Member Info for observer842

This one. ;-)

LoL @EV. There's a thread from earlier in the year titled £5-£10 which begs to differ ;-)

@tomcat, the recommissioning works have commenced... "On behalf of the Cadence Board, I am pleased to report solid operational progress at Amapa in regard to recommissioning work at the mine, port and railway"

@tomcat, I'm of the opinion that if the banks haven't concluded then another $10m net will be authorised by the courts to continue the JRP plan. No need for us to release our escrowed $2.5m early to take the 20%. $10m net circa monthly is easily enough to continue, perhaps even accelerate the plans IMHO.

Plans to use renewable energy, significantly reducing costs, caught my attention when reading the revelation there were once plans to produce steel, which we could presumably resurrect:

"Amapá takes a decisive step towards its industrialization with the construction of the first steel mill" (11/01/2013)
https://www.psb40.org.br/noticias/amapa-da-passo-decisivo-para-sua-industrializacao-com-a-construcao-da-primeira-siderurgica/
===[
With regard to energy supply, Governor Camilo Capiberibe confirmed that the State of Amapá will invest R$ 30 million, the value of the ICMS exemption, for the construction of a line that will take electricity from the Ferreira Gomes Energia Hydroelectric Plant to the municipalities Pedra Branca do Amapari, base for the extraction of iron ore, and Serra do Navio.
]===

From latest RNS:

"Positive Operational Progress at the Amapa Iron Ore Project" (29 July 2021)
http://irservices.netbuilder.com/ir/cadence/newsArticle.php?ST=REM&id=311428213863568153
===[
In addition to the engineering and conditioning study, IDG will review the power supply options for the mine and plant, particularly the possibility of connecting to the grid network, enabling the mine and the plant to be predominantly powered by lower-cost renewable energy.
]===

Thursday RNS ;-). Remember we were planning on doing 2-3 shipments every 2 months, and prices were lower for these estimates, so I'd say 8 shipments by early September very much keeps us on track, ahead of schedule even due to elevated prices ;-)

Completely understand the desire to be conservative and be surprised on the upside @EV, though I do believe that those promoting the company, including the BoD, potentially do the project and KDNC's shareholders a disservice by underselling the potential. Sometimes it's due to a conflict of interests, for instance, the BoD were recently issued options, so it's perfectly understandable if their hearts weren't truly committed to promoting the company in the run up to this. You suggest dilution could be on the cards, circa 50m shares. And I agree, it's certainly possible we decide to raise funds to take us to 49% of Amapa rather than selling an asset. I don't think anyone expects this before taking 27% of the project, and at that time it's in nobody's interests, except for those who take the shares, for a low share price. Though I suppose there is a risk the BoD let in a friendly at a subdued share price off a nod. The latest corporate presentation suggests £17m - £36m in equity required for the project, which could be relevant for the 49%, but we can't be certain. 50m shares at 34p raises £17m. 50m shares at 72p raises £36m, though I'm sure we'd all prefer the raise was above £1, and to this ends I want to see the BoD and all other promoters sell the prospects of the project well before a placing is in the air, as timing is everything on AIM! I used to crow about the CROE, perhaps I'll revive it? Conservative, Realistic, Optimistic, Euphoric sensitivity analysis. Covers most bases, I'll let the shorts cover the Pessimistic. LoL ;-)

Keep up the good contributions! As @MBW says, most don't mind repetition of the important aspects as I know they can be very useful for window shoppers! :-)))

Ob

Not to worry though, I mentally added the following to your final paragraph:

Share price £2.75-£4
All of the above just for Amapa alone. You can simply half these to get a $40/t estimate and the figures are still compelling, or near double them if you think the equity raised from dilution to 200m shares would be sufficient to take us to 49% of Amapa. ;-)

@EV Not sure why you diluted the company by a third without increasing the 27% ownership of Amapa to 49%? There's conservative, and then there's conservative! LoL. It's also possible we start to buy back at some point from profit/sales of assets rather than dilute further or divvy out: https://www.investopedia.com/articles/active-trading/073015/dividend-versus-buyback-which-better.asp

Incidentally, did you spot anything of note in yesterday's two long court movements?

Thinking about it the KPMG haul has the breakdown for the costs, but these aren't relevant longer term when we are using the private port so perhaps I'll stop here and wait for the PFS! LoL. ;-)

Oh dear... Calculator malfunction (I didn't use one!) LoL. Updated to:

Not sure if that includes loading/unloading, but if it doesn't then how about a crew of 10 people for 100 hours at $10 an hour? (10 * 100 * 10) / 45,000 = $0.22/t. Negligible. Therefore profit before tax today would be $213/t - $30/t - $23/t = $160/t

Indeed @EV plenty of upside! Your $80/t profit (after tax I presume) isn't that unreasonable either. Current price for 65% Fe/t after significant falls from the highs of $260's/t) without any premiums (which we will likely have ~$30/t) is around $213/t: http://www.custeel.com/en/csi.jsp The OpEx + G&A is $23/t https://www.cadenceminerals.com/wp-content/uploads/2021/06/Corporate-Presentation-KDNC-JUNE-2021-1-1.pdf and Brazil to China shipping rates are currently around $30/t https://en.sse.net.cn/indices/fdinew2.jsp Not sure if that includes loading/unloading, but if it doesn't then how about a crew of 10 people for 100 hours at $10 an hour? 45,000 / (10 * 100 * 10) = $4.5/t Round it to $10/t (each end). Therefore profit before tax today would be $213/t - $30/t - $23/t - $10/t = $150/t

Looks like it is real! :-))) Quite a long article, but this demonstrates it is Amapa.

Now why might this have been kept under wraps I wonder? ;-) No mention from @Kiran...

"Amapá takes a decisive step towards its industrialization with the construction of the first steel plant" (11/01/2013)
https://www.psb40.org.br/noticias/amapa-da-passo-decisivo-para-sua-industrializacao-com-a-construcao-da-primeira-siderurgica/
===[
Within 18 months, the first blast furnace for the production of pig iron in Amapá will start operating, the initial stage for the construction of the first steel plant in the state. With investments of US$ 120 million from the Zamin Ferrous group, headquartered in London (United Kingdom), the project and the investment plan were presented this Thursday, 10, to the governor of Amapá, Camilo Capiberibe (PSB), by the owner and president of the Indian corporation, Pramod Agarwal
]===

@Evan. Perhaps now is a good time to follow up on this? If true then it looks like there is scope to build our own steel processing plant to supply local demands! :-))))

observer842@05 Jun 2021 11:53
=====[
There there is this - which I won't be buying as I give it little credence, but I might follow up on at some point as it might indicate there were plans afoot previously that they got wind of - and which we (on here at least!) have yet to discover. :-)))

"Zamin – Macapa Steel Processing Plant – Amapa Project Profile" (March, 2017)
https://www.marketresearch.com/Timetric-v3917/Zamin-Macapa-Steel-Processing-Plant-10924619/
===[
"Zamin – Macapa Steel Processing Plant – Amapa Project Profile" contains information on the scope of the project including project overview and location. The profile also details project ownership and funding, gives a full project description, as well as information on contracts, tendering and key project contacts.
]===
]=====

Nice analysis @EV. Though I strongly suspect we'll see a mine life greater than 14 years, closer to 17 years or more in the PFS as a consequence of the 21% increase over the historical mineral resource estimate, which this historical 14 year mine plan was based on.

"Updated Mineral Resource Estimate for the Amapa Iron Ore Project" (02 November 2020)
http://irservices.netbuilder.com/ir/cadence/newsArticle.php?ST=REM&id=311428202001057764
===[
This Mineral Resource represents a 21% increase in total mineral resources compared to the equivalent MRE published by Anglo American 2012.
...
The historic mine plan would mean that the Amapá Project would produce at steady-state production an estimated 4.4 Mt of 65% Fe and 0.9 Mt of 62% Fe per annum for approximately 14 years.
]===

I think the point around 27% which was highlighted this week is important: we may yet to have our 20% ownership, but the project is progressing regardless, as authorised by the courts, meaning the gap between taking our 20% and 27% is closing, and might even be simultaneously if the banks drag their feet sufficiently!

KDNC's initial valuation target appears to be Anglo's impaired $660m (although @Kiran continues to incorrectly state $600m). 27% of this is $178m or £128m. With the value of our other assets this is around £1 a share. Some think the market will value higher on expectations, some think it will be lower. 60p to £1.50 seems to be the range from trusted posters. The lower end for 20% ownership and the upper end for 27% ownership. Happy to hear to the contrary!

The next target is likely Anglo's unimpaired $1.2B, and this might be seen after rehabilitation and full production a few years later, when we hopefully will own 49%. 49% of $1.2B is $588m or £423m, call it £3 a share. The true valuation will depend on many factors, shipping costs, exchange rates, iron ore prices, expansion plans, how we funded the 49%. For instance that $1.2B valuation was at a time when the USD to BRL exchange rate was below 2, it's now 5.2 meaning certain relative OpEx costs are significantly cheaper than then. e.g. monthly earnings: https://www.ceicdata.com/en/indicator/brazil/monthly-earnings

And certainly if we were shipping at full production today I'd expect significantly higher operating profits than the $171m reported by Anglo, which as I've noted previously is fairly low for various reasons... The benefits of being a multinational! Ahem. i.e the $1.2B valuation may in hindsight be quite conservative, especially if we follow through with expansion plans. :-)))

Iron ore prices may have cooled recently, but they have a long way to fall before I start to worry. I wonder if we managed to lock in the price for the next 4 ships before the fall?

Ob

And docked! :-)

I understand your position @MBW. I truly do. Mine is that since the project is making demonstrable progress and the BoD appear increasingly confident the deal is close to closing, the associated RISKED value of the Amapa project to our share price can only really be increasing, therefore all else being equal I'm happy to continue to buy at or below previous prices I have paid in recent months. I'll be surprised if I'm tempted to buy above 30p, unless I happen to spot something which unequivocally suggests the deal has closed before it's RNS'd ;-)

LoL @MBW. I know, I know. If it helps, think about what progress has been made since those options were issued, and you might understand why I'm so happy to continue to buy around their issue price. You'll thank me that earlier today I nearly mentioned that I was feeling bittersweet over the possibility that I might not have the opportunity to continue to top up anymore (assuming I was able to stay disciplined!). I thought better of it, so you can't blame me for whoever decided they'd try to drop the share for a quick sentiment trade. ;-)

Indeed. Fancy being given the opportunity to buy below the recently issued options price of 29p. It's a done deal right? Got to be the best risk to reward, including timescales on AIM at the moment IMHO. Unfortunately I suspect most who get this are already fully loaded! LoL. Part of me thinks we should be spreading the word, the other part is quite happy topping up below 30p! ;-)