Member Info for RightOn

Hi Kully, why don't you private message me on ADVFN? That way we can also chat...

Hi Kullybahia, I do not have a twitter handle, but do post on ADVFN as PantsonFire. As background, I am a chartered chemical engineer, and know many of the BoD from a previous life, where I worked in management of an oil refinery in Southern Kazakhstan, whilst they were building up a gold mine in Uzbekistan, which was eventually stolen from them when it started making large profits. And that is why they are now building this company in a safe jurisdiction. Many of those who lost money on that venture, are here, with no recriminations against the BoD. I know them to be genuinely good people, professionals, and honest. I speak with them often, which is how I gain quite a lot of knowledge, but nothing insider, of course. And finally, I know them to be very open and willing to speak with shareholders, so if you have any questions, do call them on the numbers given on the RNS's, and post whatever you learn here.

There’s been a lot of talk in recent period about PXC being undervalued. I thought I would try to do some benchmarking calculations to see if the consensus that we are undervalued was correct. In searching I found a table benchmarking 10 different African Gold companies, presented on the site of Africa Lion Gold PLC. They submitted a comparison of enterprise value, which is the market capitalisation divided by ozs of gold from M&I Resources, and I updated this for current values.

Very often African gold has higher grades, and is thereby lower cost to mine. However to balance that the geopolitical risk is a lot higher, so I have therefore simply balanced these and made a direct comparison.

Examining the comparison table, I found that the Enterprise Value had a median of 72.8 £/oz for the 10 explorer and developer companies. I then took the PXC M&I numbers for the Empire Open Pit mine, converted copper, silver and zinc to gold equivalents, divided by our market capitalisation, and came up with an enterprise value of 35.0 £/oz. Putting this the other way round, using the African Gold benchmarking, our company should today have a capitalisation of £53 million (now £25 million), or a share price of 82.2p.

Whilst I have my own opinion about the future of the company, based on my subjective knowledge of the business and the BoD, I also like objective research, such as with the above. From this I see that the company is undervalued by about 50%. That’s massive! Even if we dilute by 30% in our financing exercise, that still leaves a lot of undervalue, maybe 30%. Plus, and let’s not forget, we will have the silver in Red Star, the gold in Navarre Creek, the Cobalt in Redcastle and Bighorn, and the remaining polymetallic zones in Empire, plus the elephant at depth. This is a substantially undervalued company with the potential to be gigantic. A real Christmas gift for anyone feeling generous for their children’s stockings.

I am sorry Dartron, but in my opinion your message is insulting. A general lesson is that insulting someone has never won arguments. Try to re-pharase and I am sure you will get respect.

I believe that you are oversimplifying the story. They have produced a PEA before, as you know, but then the economics completely changed, which made gold a much more valuable target, hence the new PEA. I know from talking with the directors that the studies are looking at different configurations of plant, as well as throughput, which can change the capital costs. So, no, they do not know production rates, and no they do not know the plant configuration, and no they do not know the capital costs. So, no, they cannot go out for finance yet without this information. But when they do bring all these together, which is now just weeks away, they should have the green light for design, engineering and construction in a short period after. Have you talked with them about this? If not, then can I suggest that you give them a call. Then post it here...

A couple of points Sparky. First, the finance will be announced after the PEA, for until they know the full package, they do not know for instance the full project costs, which may have a bearing on the type of finance they use. So, whilst I can understand you impatient to know about finance, keep positive, for this day will come, and will come soon. Next, you mention "The idea of the stock markets is not to make retail mugs like us money, its about creating wealth for the professionals and they control the market. It is rigged". Why would anyone ever want to invest in the stock exchange if this was the ultimate truth? If we look at Phoenix, and its share register, I noticed with pleasure that Hargreaves Lansdown now hold 12.7% of the shares. That's an amazing climb up by the small investor (for this is what it is), for I remember last year H-L were at around 6%, if I'm not mistaken. Most of the other holders are also nominee accounts, which again are small investors, so if this share rises, as I expect, it's us small investors here who will profit. And it's not long now.

You are correct Dartron. It's only partially cleared it, and I got carried away. However, I believe that this does represent a good move for us, as we have raised some additional working capital, taking us closer to production. I feel it's also good as it sends a signal to the market that these warrants exist, and whilst you and I know about them, many smaller investors may not, and may take the cashing in of warrants as negative, whilst you and I would have them plugged into our spread sheets. I see that the market has responded positively to this news, which is also good, as it shows that shareholders do have strong confidence that this company is on the cusp of success.

Let's be clear about this. I asked about the warrants about a month ago, got the response and posted it here. The warrants were certainly factored into my calculations, and I hope for all shareholders. I like what they have done, for it has cleared out the cellar of the warrants, and brought additional funds into the company at the same time. A very good move. This company is therefore not short of working capital, it has production within grasp, as soon as the EP turns up, and then it's up up and away. My calculations show that the company can easily afford the gold loan (although personally, like most here I suspect, I would have preferred not to have such a high rate), but this will be paid off fast, allowing us to go after the very large potential from this very prolific zone. It's certainly there amongst my best hopes for 2021/2022.

Good evening 2Damen. Thank you for the kind words, but frankly, I think it should be the company getting the credit, for I am just reporting their numbers. I believe anyone could do the reporting like I do, it just needs the desire to research.

But I do have to take you to task about your approach concerning debt. You wrote "As for hoping the share price will take off once funding is sorted, I truly wonder if it will go the other way, as the funding whatever source it takes, will be costing the company, despite the fact that the funding will eventually bring in money, but, until it does, 'on paper' it is just debt, not an asset, and until minerals are being 'sold' bringing in wealth, then I see debt on whatever guise it arrives in, via a loan, more shares, deferred payments, new partners, selling off something to fund such, it all boils down to being more in debt UNTIL you start gaining from such." Let us look on you buying a house. You take on board a mortgage, but for whatever reason do not move into the house yet. Yes, you have debt, but you also have most certainly own an asset, and you just cannot hide that fact. If the asset increases in value, then you take that value for your own pocket, despite perhaps that you have yet to repay any of the debt.

In the case of Phoenix, the PEA will set out the economics of our mine, and will show the pay back, IRR, etc. I think you underestimate the whole industry if you feel these numbers going into it cannot be trusted, like mining costs, and that a thorough analysis of all the costs is not made. That would be madness, if it were true. From the PEA, we will be able to work out the correct capitalisation of the business, and the share will move to match that. It's not rocket science, and it's simple market economics, for the market seeks a certain return from their investments.

So, in conclusion, relax, the calculations are being made, and the financial return, and hence share price, should be very good, from what I have seen to date, albeit that this is indeed taking a little longer than we hoped. But who expected COVID?

And then how do we guess the grades they will selectively mine from the pit, or the copper recovery, or the zinc recovery, or the silver recovery, or the production rate, or the capital or operating costs? No, I think we are just a little too far out to make that calculation, and I certainly do not have enough knowledge to do that.
But as I suggested earlier, we know that last time when they were focussed on copper (now it is gold first, plus copper), that the numbers looked good. Since then the prices of all the metals have increased, some dramatically, whilst we are now recovering gold (we were not recovering it previously) and copper, and we have an environmentally friendly recovery process.

Just to remind any newbie, any increase in metals price goes straight to the bottom line, as there are no increased costs to mine, just extra cash coming in, so the recent increased metals prices can make a significant difference to the profitability of our business.

That's difficult to do when we don't know the recovery numbers for gold/copper/silver out of the metallurgical test work, plus the grades they will focus on for an optimised plant (yield of gold/copper/silver/zinc vs capital costs). We do know it will be a lot higher than last time, simply due to the upwards movement in metals prices.

That's the beauty at the moment, a frisson of excitement before the PEA, waiting to know just how large it will be!

The RNS is out. The first part I think this is an update of the earlier reports, in more detail. But for me the words to focus on are concerning the Empire production update. Note the words carefully :

"In the time since the metallurgical testing was initiated, the price of copper has reached $3.50/lb ($7,714/tonne), the highest since February 2013. The copper at the Empire Mine open pit now represents approximately 60% of the contained metal value within the deposit. As a result we are extending the metallurgical test work to focus on maximising the recovery of copper, alongside the optimal recovery of gold, silver and zinc. Noting that Goldman Sachs, JP Morgan and Jefferies all confirm that copper and gold are entering a commodities' bull market, further comprehensive metallurgical testing of all metals will therefore continue for a while longer in order to take full advantage of rising metal prices and to optimise the economics of the open pit project."

That explains the delay to the PEA is because they are optimising the conditions to maximise production of gold PLUS copper. That should deliver be a large increase in profitability for the PEA if they can achieve that.

Just following on from the earlier post, I do not believe ihalliwell10 that this is a gamble. Yes, there is no finance plan in place today, but that's because this will depend on the PEA, which in turn depends on the metallurgical testing currently being completed, showing recoveries of gold, copper, etc, from the ores collected from the Empire Open Pit mine. All the data to date, and we have a lot, shows we will be mining a high grade of gold, and with demonstrated high recoveries of gold and copper in an environmentally friendly process, and in a safe jurisdiction, shows it should be eminently financeable, and with the bringing in of EAS last week, who speak that they can finance projects like this, brings the pieces of the puzzle together. So, yes, we do not have that plan today, but when we do, this company will be at another level, for that would demonstrate the company would be virtually de-risked. In consequence, today, you look at the data, do your own research, and make your own judgement for where you believe this company will be when the PEA is out, and then in a year when we are actually in production.

For myself, I have strong confidence that we will have share price multiples from where we are today. I made that call the first time back in April, posted about my strong belief, and we are today more than 6 times higher. I would like to repeat that call from today's level. I think I will see maybe a 4 times return within a year, and ten times within 2 to 3 years. But that's a personal estimate from my own research. Please do your own, and I believe you will come to similar conclusions, for I believe the data says this.

I have done a little research on the company PXC have retained to help them raise finance and focus in USA, EAS Advisors LLC, and their principal and founder Edward (Eddie) Sugar. The business is intimately linked with him. He is from Australia, where he was educated, and where he had his first job with the legendary Marc Rich, all visible from his Linkedin page at hTTps://www.linkedin.com/in/edward-a-sugar-12319b15/

He came up recently in a video which can be viewed on you tube at hTTps://www.youtube.com/watch?v=v3fUy1pQGbs and let me summarise his words:

“We are a boutique company, with only 7-8 professionals. We do not take on many projects. We are specialised in metals and mining and oil & gas industries. If you have a good project, there’s always the capital for that project, and we can find that. That’s not a real issue for us. We look at the team (ie the client) to see if they can deliver a project. When you find the team who can get a project up and running, you want to hold on to them.”

“The skillset you want to look for is a couple of things. Have they done it before? You want to know that the whole team are aligned. And understand your own skill set. Understand where you sit in the process. Bring in the right people”

“How a project gets financed? It does not matter how large a project is, if it is viable, it can be financed”

I found that very encouraging indeed. Researching more, EAS is one of New York’s most respected conduits for natural resources investments for both debt and equity investors, particularly in emerging markets and Australia. Now this last one is the most interesting, as Australia has over recent times pumped a lot of money into projects in China, however with recent antagonisms there, I believe there is a void, so with his links into Australia, and their interest in mining, we could be on to a winner. I believe Phoenix has timed it perfectly to be with this company, and to be teamed with a winner for finance.

In the latest resource statement of the Empire open pit mine, copper accounted for c.45% of our M& I contained metal value of about $1.36bn, which, according to the consultant geologist, Nigel Maund, accounts for less than 1% of our ore body.
On the Bloomberg commodities monitor, copper for delivery in March 2021 is trading at $3.47/lb, compared with $3.20 a few days ago. A 20c movement in the copper price equates to a $40m shift in the Measured & Indicated contained metal value of the Empire open pit project, or $57m if you include the Inferred resource.
The following was posted this morning on SP Angel, and forwarded to me, which rather summarises the value of this project:
• Expectations for ongoing strong demand for copper continue to drive prices higher.
• Commodity Trading Funds, known as CTA’s might look to take profits post November year ends but strong manufacturing demand in China is likely to cause traders to buy into price dips.
• Prices gained further yesterday on strong China manufacturing data and expectations for additional demand for EVs, and connecting new renewable and distributed power generation.
• New infrastructure projects in China will create substantial demand such as the proposed Yarlung Zangbo River hydropower project in Tibet.
• China EV charging stations: China’s State Grid Co. set out plans on 20th November for 1.03m new public and private EV charging stations to serve 5.5m EV drivers including 540,000 public charging facilities. (evspecificationsa.com)
• The company estimate that some 50,000 personal charging stations will be built by the end of this year and that by the end of 2021 that >30% of ordinary personal charging stations will be upgraded to intelligent and orderly sharing charging facilities.
• The State Grid Co. has already built 2003 expressway fast-charging stations, 7,027 urban public stations and 3476 dedicated charging stations and 35,000 county-level urban charging and replacement facilities.
• China expects to have some 300m EVs on the road by 2030 accounting for 50-50% of vehicle sales and consuming some 17% of total electricity consumption.
• Annual electricity consumption is expected to increase to 2.68tn kWh.
• If all the EVs are connected to the grid then, in theory, the battery power storage capacity of 300m EVs will be >20bn kWh.
• This could provide some 12bn kWh of energy storage for the grid and 400GW of power capacity to support the grid if consumers are happy for their EV batteries to be used in this way, though they may not be given much of a choice.
• The US has 78,500 EV chargers as of March this year with another 192,000 chargers in Europe according to Statista.

How about Phoenix Copper (PXC)?
1. Targeting near term Production/cashflow (by end 2021 ?) from most advanced project, Empire Open Pit, in Idaho USA, one of the safest/best jurisdictions in world for mining.
2. Environmentally friendly processing technology makes permitting a slam dunk, and attractive to major investment funds. Project virtually de-risked after completion of most major hurdles other than final engineering design, building and commissioning mine, and need to finance.
3 Socially needed and valued metal production from Empire of Copper, gold, silver, zinc and other metals.
4 PEA expected to be published within weeks, likely to show project valuation at multiple of current market cap.
5 Next project (Red Star) after Empire getting ready on launch pad, news on that an other exploration areas (Navarre Creek, Cobalt projects, the Horseshoe/Windy Devil/White Knob/Bluebird are of former mines north of Empire and the potential elephant - the sulphide potential under Empire area) generate additional newsflow into future and add a huge potential 'stardust' upside to Phoenix.
6. Experienced and shareholder friendly management team!
It's not yet in production, but because of that it's substantially undervalued, but is just a short period away from being almost completely derisked.

Great to hear a about copper flying, so let's have something specific for the weekend.

A 20c/lb movement in Cu = +/- $40m to the Measured & Indicated contained metal value at our Empire open pit mine. Or, if we include Inferred, +/- $57m. That’s a nice thought to leave us with for the weekend. Not forgetting the massive copper resources at depth!

I've heard back from Emma. We have 215,352,377 outstanding warrants, with the number of shares in issue of 251,758,967, so these warrants will have quite an impact when drawn down, plus we will pull in £5.7 million from their sale, to add to our coffers. So, when you do your calculations based on market capitalisation, remember to include for the warrants.

Can anyone steer me in the direction of how many warrants there are outstanding? I have looked on their website and cannot see any detail. I have written to Emma twice but she has not responded. I would like to know our exposure to warrants so I can work out future share price from company value, and I can see a lot have been issued. Thanks for any help.

Yup, you appear to be correct shakhtar. I got half a response, and it appears that Prism put 2 plus 2 to make 5. So, I take back that news, and there was no basis for the comment that the sale is postponed due to opposition from investors.
Now, that's a shame....