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RNS Two months ago today:
‘Constructive meetings held with the South Australian Department of Energy and Mines ("DEM") The DEM confirmed desire to make PEPR unconditional as soon as possible after information requested is provided. Also Scope identified to reduce size of environmental security deposit, subject to LCCM's reasoned argument. Information requirements are being progressed and it is expected to be submitted to DEM by the end of the year with operations, subject to funding, now expected to commence during Q1 2022’
Two months ago today RNS said -
‘The Company has been working with Aetas Capital and currently has a respected global bank undertaking due diligence for the provision of a minimum US $10m loan facility to LCCM, guaranteed by the Company. At the end of the due diligence process, the Company expects that a Letter of Offer will be issued, but this cannot be guaranteed.’
I remember our BOD saying about 2 years ago that our Redmoor project was further advanced and potentially as good a resource as the (Strongbow) South Crofty project. So, what I genuinely can’t way up now is why is CUSN (formerly Strongbow) market cap at £75m and yet the SML Mcap remains at a lowly £7m?
Any suggestions or ideas?
Are we massively undervalued and overdue a re-rate?
Would be nice to see some of the CUSN investors buying a few SML shares!
Our ‘bottom draw’ shares have 5 years of dust on them! It’s fairly obvious that it’s been a no from the bank. Nothing much will happen now this side of Australia Day! Options are getting more and more limited - 2 for 1 rights Issue at 0.25 next maybe?
We need an urgent update from our BOD.
Tell us the truth this time. We’ve had years of ‘spin’ and I for one am very cheesed off.
We normally only manage about 6 trades a day.
To get 60 trades is quite something - shame they were nearly all sells. As we move into the 0.20’s things might get very precarious!
At 0.30, even a 50% uplift only gets us back to 0.45p.
I’m about 85% down now!
It’s likely that the Redmoor resource extends to the west and its likely that the total resource exceeds 20m Tonnes at or about 1%. Drilling and converting inferred to indicated all takes time and costs money (which we haven’t got). Could we have a $200m+ NPV project on our hands - probably yes.
JP said Redmoor mine operational by 2021 (and he’s our MD!) I say as a ‘layman’ 4 to 5 years from now. One year for additional drilling; two+ years for PFS and the full Feasibility Study. Then financing / permissions / construction etc. another One to two years.
Will it ever happen??? Maybe, maybe not - we might even sell it; there are many different scenarios. Is it a world class asset - yes it is. However, the mining ‘big boys’ appear to always choose projects in far flung parts of the world e.g. the DRC where labour and mining costs are lower and there’s less legislation to deal with = More Profit!
There are Many more hoops to jump through in other parts of the world - as we’re finding out in SW Australia!
One final word on Redmoor - it’s all to do with the maximising the output in the early years and ensuing that the payback period is 3 years or less (that appears to be the benchmark). If it takes 4 or 5 years for the payback to occur it’s unlikely to happen (might be different in 15/20 years time as world wide resources deplete) , but that’s certainly the situation right now as I’m sure Southwestener would confirm.
Good luck all. IMO
DVH - Do you remember the last face to face AGM? All of the positive ‘spin’, talk of dividends and SP predictions in line with the share options at 2.75p, 5.5p and beyond. A £100m Mcap was communicated as the short term vision - and yet a capital raise was already in situ as they suspected Brenda would default on the agreement. How stupid we’ve all been. I had a very short window to get out at about 1.20p two years ago but since then I’ve been sunk and massively under water!
PEPR - no problem we were told; it’s just a paper exercise which takes a few weeks and will be ‘rubber stamped’ in this Mining friendly part of the world. Our BOD have now gone to ground and have never once apologised for anything they’ve said or done.
We might still get the PEPR, but at what cost? (we’ll never get to find out). Funding - we will probably already have a decision ‘in principle’ one way or the other as it’s inextricably linked to the PEPR approval.
One final comment - we can’t blame any of our misfortunes on the Pandemic as we’ve been largely unaffected by this and we’ve not really had any ‘bad luck’ either. So who’s to blame for the poor, miss-judged and naive decision making resulting in twice as many shares in issue and a death spiral SP - I’ll let you decide!
Is the SP currently at a good price for a punt?
Probably yes, it’s 50/50, red or black but if your average is well above 1p like mine, it’s a long way back!
All in my own opinion. GLA
Multiple capital raises in the last two years. Next one in the 0.20’s for our ‘Profitable mining and exploration company’???
John’s brother sold out at 2p - wise move.
RichyP has been quiet recently which is worrying.
Fira has been right every single time!
Two years ago we were told that the PEPR was merely a paper exercise which would take a few weeks to be rubber stamped in this Mining Friendly part of the world. However, we’ll just wait until after Australia Day at the end of January before we submit the paperwork!!!
There are over 7200 Tonnes of indicated resources at the Mountain of Light site and circa an additional 2000 Tonnes non JORC at the MOL site.
If we can produce 120 Tonnes per month that gives at least six years production without utilising the other indicated resources on the other tenements. The maths make for a very positive outlook if production can reach 100+ Tonnes per month. For example 120 Tonnes per month @70%CU @$8600= $6020 @ 120 multiplied by 12 months is $8.6m income per year less the cost of production of circa 50% = $4.3m gross profit per year. Less loan costs (to be agreed). This Looks an attractive proposition and hopefully the bank will agree.
Combined with the existing Cobre income, we could be looking at annual income approaching $12m per year for the next few years.
Payback period is the crucial element. 24 to 30 months payback looks achievable.
Re-rate and £20m + Mcap hopefully incoming.
Once a project is funded it goes into the company’s account as an asset and the NPV should be reflected in the share price. Current Mcap is Cobre only. 2p to 3p now looking feasible.
Wouldn’t want a short position in place just now!
The Independent Preliminary Economic Study from November 2020 demonstrated the following, a US$156m NPV and 31.3% IRR with a 49% Operating Margin based on a 12 year LOM.
With US$963m Revenue over the Life of Mine. A US$79m upfront Capex cost.
All of these are decent numbers and will surely look even more favourable once the new resource estimates are incorporated into the model.
A total mine revenue of circa US$1400m looks perfectly feasible as does an NPV in excess of US$200m.
However the seemingly critical element is payback period and 3 years appears to be the benchmark / ceiling from a Financing perspective. That’s why the early years ore extraction and mine design are absolutely critical here. Southwesterner may possibly provide further detail, but a payback period of 3 or 4 years or less is seemingly the main box to tick. GLA IMO
Loved this post from earlier:The Juggernaut is back having been off road for a while with a slow puncture !News coming !!It’s taken that long, they must have changed all 16 tyres - lol. I stupidly got emotionally involved in this share - big, big mistake. No Nickel Laterite and fries for me! Should have sold at 2p like we know who.
Excerpt from RNS 10th September 2020 - one year ago:
‘Given the level of detail reviewed in the draft submission and the encouragement received to date by the South Australian government, the Company feels confident that an approval will be forthcoming before the year end (2020).
We are now One year on and whilst we’ve had draft approval, there are still many conditions / hoops to jump through and most importantly all of these things come at a cost, not least the chunky Environmental Deposit required. I wonder if the previous mine owners had all of these requirements to meet?
Next RNS - LCCM update or 6 Months Cobre figures?