Roundtable Discussion; The Future of Mineral Sands. Watch the video here.
Just watched the presentation and unless I'm misunderstanding it was mentioned twice that they now expect to have a buffer of 60 million. How does that stack up with original contingency of 100 million plus this latest raise of 80 million. Suggests overspend of 120 million out of original cost of 440 odd million when 375 odd million was meant to have already been committed much earlier this year?
Long term holder but not that up to date with the current story so apologies if I'm talking rubbish!
I also suspect that a big reason for the extra funding is to fast track A2 but if that's the case why not just say so and start to realise some of that NPV as well. Can't help thinking there might be a curve ball to come yet (hopefully a more positive one) and just wonder if Teck might provide it?
I'm confused as to why all the focus is on the 7p raise price. Yes I'm slightly disappointed with this particularly as I thought 7.5p would be the floor but it is a function of the huge amount of money being raised.
What I'm more upset about is why is the total raise now 633 million? A1 was meant to be 443 million including contingency and I guessed the raise would be around 500 million to allow for working capital and a bit towards Vermelho.
A1 now appears to be 477 which I guess was flagged due to proposed purchase of better quality European kit but similarly the local currency has devalued dramatically since calculations were done which you would have thought would have helped.
Why the heck do they now need another 45 million for cost overrun then, particularly when the project manager they fanfared has a track record of bringing projects in on time and budget?
What I don't get at all though is 135 million for working capital? Yes it gets Vermelho to DFS which is great but what's the rest all about? They seem to be flagging that it gives them something like 100 million up their sleeve but why do that at 7p??
Finally, what I'm also a bit surprised at, is there is no mention in all of this of Teck. With their representative on the board already, their holding has just been severely deleted from over 12% to about 5.5%. Meanwhile Orion and La Mancha have got in with in my opinion a free ride for Vermelho. Can't believe they'll be happy so could that mean they might contemplate their own offer for the whole company? With current shares in issue an offer of around £500 million at nearly 30p per share would make them billions in the next few years and I'm sure would be accepted by the vast majority of current shareholders.
Thanks for taking the time to reply Wasa. I might be going number blind but I was working on around 14.5k tonnes per year from A1 so two years would be 29k tonnes and my suggested 2k tonnes of prepaid offtake would be around 7%.
In fairness, I am working on a nickel price in early 2024 of around 24k dollars and with our "extraction" costs of around 7k dollars this would give a profit before tax etc of around 17k per tonne. I'm then assuming an annual production from A1 (after offtake is accounted for) of say 13k tonnes. This would give annual "profit" of about 220 million dollars or around £170 million.
I'm then working on a market cap of around 7.5 X annual profit or around £1.25 billion which is 50p based on 2.5 billion shares.
Forgive me if I'm talking nonsense as I'm obviously not an accountant but this is why I have posted so cleverer people than me can "correct" my numbers!
Very disappointing day today for the share price but I guess not unexpected on AIM.
Just juggling with the numbers going forward and would be interested in other people's opinions.
Looks as though the finance part of the package will now go through for a total of 346 million dollars (can't find the dollar sign on my tablet keyboard!) and we already raised 25 million dollars a few months back totalling 371 million. I agree with Wasa that I think we will be looking for around 500 million total to get A1 in to production as well as the next FS on Vermelho and some working capital. We still need around 130 million dollars therefore or in round figures about £100 million.
My guess would be a target of around £75 million equity and £25 million prepaid offtake. In terms of the offtake if this was agreed at say 18k dollars per tonne it would be around 2k tonnes or about 7% of the first two years production from A1 which doesn't sound unreasonable to me.
In terms of equity, if a further 725million shares were issued this would be just under the 30% threshold of the new grand total of issued shares of 2425 million shares allowing a new entity like Vale or Orion perhaps to take them all if need be or perhaps Glencore or Teck to take the majority with the rest to other parties.
Depending on the prepaid offtake these new shares would have to be issued at around the 10p mark which is of course a premium on where we are today. That might seem unlikely but there again the cornerstone would also be getting up to 30% of A2 and V as well so still a good deal for them in my opinion.
In summary, I have been thinking we would finish up with around 3 billion shares in issue when all the dust settles but based on the above I think nearer 2.5 billion may well be possible. If it does end up at around 2.5 billion what do you all think the share price could be at production? My own thoughts are that it could be easily 50p plus?
Thanks Wasa and enjoy reading your posts here as well as many of the other regulars. I would very like to put more in to this as around this price I think is very good value with good upside and fairly limited downside but unfortunately funds are in short supply at the moment. Ideally I think I would be looking for around 40 to 60 pence per share before exiting. I personally still think we will finish up with around the 2 billion shares in issue so somewhere around the £1 billion market cap would be nice.
Timing wise is the big question but I feel that once A1 is in production then we are very likely to have a clear route for A2 and will almost certainly have some sort of JV for Vermelho as well. In these circumstances I think a £1 billion market cap is not an unreasonable target being around 50% of NPV for A1 & A2 combined. Personally think we could get there around late 2023 or early 2024 if we're not bought out in the meantime. Based on the fact we've got three "Onca Pumas" surely any buyout price would be north of 30p?
Hi all, just a question on NPV. I have tried researching where we should be in market cap terms based on NPV but without much joy. Does anybody have any reasonable ideas on this?
All I can see at the moment is that with a nickel price of around 19k dollars/tonne our NPV8 for A1 on its own is around 1 billion dollars or around £700 million. Our current market cap is around £130 million so only about 18% of NPV. Is this about right for the stage we're at and if so where should it be on finance being agreed, start of production etc.?
Thanks in advance for any answers.
Just making a best guess of what we will owe LO for the 15% guarantee that we put in place with them.
Based on my previous estimates I would have said there were still about 180 million shares to dispose of on Monday morning but given the extremely high volume on Friday I would reduce that estimate to around 150 million.
If this is the case then they will have disposed of around 410 million at say an average of 2.1 pence and the remaining 150 million at today's numbers of around 0.6 pence.
With the BPC guarantee of 2.3 pence this would leave us a liability of (410000000 X 0.002p) + (150000000 X 0.017p) = £3370000.
Let's be generous and say a bit less than this but will probably be still near to around 4 million dollars. Not sure about the decommissioning costs for the well but guessing at around 5 million dollars?
If these estimates are anything like correct then based on yesterday's RNS we should still have around 3.5 million dollars left which is there or thereabouts for next drill of the ex CERP assets.
Has anyone got any other ideas as to current cash status?
Yes would be good if we could get a rise to offset the sales under the 2.3p mark. Very roughly if they sold 460 million at an average of 2.1p and then the last 100 million at around 3.3p then that would do the job I think.
Zag, just back from a long walk so apologies about delay in replying but yes I do think they got rid of a lot yesterday (probably about 30 or 40 million?) just merely pointing out that to date they have averaged about 60 million per week. Hopefully that average will go up particularly after yesterday's trades but if it doesn't then it points to end of February before they have completed their unloading.
Just been doing some rough calculations on what they've got rid of so far and I reckon that last Friday when they declared going under the 5% they had disposed of an average of roughly 12 million shares for every trading day. Give or take at that rate that would leave another 20 trading days or 4 weeks to clear them out completely, one week of which we've already had.
Obviously the numbers can change dramatically with volume but just think we are likely to be rangebound in the 2 to 2.3p because of their disposal for the next two to three weeks.
I suspect that results of the drill may well be "delayed" until they are out, so even allowing for the drill physically finishing within the next ten days or so I don't think there will be an RNS until early March and this would allow them some time for analysis of the data along with communication with the Government.
Only my thoughts obviously but don't think we should get too concerned in the next few weeks that a. The price isn't rising in expectation and b. That official announcement of the result is not forthcoming as quickly as we would like.
For the record, I remain quietly confident that some sort of commercial find will be announced but my expectations of the rise in the share price are initially at the lower end of other's estimates (probably around 6-8p) with hopefully bigger rises as we attract interest from the big boys.
Thanks. A big risk for these parties then that their fees will evaporate if we hit dust.
Correct that I'm wrong or correct in my statement?
Suspect I'm probably wrong here but isn't it the case that an issue of warrants, in this case 9375000 of them, involves the parties involved actually having the right to buy those shares at the set price, in this case 2 pence?
This surely brings in more cash to BPC (£187500) and the interested parties only make money if they sell at higher prices. Based on the share price of yesterday if they sold they would only make around £10k which I'm sure is not representative of their fees. If they were to sell at 4p though they would make nearly £200k and every 1p increase in share price after that would net them nearly £100k.
Am I wrong in this assumption, for example is it something to do with the dreaded put and call again? Any explanations will be appreciated.
Thanks for replies guys but Sharescare in the post at 13.21 is still saying the call has been taken. Is that wrong?
Hi, very confused this morning. Everybody seems to be saying that LO have taken the call for extra 185 million shares but surely the holdings RNS this morning is the Put of 187.5 million shares which hit the market on Friday. Surely LO still have the option to take the call?
Really don't understand this Put and Call business so if anybody can simplify it I would much appreciate it.
Today's RNS not unexpected and I feel fairly neutral about it. On the positive side a very clear breakdown of where we were and how we've got to where we are now. Also think (for better or worse) that the company will survive and possibly even flourish in the longer term even if Pers-1 is a duster. I also think,
like others, it increases the likelihood that oil has been found as it looks like a suicidal move if there is no oil. On the negative side I think the company is being a little disingenuous comparing the current dilution against where we might have been with a farm out. Firstly they neglect to mention the 15% uplift guarantee to LO which potentially could use up millions of the money that we have supposedly raised and secondly that any farm out would have likely had an element of back costs paid which for example could have meant that we would have only retained say 25% but also would have had tens of millions in the bank.
This was my first ever share that I bought 9 years ago and to be honest will be glad to ultimately exit. Wish I had exited a long time ago but a bit like a scenario with a first child with troubled teenage years I've stuck with them, supported them and ultimately hope to see them mature in to a successful adult.
For what it's worth, I remain confident that oil will be found and that such an announcement will see an initial rise in share price to perhaps 5 or 6 pence. I think we will then sell or farm out the asset for between 10 and 20 pence but this may take months and there could be more bad news before that happens with the environmental lobbyists and possible lack of public support from the government. If the well is a duster then I can see an initial drop to about 0.5p followed by a rally back to about 1p and hopefully recovering back up to around 2p within 12 to 18 months.
These are just my thoughts and I know plenty will disagree either thinking I'm too positive or too negative but whatever, I do wish you all well.
Can any oilies out there give us a little more detail on how the COS for our upcoming drill is calculated? I have a vague memory of reading that for a successful drill there are five or six independent factors that are all required to be in place such as the trap, seal etc?
If, for example, there were six factors and the individual probability of success
for each of them was 84%, then the overall chance of success would be (0.84 x 0.84 x 0.84 x 0.84 x 0.84 x 0.84) = 35% ie. Similar to our expected chance of success with Perseverance 1.
Any clarification would be much appreciated.