Member Info for observer842

About a week or so ago, one of the other presentations went from available soon to being available, leaving EMH's as the only one not available.

We don't need to raise any cash at the moment, but I'm certainly not suggesting anyone shouldn't sell if they want to though! I certainly wouldn't blame them given the lack of any meaningful news of late. However, I know what "event" I'm waiting for... ;-)

Any idea why EMH's presentation is yet to be made available at:

"BENCHMARK WORLD TOUR 2018 | EUROPE – DOWNLOAD PRESENTATIONS HERE" (4th July 2018)
http://www.benchmarkminerals.com/benchmark-world-tour-2018-europe-download-presentations-here/
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European Metals Holdings Ltd – Keith Coughlan, MD (available soon)
]===

@ProphetWarning. There are many different ways to attempt to place a "current" value on our Hastings JV. Since it isn't officially in the mining plan, unlike the Sonora JV, it's a further step removed from value, and our BoD haven't attempted to place a value on it recently. In the April presentation they arrived at a current value of around £8m for the, fairly small, parts of the Sonora JV that is in the mining plan: fully discounted, and scaled to the BCN share price. This doesn't stop me having my own personal valuation of our Hastings JV's though!

How about this hand waving estimate? Their November feasibility study had an after tax NPV8 of A$466m based on mining 8 years on their 100% ground. That's 260 million pounds. Adding all of our land together, by this measure we have claim over somewhere between 1 and 2 years worth of mining material. If this were mined equally throughout the 8 year period (it's not, none of it is), our share of that NPV would be somewhere between £32.5 and £65m. However, in order to find a "today value" that needs to be scaled by the current market cap of HAS: i.e. what shareholders are willing to attribute *today* to the project, which is around £95m. Therefore the £32.5-65m becomes around £12m - £24m. And then we further need to reduce this by an estimate of when it might be mined: likely after year 10 as things stand, so probably by around a half or so. Which brings me to a personal estimate, using the method above, of a current value to KDNC from our Yangibana JV of around £5m to £10m. But in reality it is "worth less" until our JV's officially enter the mining plan or are (part) sold: or we change CEO back to one who is willing to hope and hype the bejesus out of it ;-)

Ob.

@Bannor As reported in the accounts, the CLN's at year end were £4,182k, so I think we are talking in the region of £3m now, not £4m as you stated. I know it was an approximate guess, and 4 is almost 3, but I'd be happy to be corrected so I assume others would be too! We also had £2m in cash and equivalents at year end. ;-)

Lol @Bannor. I guess we shouldn't sniff at that 9-10t of LCE projected to be coming our way around 5 years from now - if all goes to plan! ;-)

I like your optimism @Bannor! The Sonora JV in the mining plan isn't currently scheduled to be mined in any significant volume until year 11: less than 1% (to us) in years 3, 9 & 10. Around 10% from year 11 for a few years, falling to around 3% in years 16 to end of current plan (19). Page 137 & 138 of the feasibility study. This assumes the rate of production increases from 17.5ktpa to 35ktpa - without even that expansion the JV is (currently) "worth less". Of course with an earlier increase to 35ktpa, and a later expansion beyond that, it's "worth more". ;-)

We've got around £15m in available for sale assets - i.e. that invested in listed companies at their current share price: the main ones, BCN and EMH are extremely undervalued at the moment. Oh and not to mention our unlisted direct assets - in particular the Sonora 30% JV's but also possibly a sale of our 30% Hastings JV's could be in the works as we speak. The Zulu asset is an absolute bargain for KDNC. But you know that don't you? ;-)

If the share price doesn't even reach 0.92p on the required timescales the company saves itself from issuing a total of around 233m shares to the BoD, which at today's share price is close to half a million pounds, or around 2 million pounds @0.86p. By the way, the 2.14p in the Subject should read 2.18p, the other target price being 1.82p

The August CIBSE journal had an article which included trials of micro CHP. This paragraph piqued my interest:

"Vital signs of success – North West Ambulance Service’s energy performance contract with Imtech" (Posted in July 2018)
https://www.cibsejournal.com/archive/PDFs/CIBSE-Journal-2018-08.pdf
https://www.cibsejournal.com/technical/vital-signs-of-success/
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Reliability issues

Micro CHPs

These wall-hung gas boilers, with an integrated Sterling engine, produce 24kW of heat and 1kW of electricity. Seven were installed. Most suffered mechanical and electrical breakdowns, although there was no common reason for these failures. Standby or supplemental boilers were installed as part of the heating-system upgrade, so heating was maintained to the building during breakdowns. By working with the manufacturers to resolve the issues, the reliability of the micro CHPs improved significantly and the best electrical-generation performance since commissioning has been achieved in the past 12 months.
]===

Compare the 24kWt to 1kWe ratio with the Inspirit Charger's 15kWt to 3.1kWe. 5 times greater. Just saying... ;-)

Ob.

See page 49 of the annual reports for the likelihood the BoD assumed.

Fight the machine @Dallas! Or cave in and do what it does... ;-)

Ob

Indeed @Dallas - as a holder myself I'd prefer that all other holders continue to hold also (or continue to buy), so you won't be surprised to hear me say: KDNC could be worth multiples of today's share price on the back of any number of pieces of expected news in the pipeline. It's stock, but true! And of course I'm always happy to go into detail, far too much detail for some in fact... ;-) By the way, great video you posted the other day about trading scams. Someone should do a similar exposé on AIM to help protect newcomers.

@Frankie - in summary: circumstances change. Just because someone once said that our Yangibana assets could be worth a fortune to us doesn't mean that statement is true for all time. The "could" was a caveat on factors such as its mineralogy and whether the project is eventually funded to production and if so where it would come in the mining plan. In terms of Yangibana North (our 30% JV), the mineralogy is good for what HAS are planning on producing, but not great in comparison to their own 100% areas, and this is the stated reason why they are planning on mining their 100% areas first. So when you heard that Yangibana could be worth a fortune to us however many years ago - probably by me too! whoever said it, me included, will no-longer think it's worth a fortune today due to changing circumstances. It has value, but I wouldn't say at the "fortune" level any more, whatever that subjective term may mean anyway! ;-) For me it no-longer has triple digit million value to KDNC, but low double digit millions (pounds). Not quite from riches to rags! More like from fortunes to decent return. ;-)

Ob.

@Frankie. There are many ways an investor may place a "fair" value on a company when deciding whether a share is buy, sell or hold. At the moment the market seems to be agreeing that our share price should be around the net asset value: value of the shares we hold in listed companies, plus cash, minus debt - and assigning no value to any of the assets we own or are in the process of owning: the various JV's (Sonora, Hastings, San Luis, Zulu), 100% Greenland. This wasn't always the case: at one point the share price was significant multiples of the value attributable to our listed companies, plus cash, minus debt, meaning that the market was valuing the balance on something else. I call it hope and hype, and it could have been the possibility of a sale of KDNC, the possibility of the JV's (Yangibana or Sonora) being mined early on/sold, or plenty of other things our past leader might have hinted at. Tesla involvement for one springs to mind.

Personally I still believe that BCN will get funded, and they will end up building a plant significantly larger than 35ktpa by the mid 20's - perhaps even into the 100's ktpa, which will mean our Sonora JV's will be mined in much greater quantities than is in the current mining plan. I do hope that if we do sell them before their value has fully matured it is to fund something equally or even more lucrative! ;-)

Ob.

@Frankie I think you've asked a few times about Yangibana. My current take is that Hastings (HAS) intend to shore up enough resources so that in at least the first 10 years they are able to mine from their 100% owned areas in the Eastern Belt. However they have also mentioned the possibility of mining from their 100% areas in the Western Belt, and my take is if they were to do this, in particular if they were to mine Yangibana West, then due to the mineralisation of Yangibana North (our 30% JV) being similar, and the close/continuous proximity to Yangibana West, it would almost certainly be beneficial to mine it on a similar time-frame. In terms of value to us, with this hand HAS are playing we could be looking at say a 10% discount for 10 or so years on any cash flows, which discounts the value of anything mined from our area to the present day by around a third. Not great, but not terrible! i.e. > 0 ;-)

So although there is no official plan to mine any of our JV's, and likely the reason the KDNC market seemingly placing zero value on them, the closer HAS gets to funding and production, the more important they become in the long term: especially the 10-20 year time-frame. i.e. post or during funding we may strike a deal with HAS or any of their investors to let our JV's go for cash or shares in HAS.

In summary, Yangibana could eventually come good for us (double digit millions), but it's a waiting game: again, one we are best playing with a strong hand... ;-)

Ob.

My "Strong Buy" is based on an (undisclosed) assessment of the risk to return ratio for someone investing in KDNC today. There is downside from here: there is a risk the company goes completely belly up - a very low risk IMHO; there is a risk, perhaps middling that the company's share price drops steadily (as it has been doing in line with BCN + EMH); but there is the other side of the coin: there is a good chance, our assets recover in value (I'm looking at EMH here!), and our share price starts to appreciate, and there is an equally good chance that anyone of our assets/investments will come good/be sold and our share price rockets in response. Perhaps we'll get news on the Sonora JV's soon? Our BoD told us that we are now on good terms with BCN and not so long ago we were heading in the direction of a decent operational JV agreement with them: but we don't know the details of this. So overall, I believe KDNC is a Strong Buy. Great upside from here, with limited (but non-zero) downside.

By the way, "all things being equal" usually means "provided that other factors or circumstances remain the same", not 50:50 ;-)

With respect to (part) selling the Sonora JV - I do hope we only contemplate this whilst we have an upper hand, I'd hate to see them go in a stressed seller situation: again! 70p BCN share sale! although that sell off doesn't feel too bad going by the present BCN share price... ;-)

Agreed @ivybush - from your perspective it must feel like a great time to continue to buy - one where you could quite easily double/treble (and some!) your money should we start to make good progress in San Luis and Zulu over the coming months. I like my caveats so I'll caveat that statement with I'm pretty sure I was saying the same at 0.6p, 0.4p and 0.3p... ;-)

I'm afraid I'm not here to allay fears @FrankieH. @maddog38 made his sanest comment to date the other day with: "all things been equal it could all go up in smoke,"