Member Info for observer842

Also, are you confident you have discounted correctly? For instance you stated: NPV0 as "yr 12 : $33.03m" and this discounted to "yr 12 : $13.20m". Presumably you did: $33.03m / (1.08**12) = $13.12m Putting aside the rounding differences, you need to discount by 13 years to get the NPV today as year 1 is the first year of mining, and year -1, and -2 are construction years: $33.03m / (1.08**13) = $12.15m Therefore your $53m total (before CapEx) becomes: 53 * (12.15 / 13.12) = $49m So I'm back tracking to @kiran's $30m (pre-tax) estimate... ;-) (I'm not sure what you mean by "the npv8 of our lce will be less than our contribution towards the plant capex..." I've demonstrated that this is not the case, and results in around $30m NPV8) Ob.

Great - now I understand. Unfortunately I think I'm correct that you need to include our share of the CapEx for stage 2 in years 3 and 4 of 22.1.2.

I see! ;-) Stand by...

I'm having a hard time cross-checking your figures with those in the feasibility study - even if I squint. Where have you got 35,764t LCE from? What about this $251.9m you keep using? I can't see either mentioned by searching.

I looked at your numbers earlier and I concluded they didn't include CapEx. For example your "yr 11 : 3,348t lce" translated to an NPV0 of "yr 11 : $23.58m" which means: $23,580,000 / 3,348 = $7,043/t LCE Indicating an OpEx of: $11,000 - $7,043 = $3,957 which according to table 21.2.1 and 21.2.2 is about right - although it's lower if you include the credits (which I presume you haven't done?) Can you elaborate on how you translated from your fact 5 to your fact 6? By the way, I'm open to be persuaded I'm wrong, so this is all good discussion! ;-) Ob.

Because it is 3.59% of the total operation. Therefore it is twice that percentage if we squeeze it into half the operation. The point being if you only want to contribute to the stage 2 mining and processing CapEx (as you suggested), we'll have to contribute approximately twice 3.59%: = 7.2%. Admittedly I'm just regurgitating what I've already said... think about it - and if you still don't get it I'll come up with an example. ;-)

@tomcat - I'm not suggesting that the CapEx isn't included in @Kiran's $30m (your $45m) - I'm saying you need to include it in your discounted cash flow approach where you got $53m. I presume you calculate the profit each year, after costs, and discounted that back to the present to reach your $53m ?

Hopefully this news will get the permitting process rolling for *everyone* in the region! ;-) "McGowan Government strengthens ties with Argentina" (17 May 2018) https://www.mediastatements.wa.gov.au/Pages/McGowan/2018/05/McGowan-Government-strengthens-ties-with-Argentina.aspx ===[ Mines and Petroleum Minister Bill Johnston today signed an agreement to build a stronger mining and resources relationship with Argentina. The Memorandum of Understanding (MoU) will help develop a mutually rewarding partnership by sharing specialist knowledge, technical skills and regulatory know-how. ]=== Ob.

Decent report from the institute of mechanical engineers. "ENERGY FROM GAS: TAKING A WHOLE SYSTEM APPROACH" (May 2018) http://www.imeche.org/docs/default-source/1-oscar/reports-policy-statements-and-documents/imeche-energy-from-gas-report-final-may-2018.pdf The section on power to gas drew my attention, as I see this approach being adopted in countries with existing gas infrastructure to seasonally shift renewable power generation. Eventually I see practically all the world going Solar/Battery (with a bit of wind), but there is a good few decades for transitional technologies to play a part. One such technology being low cost, low maintenance, sealed for life mCHP Stirling boilers! ;-) Ob.

A couple of interesting talks on the correlation between increased lithium demand and increased Rare Earth demand: "Alkane�s Nic Earner on the �Critical Link� between lithium and rare earths" (18 May 2018) https://www.youtube.com/watch?v=6OVUtLPLLlU "Arafura's Gavin Lockyer on the rising rare earths market" (17 May 2018) https://www.youtube.com/watch?v=ArkRYp6ePmI Both 15 minutes long and worth the listen to remind ourselves why we have Rare Earth element assets as well as battery metal ones. It's also worth taking a look at the most recent Hasting's corporate presentation at: https://hastingstechmetals.com/investor-relations/presentations/ We may appear to be sidelined in the 20's, but I'll be very surprised if we aren't mined at some point in the next two decades, as that is when the mining licence expires! And of course with increasing demand there is nothing stopping Hastings opening up another pit over Yangibana North and West, as previously planned... ;-) Ob.

It's had a bit of a overhaul of late including a recent research report: "Independent Investment Research Report" (May 2018) https://hastingstechmetals.com/investor-relations/research-reports/ I wonder how we are getting on realising our JV value by potentially negotiating a cash/share sale? ;-) If you believe the EV story it's likely Rare Earth demand is set to rocket - links to follow ;-)

A couple of points @tomcat 1. As you saw on the weekend, the NPV differs considerably from the $45m calculated if our 3.59% is mined uniformly over the period compared to if it is mined primarily in the second half. The $45m becomes approximately $30m. The CapEx is included in this. Did you learn nothing!? lol ;-) 2. In the other approach (which admire your effort on!) you need to factor in our CapEx contribution to the $53m you calculated from discounting profit cash flows to the present. However, your statement isn't true: "which imo is over the top anyway considering we only need to process our portion using one plant not both... so we should get half that refunded...". If you want to hypothetically consider our clay to be processed by the stage 2 plant only, then you have to approximately double the 3.59% to 7.2% and use that to calculate how much we would need to contribute to the $380m CapEx of stage 2: $380m * 7.2% = $27.4m Off of the top of my head I'm not sure if we should discount that by 5, 6 or 7 years. Going with 6 years: 27.4 / (1 + 0.08)**6 = $17.3m Assuming your cash flow calculation is correct, this gives us an NPV of: $53m - $17.3m = $35m (heavily rounded) which is a little higher than that stated by @Kiran. So it does feel fair to me to say it's perhaps worth in the region $30-35m once the project achieves funding. Of course we are led to believe that the CapEx contribution will be deducted at the time of mining, rather than having to contribute up front! How good a deal we manage to strike here is to be seen... And that range should be nearly doubled for today's LCE prices, $11,000 is so yesterday ;-) - call it $50m after tax for that tiny little bit of JV1 and I'm happy. And for the rest of JV!? Any less than triple digit after tax *pounds* and I'll be severely disappointed! ;-) Ob.

Don't forget to subtract our contribution to the construction costs in your calculation. What's that? Well it depends. Worst case I suppose is 3.59% of both the stage 1 and stage 2 costs: 3.59% * $800m = $28.7m Discount it over a few years (especially the stage 2 costs) and you might arrive at around $23m say, which when subtracted from your $53m gets us to @Kiran's $30m or thereabouts... Ob.

@Zoom56. I haven't really considered how this might play out. It's worth taking a read through the various material provided by the lme at: https://www.lme.com/en-GB/Trading/New-initiatives/Electric-Vehicle-Battery-Materials#tabIndex=2 in particular this presentation: "LME EV Battery Materials" (December 2017) https://www.lme.com/-/media/Files/New-initiatives/EVB/LME-Electric-Vehicles-Battery-Materials-presentation.pdf It feels like a good idea in principal. There are issues that come to mind though: if they are intending to store lithium, will it be stored as Lithium Hydroxide Monohydrate, Lithium Carbonate, both, or other (LiCl?). What is the shelf life? I thought it was only a few years, but googling suggests it might be around 5 if stored under good conditions. Additionally, unlike other metals, in terms of use in a battery not all compounds are made equal. Two batches of declared 99.5% LCE minimum can't be interchanged without extensive testing beforehand, as it is the remaining up to 0.5% impurities which cause the problems (including fires!) for some battery types. As battery technologies become more tolerant to impurities (e.g. nanoOne) this becomes less of an issue, and material of similar LCE concentrations from different providers can be more freely interchanged. Ob.

I don't use that when doing it properly @tomcat. It's: NPV = $1,000 / ((1.0 + 8%)**years) So for 2021: NPV = $1,000 / (1.08 ** 3) = $793.8 And I got exactly the same as you, which means we both did it correctly - although one of us is out by a year ;-) https://www.mathsisfun.com/money/net-present-value.html Ob.

No one mention the war @Bannor! ;-) Given what had transpired in the preceding months (JV sidelined in PFS, Tesla project sidelined, attempt at re-domicile to devalue our JV's), and that we felt we had strong backing (from a private Mexican fund), I think the attempt to take control was very much in the interests of KDNC's shareholders. However, it didn't pan out - the primary reason I believe to be that our Mexican backers didn't get regulatory approval: perhaps we should have aborted at that point, perhaps not, maybe there was a hope the regulatory issues could be resolved? Either way, we are led to believe in recent webinars that it was worth a shot. Don't think I'm trying to persuade you though: I'm not, as I know there is nothing that either I or the BoD or indeed anyone can say to make you think it was worth the gamble given all the available facts to the BoD at the time. ;-) Ob.

Nice one @tomcat! Although you don't quite get full marks as you appear to have discounted by one year too many as I can only get the exact same as you if for example I discount the first year (2021) by 4 years, not 3. It could be me that is wrong though! ;-)

I broadly agree @addicknt, unless someone wants in with very deep pockets, BCN has control over the JV's. This means that when (if!) BCN gets funding in the coming weeks/months its market cap should start to reflect the NPV of the planned 35ktpa project and since a small part of JV1 is included in that project its worth to KDNC should start to reflect in our share price as the project post funding is significantly derisked. And as @Kiran says, should we want to let it go, the most likely buyer is BCN, unless of course we are talking takeover $$$ territory, perhaps to someone who needs guarantee of supply. Either way, I believe the true worth of JV1 to be many times of that indicated by the current NPV since to my mind, and the minds of many invested here, the production rate will be significantly beyond 35ktpa by the mid 20's, as was close to happening when NextView were on the scene - Sonora is very readily scaled up. @Kiran is on board with high lithium demand scenarios so I'm confident we'll get good value or let it ride until the degree of disruption taking place in the energy industry is undeniable - I expect the lithium price to have taken another leg up above $20,000 by then. Cast your mind back to just a few years ago when LCE was @$5,000, today's $16,000 was quite unthinkable then to practically everyone. It'll all be obvious in hindsight ;-) Ob.

@addicknt - this wasn't the point under discussion: we both agreed that BCN have a first right of refusal on the JV if an offer was made for our 30%, similarly we both agreed that we have a first right of refusal on the JV if an offer is made for their 70%, what was under discussion in January was whether it was likely that the drag and tag terms were also symmetrical. I concluded they probably, but not certainly were: ob@14 Jan '18 ===[ Oh, and one more thing, from various examples I could find I concluded that a joint venture agreement which was designed to allow up to 49.9%:50.1% split with a declared symmetrical right of first refusal, likely also, nay probably also has symmetrical drag and tag terms. ;-) ]=== Whereas if I recall correctly you refused to accept this as a possibility. Ob.

@tomcat. Here is an exercise for you. Line up 20 pounds in a row, 1 pound each for the years 2021-2040, and calculate their net present value today. Then line up the same 20 pounds in a row, but 0 pounds between 2021-2030, and 2 pounds each for the years 2031-2040. As we know if a discount of 0% is used the NPV today is simply 20 pounds in both scenarios. What are the NPV's if 8% discount is used. 10%? What discount would you have to use such that the NPV in the first scenario is twice that of the second scenario? Ob.