Member Info for SGD27

For anyone following the continuing saga :

https://www.desmogblog.com/2019/02/21/cleanup-peabody-coal-texas-public-policy-foundation-navajo-generating-station

Thanks again :-)

Hi Dubliner, many thanks for the feedback, all sounds on track. A few quick questions come to mind, if you can be bothered :

1. Apart from PC, were any other BOD/Management/Consultants/etc in attendance? (I'm guessing not, as with only 4 shareholders present it might be hard to justify the expenses!)

2. "PC said he would look to re-invest in the Minerals projects." Was this 100%, or might we see part of the profits come back as dividends?

3. ...and were there particular "Minerals projects" that he had in mind?

4. Was there even the vaguest inkling that this might all just end up with a takeover?!

Cheers and Thanks Again, SGD.

The AGM presentation has just appeared :

https://www.sunriseresourcesplc.com/filemanager/Presentations/2019/Sunrise%20AGM%20Presentation%2021%20February%202019%20-%20Website.pdf

It's a bit pushy, but if anyone at the AGM is reading this, there's another question I'd like to have asked :

At what point can we expect to see the permitting application appear on the BLM website?

Oops, typo : 08:31 !

It's on Nex at 03:31 :

https://www.nexexchange.com/member?securityid=18957

Let me just expand on the last point. I'm not suggesting that people will keep buying until fair value is reached. No one is going to buy at fair value and take on all the risk with no upside! So people will buy at a submultiple, balancing the multibag potential with the risk. The hard question is to know what that submultiple should be!

This applies for exploration companies, but if the company moves to production and profit then the dynamic is quite different. In that case one would expect the SP to be much closer to fair value. And it's that jump - from big submultiple to smaller submultiple - that presents the opportunity in a share like this.

(I'm probably stating the b****y obvious here - that's something I've always been good at :-)

Hi Mineralex,

OK, but at the time of your article Brent was $55. Today it's $67, so up more than 20%, which was my point. (There's bound to be a lag for pump prices of course.) Good news is there's effectively a 'cap', because if it gets too high then the US frackers will turn on.

So I'm not worrying about it, I was just explaining why I'm personally inclined to use a conservative value for the profits per tonne in my valuation.

Other people can use higher figures if they want, and will then get an even higher fair value SP than I do. But then I can't understand why they aren't they piling in at today's price and driving the SP up?!

ATB

You're not conflicted, you're hedged!

Hi Dubliner,

Your $30/t figure may well be closer, as the fly-ash shortage continues push up the pozz price. I'm just being a bit cautious for a couple of reasons :

1. The NGS closure in December is still not quite a 100% certainty. Some of the local Navajo people are mulling the possibility of taking it over, with the idea that if they're running it directly themselves they may be able to do it more economically. The problem is that although they wouldn't pay anything up front, they'd be taking on massive future decommissioning/reclamation costs. So I think they'll eventually conclude it's financial suicide, and drop it.

2. The price of oil has snuck up a bit this year. As I'm sure people are aware, transport costs are very significant for us (maybe around $20/t currently).

You're right that I haven't included future downstream processing possibilities, which could provide a nice upside further down the line.

Hope you enjoy the AGM on Thursday. Any feedback really welcome of course!

Unfortunately I can't get to the AGM.

I don't expect other people to do my research for me, but if anyone is looking for ideas for questions, here's a few suggestions:

1. What impact, if any, has Trump's government shutdown had on the permitting timetable?

2. It's great that NewPerl was discovered and 'bagged'. But how big is the risk that a competitor might discover another similar deposit nearby, and so be able to set up a competing operation right on our doorstep?

3. The SVS Research Note was disappointing, because it was poorly written and contained a number of errors, inconsistencies and ambiguities. Can we ask for a corrected version?

4. Given the problems at African Battery Metals, where shareholders have suffered badly, it's understandable that Sunrise investors might feel uneasy that we are employing the ABM CEO. What benefits does Mr Murphy bring to the company? For example, does he have previous experience with perlite or pozzolan?

5. There is a 120kV power line crossing the CS site. This is great, except that is looks as if it crosses an area that we would want to mine! Will we have to pay to reroute it? If so, what will it cost?

6. While on the subject of electricity, has the possibility of installing an EV charging point been considered, so that in the future as electric trucks become more commonplace, we can use them to keep transport costs down?

(My approach is to stick with questions that might actually get answers, as opposed to ones like "Why is the SP so low" which won't!)

Hi folks, here's my 'fag packet' calculation. It's based on the long term production targets, so may take some years to achieve.

Pozzolan: 500ktpa @ $20/t profit = $10m pa.
Perlite: 100ktpa @ $50/t profit = $5m pa.

Total = $15m pa = £11.5m pa.

A PE of 5 seems to be standard for this sort of long-lived operation, giving £58m mcap.

Divide by 2.9b shares (cos it gives a nice round number): SP = 2p.

This doesn't allow for capital expenditure or significant share dilution. SVS presumably do account for these in their pre-risk-discounted valuation of ~1.4p, which therefore looks quite plausible to me.

https://www.kitco.com/news/video/show/VRIC-2019/2248/2019-01-24/For-The-First-Time-In-A-While-This-CEO-Is-Bullish-On-Gold

Glad it's not just me having trouble understanding the detail.

"70% discount rate comprised of permitting (10%), logistics (15%), DoT licence (20%), mining market (25%) and estimated current equity risk premium (5%)."

This doesn't even add up (and doesn't work if you compound the risks geometrically either). Perhaps more importantly, it makes no sense to me that this is higher than the figure of 67.5% used by Beaufort 18 months ago - surely the risk must be substantially lower now!

See also my 12:06 post. A bit disappointing; PC should tell him to put it right.

https://www.proactiveinvestors.co.uk/companies/stocktube/11892/more-growth-ahead-in-2019-for-remote-monitored-systems---chairman-burton-11892.html

The new valuation is pretty much what I'd expect, an improvement on the old Beaufort target SP (0.41p vs 0.32p) due to the progress made, and risks overcome. What it boils down to is:

Best case: All risks are overcome, 70% discount goes away and predicted SP is then ~1.4p.

Worst case: one of the risks proves terminal, SP falls to ~0p.

Classic AIM really - 10-bagger or total loss. But for me at least I think that's a good risk/reward ratio, so I'll continue to hold.

(I notice there's no mention of Trump's shutdown as a risk, but this will hopefully be no more than an annoying delay.)

Glad to see a proper attempt at valuation, but slightly confused :

"For simplicity we have assumed a perlite and pozzolan selling price of $75m and $70m respectively ..."

I assume 'm'is a mistake and they mean dollars per tonne. I'd also have expected a bigger difference between the prices, but this might be because pozz is delivered whereas perl is "at the gate" - they don't specify.

https://www.sunriseresourcesplc.com/filemanager/Research%20Notes/Sunrise%20Resources%20plc%20-%20SVS%20Securities%20-%20Research%20Note%2018%20January%202019.pdf

Here's a direct link to the new presentation :

https://i3.energy/wp-content/uploads/2019/01/20190115-i3-ENERGY-Q1-UPDATE-v1.3.pdf