Member Info for pickedpeck

We could use the board to discuss the company and their prospects rather than other BB members ? If someone is full of **** then you can always filter them.

Wasa / DJ - Just been back through the Investor Presentation, did you notice that in it the Araguaia finance participants were listed as 5 x Tier 1 International Banks , 3 x Brazilian Banks, and 2 x Export Credit Agencies. I thought at the time that was pretty specific, but given the debt announcement with the 5 x banks fo $325m... I wonder how much the other 5 participants may sign up for. If they are also prepared to put up debt, it could mean a very small or zero dilution if there are pretty much any off takes at all in play.

Mr Arm, no significance at all other than a handful of long term holders picked it as an arbitrary future date to predict the share price several months ago. The reason it was picked is that we mostly believe it to be just before finance is concluded at the end of Q3 with a view to starting mine construction in Q1 2021. The debt announcement a couple of weeks ago wrong footed a few, the equity portion, offtake agreements and more look set to come over the next two to three months.

Wasa - the only bit I disagree with in your post is the basis for an offer. You’re valuing the assets and potential, and offer is about what shareholders will accept for their holdings and how they would think about the available profit (or not) vs time vs risk before voting. I have never seen an offer come in at what PIs believe fair value to be, we have just been through a period where at least one major seller thought 3.5p was an exit price (still no forms...). Sadly offers are made at what sellers will take not what an asset may be worth. Citing an experienced BoD doesn’t help much as you and I both hold more than pretty much any of them.
Either way I agree the best defence is Teck and then Glencore and what they would want for their holdings. I doubt either would part with their stake for a derisory offer.

Flavours - did you notice the 2 ton bags were out of stock?

Wouldn’t it be lovely if HZM and Tesla announced a JV for Vermelho on battery day... We may see a decent rise that day, maybe even hit Luke’s target. Too late mind... although after today I think my 6.9p may be doomed.

You're forgetting the ban holiday... 6.9p...

Dave - what would you consider the cut off grade for the underground resource at Hawiah to be? I know it has to be based on a speculative gold price, but say taking $1700 as a base with Ag holding at say $26 where would the cut off grades fall?

Interesting board this, lots of wild opinions!

I live not too far from Parys Mountain and drove past there a few days ago. The economy of Anglesey has shifted from industrial back to agriculture and tourism. The latter has had a 47% increase over the three previous years to this one. The visitor centre at Parys mountain that probable makes more money than AYM at the moment... https://www.tripadvisor.co.uk/Attraction_Review-g552017-d8059510-Reviews-Parys_Mountain-Amlwch_Anglesey_North_Wales_Wales.html

However... Grangesburg and Labrador look interesting to me. The Iron Ore price is currently at or about a five year high, up from $40ish in late 2015 to $125 now. Commodity prices in general look to be steadily higher for a while, surely this starts to make the economic models stand up a little better even if we don't get back to the 2011 / 12 prices. Does anyone have any feasibility study data on the profitability of the assets at current commodity prices?

Parys itself may make a lot more sense as copper is also on a run up, will be interesting to see what the Irish guys finally say.

Not invested here - yet - but thinking about it.

The silver grade is marginal, Hawiah is mostly about the copper then the gold, silver as a by product is only a maybe at that grade.
I'm starting to sound negative here, I am not. PEA for Hawiah and funding for TK as the next news puts us in an interesting spot. The first could and should move the needle, the latter will bend the needle around the clock.

Just a feeling I have that we will get an offer in the region of 12-13p sooner rather than later. Represents a premium etc... I think it will be a test as whilst I am sure most PIs would wish for more, the major holders may look hard at it and be tempted. I don’t think its realistic that an initial approach would come in higher, but anything lower would be laughed off.

Just a feeling, I’ve been wrong about this sort of thing before, but right quite a few times too.

By the way, the 6.9 is mine, owlo has 5.9 :) . I reckon I own the range 6.7-7.0 in fact!

Calm down or it will overshoot my 6.9p for the 15th of September. Rolls eyes...

Steve - pancakes and plum sauce is what you serve with a dead duck.
I hope for your sake that’s not the case here. I baled earlier in the year and took the hit, hard to believe how far it’s fallen. The assets still have legs, but unless the debt can be paid down somehow, or at least deferred to a longer timescale, then I see no way back.

Smelly - I'm not sure I agree with you on the gold valuation pull back to pre-covid levels. Governments have already effectively diluted their currencies as a one way trip to pay for all the emergency measures put in place. That money is spent and in circulation, the genie simply doesn't get back in the bottle on its own. There may be some retrace, but commodities and commodity producers are defensive against the very probable inflationary pressures that will emerge because of the quantitative easing . Basically I doubt gold will drop back below $1800 and could still carry on its march higher.

Simms - its 14% of NPV for TK because Hawiah and JQ have effectively no NPV until the PFS is done. What they have is speculative potential future NPV which could be any value. Are there power / roads / water available to operate the mines? What would the capex requirement be, and what type of process plant would be needed and what would the cost of that be in SA? JORC reduces speculation on there being recoverable material, but it doesn't give us any insight into NPV in reality. I think we can only ascribe relatively low valuations to the assets for now.

Also you can't take a multiple of 10 for a mine with a current forecast 8 year life, 6 is the highest reasonable top PE you can ascribe. If you also take out the debt payback from the net sum (Earnings Before Interest Tax Depreciation and Amortisation) then the return to shareholders will be much lower - they have to pay the debt back before there is any shareholder distribution.

There is no need to embellish to produce huge numbers here. The real numbers still stand up to scrutiny as a profitable project worth three or four times what it is today once the mine is built and in production, its simply just not worth ten or twenty times the valuation based on the current data.

Pete diamonds... At this rate I will be able to afford to buy them myself although not sure I would rename them.

All gone a bit quiet here, quite the recovery task for anyone to take on unless they can get some relief on their debt pile which is not impossible. Better to get it late than not at all.

Does anyone think this is worth a punt at this price or are we already getting the pancakes ready?

The trick is to ignore un-investable things like possibilities and potentials. Until its drilled and proven it doesn't exist other than in the imagination. Harry should stick to the facts, they are enough to make an investment decision. Great there is potential for upside, but right now the finance deal will be done on facts not wishes. Investors actually get put off when you talk about unproven upsides, it makes it sound like you need to embellish in order to make your case.
The presentation is holding the line for the financing which is good, just want it signed and published in the next month or so in order for work to actually start on the mine.

The important bit in the investor presentation is...

•Ore Reserve 1.1Moz (15Mt at 2.1g/t)
•91-94% recovery
•DFS Annual production 140,000 oz pa
•AISC US$800-900/oz
•EBITDA ~ US$69-125M @ $1400-2000/oz

8 year mine life for existing deposit. 2 year Time to pay back capital investment at $2000 Au. Other deposits could extend this.

Anyone interestes in whether the relatively low grade of silver at Hawiah is recoverable, and ow the Au content matches against other mines could take a look at the document here:
https://www.researchgate.net/profile/Huseyin_Vapur/post/What_is_the_concentration_of_silver_in_economically_minable_deposits/attachment/59d62548c49f478072e9a307/AS%3A272157051949056%401441898706476/download/Options+to+Treat+Refractory+Ores.pdf

Silver is recoverable in the same Cyanide leeching process as the gold will likely be extracted using. Its not a core product at this grade, but definitely a useful byproduct. So is the Zinc by the way, $2500 per tonne. Perhaps they should have stuck with Kefi Minerals after all...

Just been back through the Vermelho PFS looking at profitability.

The consensus1nickel price of US$16,4000/t (US$7.44/lb) was used in the Base Case for the PFS along with a US$2,000/t (US$0.91/lb) premia for the production of nickel sulphate. The nickel sulphate premium is driven by the battery market (where nickel sulphate is valued higher than class 1 nickel) and is supported by very strong growth in the electric vehicle (EV) car market.The US$2,000/t (US$0.91/lb) sulphate premium is the average value for this for seen in the market over the last 12months. The Wood Mackenzie long-term incentive price currently stands at approximately US$19,800/t (US$8.98/lb), this was used as an alternative case. A fixed price for nickel was applied over the LOM.

So - price of NI for vermelho would command a $2k per tonne premium to the NI base price, makes the PBT even more attractive given where Ni seems to be heading.

Also...

The cobalt price assumption of US$34,000/t (US$15.43/lb) used in this study is significantly below the long-term consensus bank/broker forecasts which stand at US$55,000/t (US$25/lb).

Again pretty conservative sums.

Wasa - £1 a share is possible, your PE of 5 is way too low for 2023. I'd be looking at earnings growth of about 30% compounded over the first five years with the various assets coming online and growth in nickel price through the mid 2020s.
As a straw man start at £2Bn mkt cap (still assuming 500m new shares issued) with earnings in 2023 of £80m allowing for a bit of leeway in the nickel price by then, a PE of 25. A fund manager looking at returns on a five year play forwards would be thinking about that 30% growth and landing on a PE (for their initial £1 a share investment) of under 7 after five years. Obviously the price will increase in that time so PE will evolve but a 2023 PE of 25 is not wildly racy given the future stage project growth plans. A PE of 7 by 2028 is not at all impossible on £1 a share.

Bear in mind the investor presentation has them listed as being capable of producing >50,000T p.a. in Araguaia and Vermelho without the ~30% boost from SDT. At Ni $16400/T PBT with all in costs around $8000/T then their annualised production PBT could be $420m. Boost nickel to over $20K/T by 2025 (still very conservative in my view), PBT goes to $600m with A and V in full production. There would still be growth potential from SDT at that point too, so even then you may see a racier PE in reality.

Bottom line is this has the legs to go a long long way up from here.