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All the pieces are moving into place, much faster than I expected. Bill has onboarded people to take the company more commercial, we are firming up ownership and incentive structures. In the background on the science side, more hamersley sampling, munni munni historic assay sorting, and EH reopening are being worked on.
The market sentiment is against miners, small caps and risk-on stocks, independent of each other. The whole junior space has sold off aggressively. From the outside who is to say that UFO is different? This is just a patience game until we have some exposure, most likely through progress aa outlined above.
The placing was a bit puzzling because I thought they had a sizeable credit facility which should be used for purchases such as this. Maybe it is being used solely for operational liquidity and kept aside for a rainy day. Still, didn't want to see a placing in the doldrums down here, with the raised amount from WH likely to be flipped in tbe coming months and keep a downward pressure on the SP.
AIM goes by sentiment instead of valuation mostly, and people can take a long time to realise value in certain shares. I think that was the case with GGP, Havieron was discovered and it took a good while before it was reflected in the SP. People who haven't looked into UFO in a lot of detail will see a loss-making explorer with some interesting projects that appear nowhere near shovel ready. It takes some digging (no pun intended) to see how easy it is to set up an operation here (dramatically lower capex) than it is for other miners out there due to the specifics of the deposits. I think there has been a bit of a failure communicating that effective by Turner Pope and others, there is some mention of it but it's not exactly shouted from the rooftops. When we get closer to production we should see an influx of new names on the board and some rampy action, and we could be off to the races.
It could go to zero, of course, because of financial distress / permitting / metal prices meaning the resources aren't economic / not finding anyone to mine, transport and/or buy the products / unforeseen events. If they achieve profitable mining status with any one of their projects, nevermind half, it will make the 30M MCap we are sitting on look like a joke in hindsight. We have proven mineable reserves for Hanc0ck and EH at the least, with strong indications of monstrous potential at Munni Munni with PGMs and at Brockman with iron ore. If either Hanc0ck or EH were to come online you're in the region of £1b reserves each and at the very minimum our MCap in turnover each year (with a lot of these numbers being wild speculation since we haven't firmed up the plans yet). So worst case scenario is going bust, but achieving any semblance of success will be (imo) minimum 10 bagger at these levels. But as always DYOR.
Pure speculation but I agree with the general sentiment that this has probably been stewing for a while and negotiations with shareholders in Mexico were dragging on. Bill was likely sitting on the drill results until he could get approval and could drill central. I can't help but feel it isn't a coincidence that the new guy comes on board and 1 business day later we get this. I can imagine him telling Bill about sunk cost fallacy and to just drop Mexico entirely, which I think is correct.
I don't think it wad a vanity project, just historical and an effort by Bill to try to keep to his strengths and the business plan first set out. Explore, acquire cheaply, hold many projects at different stages to stay diversified, look for J/Vs. Evidently if we are planning to mine ourselves the priorities and resource allocation have to change, as many have been saying here. The business model is still functional, but we already have four projects (teo complexes) that are home runs from the discovery side, so the others are just distractions now.
The next 12 months are going to be pivotal for UFO, seeing if we can convert the insane quantity of resources into value. The problem here has never been finding geological opportunities and analysis, it has been getting partners on board and starting mining. Bill has done a stellar job on the former, but the latter hasn't transpired yet. These things are hard to do and I'm sure he's been putting in a lot of effort in that regard, and sometimes you're just unlucky. I think a CEO change with skills to get over the major hurdle we are facing must be a good thing, but I was happy with Bill's efforts too. A bit conflicted on this one, still optimistic but we'll have to see.
Or suffering from market drops, which are possible given the climate. They have locked in the profitability while focusing on scale up, which is a significant derisking. Short term bearish outlook on Chinese demand, for example.
The Sunday Roast interview seemed to contain a lot of material information that should be released via RNS. They confirmed they are up to full production of the HWM, that they still have a profit margin even at a lower metcoal spot price, and other things. The podcast seemed entirely positive and removed a lot of doubts, especially with the serious price drop. Not sure why the drop continues, I couldn't tell anything in the podcast that rang alarm bells.
Bought in yesterday because of the eyewatering value of the Songwe deposit and close to finishing approval process, which is quite likely and a value inflection point (in my opinion). Unfortunately this means a 20 - 40% drop from these levels because I'm invested now. Apologies for the inconvenience.
The financials are definitely an issue and hope they get released soon to legitimize the enterprise. It sounds like once we get those it will significantly improve investor confidence and spur the SP up, which is a significant incentive for the company to put what they've been telling us on paper. It does feel like that both shouldn't be too hard and is expected around now by most AIM company standards.
We are expecting the HWM news, permits and trading updates in due course. I expect the fundamentals to shine through eventually.
I haven't been keeping up - Dartron, why don't you believe in the company? Are there some red flags for you?
Met coal dropping puts a damper on things obviously but as lony as BEN remains profitable I can see it being a temporary dip. JS is a bigger mover of the SP and is also temporary. I can't call the bottom but this seems like a rare bargain at this forward P/E if held over the next 3 months +.
So it was just a big move in SP by JS deleveraging that was compounded by a big short position against him / more shorters / more stop losses / more deleveraging by other margin calls. Plausible, and might damage confidence in the near term with the excessive volatility, despite no effect on the underlying business.
So we've had a couple of days of volume at 25 - 35x the average - truly a ridiculous amount - and the John Story and MBU Capital theories seem to be a bit thin at this point. This volume is more than JS has and MBU bought more shares. The company issued a prompt RNS that they don't know the cause of the drop early yesterday and director buy of a sizeable chunk today. All this data I just took from skimming this forum and the RNSs. So anyone have any other theories as to why this has collapsed?
Futures markets are saying that steel demand is going to decrease and so smelting coal also. The coal price dropping will cut into profits but the profit margin seems to be sizable with how cheap it is for BEN to extract. Since they are expanding and will have extra tonnage to offload, this may even benefit them as they have lower opex than their competitors and will still be able to supply at depressed prices. Unfortunately the price might be responding to these transient concerns instead of looking at the pure profitability of the business. Even against broader market headwinds it's hard to argue with the numbers they're putting out.
New to BEN, did some basic calculations about the expected return and got a forward P/E of around 7 even without additional capacity. Surprised to see the drop recently for a company that still seems significantly undervalued. I imagine the market is cautious of a new company in this climate and is waiting on dividend announcements. Seems fairly safe with exposure to raw materials needed for Biden's infrastructure push, in the US, but who's to say.