generally doesn't realise we are a junior partner of theirs, owning 18% of the Sonora RESERVES, and perhaps ripe for plucking... :-)

https://www.cadenceminerals.com/projects/sonora-lithium-project/

Thanks @degsie. I've got a large stake here so it's clearly in my interest to make sure I research thoroughly. And since I'm the sharing type, I share, though obviously not completely selflessly - it's clear to me we need to improve the reach and understanding of this share: the more that understand the potential, the more we all stand to gain. Hopefully decent news will get the ball rolling!

Sooner or later value will out. And it really does feel like sooner, especially given how undervalued we appear at the moment! As ever follow the link for better formatting, corroborating links, and much more information!

https://www.reddit.com/r/CadenceMinerals/comments/vpr5w7/due_diligence_lsekdnc_cadence_minerals_asset/
===[
Thought I'd share an updated version of my asset valuations for discussion. Contributions/corrections most welcome!

Summary
I've broadly split the valuations into categories, but because I find aggregating the valuations useful there is overlap in the tables below:

Minimum/Fair Present Value: For unlisted assets this range is determined by recent contributions to increase our stakes or actions and agreements by others.

Sale: What we might expect to realise in a sale of asset.

NPV: Net Present Value based on current mining plans, ranged with low, high product sales, and likely expansion plans.

NPV Potential: Potential expansion plans and improved economics.

But what about the market cap today I hear you ask? The market decides that, and I'm not suggesting it should be deciding £1-2B, nor I doubt anyone informed would suggest £17m is a good reflection of asset value either - so somewhere in between! Very roughly and assuming most things go our way my best guess is:

Near term: £37.5-92m

Medium term: £160-420m

Longer term: £1-2B+

Totals
Asset Date Minimum/Fair Present Value Sale/NPV NPV Potential
Amapa 2022-07-02 £10-30m £30-170m £450-1,200m
Sonora 2022-07-02 £12-45m £105-181m £500-900m
HAS 2022-07-02 £5.1m £5.1-12.4m £20-40m
Evergreen 2022-07-02 £1.81-2.5m £5-10m £10-20m
EMH 2022-07-02 £6m £15-45m £50-100m
Passive 2021-12-31 £687k £1-2m £2-4m
Cash 2022-07-02 £2-3m £2-3m £2-3m
Total 2022-07-02 £37.5-92m £160-420m £1-2B+
]===

As previously stated, I personally think there is a good chance the others BoD members are too closely involved with Sonora negotiations, whereas Kiran believes he has divulged sufficient information to allow him to purchase, perhaps as was the case for Yangibana. Namely:

https://www.reddit.com/r/CadenceMinerals/comments/vw726k/weekly_discussion_thread_upcoming_news_icymi_july/
===[
2022-07-01: Investor presentation and Q&A highlights:
Same position as Ganfeng: these licenses are still valid.
At this point in time Cadence not in the discussions Ganfeng appear to be having with automakers.
Ganfeng embarking on a DFS to prove 50ktpa Hydoxide is possible. If successful, our areas would come forward in the mine plan and have higher value as the NPV would increase.
Amenable to converting JV into equity or royalty or any other derivative ownership of the entire project.
]===

My summary of upcoming news. Follow the link for better formatting, corroborating links and much more:

https://www.reddit.com/r/CadenceMinerals/comments/vw726k/weekly_discussion_thread_upcoming_news_icymi_july/
===[
Amapa Iron Ore: First right of refusal to increase ownership stake from 27% towards 49% of a project that had discounted cash flow valuations of $1.2B Anglo & $1.66B Cliffs and an initial valuation when purchased by Anglo of $3.2B in 2008.
- Anticipated order of events: MRE, PFS, 22%, IPO, DFS.
- Shipment of stockpiles recommencing when conditions are favourable.

Sonora Lithium: In conversation with Ganfeng regarding KDNC's 30% JV's. Details on Ganfeng's optimisation and expansion ambitions and potential impact on KDNC of massively increased stage 1 plans to 50ktpa of Lithium hydroxide and beyond forthcoming, including strategic OEM investments, and consequences of recent nationalisation votes.
- Anticipated order of events: Confirmation Lithium tenements are valid, publication of expanded DFS, new off take/investors.
- Recent events highlight Ganfeng is keen to do deals.

Evergreen Lithium: Initial public offering.

Yangibana Rare Earths: Finalisation of agreement to take £5.1m in HAS shares in exchange for our joint venture areas.

EMH Lithium: DFS/partner/offtake/funding announcements for phase 1 of the project.

My Latest valuation estimates suggest the market is currently discounting Amapa and Sonora to near zero contribution to the NAV.
]===

Indeed @jimb. I find it absolutely incredible that "we", the KDNC market participants, appear to be valuing our Sonora holding close to zero. We know Ganfeng will be embarking (likely well underway IMHO) on an updated DFS over Sonora for 50ktpa Lithium Hydroxide, and that is likely just a stage 1 of 2 (ala Thacker Pass), or more! If we haven't struck a deal before that is published we could see a sharp jump upwards in our share price as it becomes apparent to the wider market who owns 30% of the Lithium feeding the vast majority of the expansion!

Missed this. Thanks for sharing!

"RIU Sydney Resources Round up - Wednesday session 4" (5 May 2022)
https://www.youtube.com/watch?v=qg3wRb3d0Y8
===[
As you'll see from our share price chart we've got a market cap there of about [AUD] 220 million dollars that represents less than one-sixth of our share of that NPV so I'm fairly confident telling you that I think this is probably the cheapest or most undervalued lithium development story listed on any share market.
]===

That was at 65p, now at 40p...

Concludes with:

===[
So the key thing is any of my shareholders here will tell you what they really want me to do is to sign an off-take agreement because we've all seen what that does to the share price. We will do that, it's been advantageous to us in not doing it too quickly because the terms are just getting better and better. Off takers are now prepared to give you terms that they simply weren't prepared to give you 12 months ago or six months ago and I think that will continue for some time with the supply demand equation
]===

Though I do think it quite possible, perhaps even likely, we'll use the same company for the DFS if we feel they did a good job on the PFS and we continue to have a good working relationship with them. Meaning the additional 3 months that @Kiran mentioned as "sometimes" being necessary collapses to 0.

lol @Bannor, I said optimistic or optimistically no less than 5 times in my post - wasn't it clear to you I was talking optimistically if things play out our way? ;-) Additionally, for good measure, I said "Seems unlikely to me"... :-)

lol @Bannor. How about listening to the relevant section (which I did before posting) rather than trying to remember. ;-)