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Thanks everyone - food for thought, timelines seem non-existent to me (unless I am missing something). Potentially silence relates to funding? with clarity - I'd be far less hesitant. Attracted to the upside but feels too much of a gamble to be heavily invested - perhaps a small start at some point for me....
Hi guys - new here and would love to gain some knowledge/wisdom from the regulars. So... watching FCR but aware there seems to be a lot of history (&disappointment) here. I've read all the blurb that tells me Toral is a great asset, but I really don't get a feel for how this company will turn the asset into value, there appears to be no rush to find a buyer, no rush to mine and no timelines that I can see. Does the appointment of MC and CB change this and make FCR investable? On the other hand, great asset, great location and teeny Mkt Cap............ Any thoughts/comments most welcome.
Hi Jason, the obvious answer is we don't know, however Dubliner was right yesterday to highlight the Letter of Intent signed with Veloso towards the end of 2016 - it remains very significant in scale if still an active sales lead. Below is some text from news about this at the time; -------------------------------------------------------- The company has also signed a letter of intent with local coffee company Veloso to supply it with 45Kt of its KPfertil fertiliser product through 2017. Veloso will pay around US$60 per tonne at current exchange rates. Brian McMaster, Harvest�s chief executive, said: "All the test work we have carried out on KPf�rtil over the past year has continuously surpassed our expectations. �As well as being a K, P, Ca and Mg multi-nutrient product, KPf�rtil has many additional properties that enhance its suitability as a re-mineraliser and fertilizer. �While we continue with the product registration process and testwork with the Ministry of Agriculture, the work we have carried out with Santinato & Santinato Caf�s and Veloso has convinced them to sign this LOI.� ---------------------------------------------------------- Obviously if this was to come good and we assume the 36kt is an annual order from Aggrecerado and the 45kt with Veloso comes good, 81kt is 25% of current capacity and around $4m profit per year.... I, like Dubliner, suspect that Veloso is within the "over 20" direct contacts and maybe the biggest - discussions will be commercially sensitive so no surprise we have not heard more. If we had a real punt and said the remainder of the "20" were on average 1kt each, 100kt in year 1 would feel very positive to me & delivers $5m profit - everyone wants to see it up at 320kt asap but in year 1 that would be unfairly unrealistic IMV.
These are my summary notes with some interpretation - hope they are of use Telephone conference - Brian McMaster, Executive Chairman HMI - 13th March 2018 1. Has the order book of 20 buyers increased - HMI have an order book of more than 20 looking to buy directly - growing by the week. This is beyond the companies expectation 2. What are the terms of the 36kt Aggrecerado sales contract - This is not a consignment - HMI have sold the product - There is a production and delivery schedule beginning May - Normal credit terms - 30-60 days to pay for the product 3. Is there any outstanding testing for Kpfertil? - None - all test work is complete and all is in with MAPA for review 4. How will you deliver the physical distribution for a such a large quantity? - HMI have suitable infrastructure in place including improvement to roads etc. to deliver the current expectations - In terms of mining this will continue to be on a contractor model 5. Will cash over the coming years be used for dividends or developing other projects - Immediate focus is to bring Arapua up to scale - Cash generated from this will be sufficient to make some strategic decisions - paying dividends/developing other projects/acquisition of new projects - decisions are not made yet 6. When will full mining licence be granted - To gain a FML HMI are required to give the government a report to demonstrate an economic project - HMI have submitted that report to the government and are awaiting their formal response expected early Q2 - on receipt of this there will be a 1 year formal period to apply for FML - When HMI obtain FML $1m dollars is paid to the vendor - obviously timing this with some sale of the product will help to fund it - Current trial licence no cap on quantity (50kt rolling as many times as you like) / it is a 4 year licence (of which 12 months have now elapsed) - Brian McMasters expectation is that application made around the middle of this year and granted by the end of the year - They are doing this not because there is an operational need to do so but to get rid of any ambiguity or confusion surrounding mining licences 7. The site is much larger than thought are you intending on firming up the level of the resource - There is no urgency to do this - existing resource lasts even at a high production level for many years - HMI may do this in a few years but it is nothing to be concerned about - Future potential is demand is great enough to have plant at both ends of the site - No major drill programme needed to do this either 8. Sergei project plans - The next logical steps for the project is some drilling - put a JORC together - The asset is 1000m deep and even drilling is expensive - Focus now is on cash generation from Arapua to fund this
Agree not to overhype, but as we all know the really exciting thing here is that with a very modest bit of progression and patience from here, over the next 12 months, all the fundamentals point to a bagger. Patience patience patience now - let the team get on with what they are doing, the sales will come in and the reward will be there. I keep on telling myself to just leave this holding alone and not to panic or get over excited.
It is worth noting that reports indicating target price of between 30-45p included up to 50% risk factor... that risk has significantly decreased after today I would suggest. There is still some degree of patience required to get the full re-rate, but IMHO 50-60p is likely in the near term. It feels like we are at the beginning of the rerate and the market has been very slow to catch on. By my calculations and with some reasonable currency assumptions 55p per share would be; P/E - 10 Sales - 250ktpa Sale price - $52pt Cost of production - $12pt That assumes higher than quoted cost (my feeling is distribution challenges might affect this) and a prudent post-MAPA sale price. 250ktpa is a very modest level also against what is being quoted, but probably not far from reality in the next 2 years.
Thanks Jason, really helpful update and thanks for feeding back about the distribution challenge... it feels like a weak spot. Overall it still stacks up - news on MAPA + sales still the final piece of the jigsaw as at as a rerate is concerned.
I’m interested to hear about their plans for distribution. Even if the customers ‘are on the doorstep’, shifting 320ktpa is going to require a bit more than customers turning up with their trucks. 1-2kt per day is a lot of product (and a lot of trucks).
Agree MAPA if refused would be a big deal, given the messages until recently have been ‘its a matter of time’ I think MAPA is probably at least partially costed into the SP. on Good news about MAPA maybe a spike and retrace - the big news will be sales... all the best everyone, bought in around the 12p mark and it’s looking good to go further
https://www.fool.co.uk/investing/2017/12/29/2-small-cap-stocks-im-watching-closely-in-2018/ Just in case anyone hadn't seen it...
Agree, for me MAPA probably won't make too much difference to SP, maybe a spike and gentle retrace? The real big news will be about substantial sales and production, if HMI hit the $22m cash per year PLUS other projects in the pipeline, no reason why SP shouldn't be well above £1. That is if HMI get the sales and substantial market share for KPfertil...