Member Info for southwesterner

"..you are a Mining engineer..how many companies have you found finance for?.....and what do I do?"

Then why were you wrong in 2017, when my assessment was much more accurate?

https://www.lse.co.uk/profiles/southwesterner/?page=6
See "Scoping Study Summary; 24 Jul 2017; 15:43" etc

"Financing won’t be a problem"

To be fair you were saying that over 3 years ago; https://www.lse.co.uk/profiles/calmtrader/?page=24

"Bill was also very confident that raising the$53m would be straight forward"
"I’m expecting news of new CEO very soon... this will be game changing IMHO"
"I'm expecting the new management team to be announced very soon."
"a JV with Rio is my banker"
"we are only two years from production.. a lot of the finance will come from an off take agreement so no share dilution"

All from 2017. And here we are. Look, the facts are simple. This project is not a shoe-in, as I said in 2017;

"This is why this Scoping Study is taking so long, because its not a matter of printing money. This project is a small mine, a fairly low grade (underground) mine - and a fairly marginal project in a lower price environment.

That is why the Market Capital is £10m, not £100m."

Since then the project strategy has improved, the scale of the mine is larger, modern mining people have been over the plans (QME) - I think they stand a much better chance now of achieving a satisfactory outcome in the PEA than they did in 2017, but this is not a shoe-in for financing at all, and if you think that you are plain wrong. Its just a question of whether the outcomes in the PEA will be good enough for the market to progress to a PFS with further drilling, testwork and more detailed technical and economic studies that will take at least another 12 months realistically.

But look there is some really really positive drivers here. Selling the stake in LIM for £2m+ should fund the PFS and further work required, without further equity raises - and that is a huge advantage in this junior mining market - a lot of companies just get stuck because they have no money to move forwards. If the Board have real belief in Parys Mtn, thats what they will do that. Lets see what the PEA says, but I think there is very good reason to believe there is a path forwards here emerging.

I would then draw a distinction between the Parys Mtn PEA, and most of the activity you see in the junior sector of mining on companies in AIM (I know AYM is main listed but this is mainly because its ancient...) - and the likes of Glencore, Anglo, Rio, BHP or whoever - looking at a multi-billion copper projects in Chile, Australia or what have you.

Them and us are like apples and oranges. They are a different beast. They might accept a longer payback, maybe 5 or 6 years even for the right project. Thats because there will be a lot more confidence and a lot more studies done prior to capital allocation, and the quality of management teams that they can afford to execute the projects will be much higher, this is an interesting article in relation to this; https://www.mckinsey.com/industries/metals-and-mining/our-insights/small-doesnt-mean-unprofitable-unlocking-new-value-from-small-to-medium-metal-and-mining-projects

All I will say in conclusion though is this: metal prices. This is the greatest variable in these analyses, whether you are looking at IRR, NPV or payback. The metal prices you assume underlie all the calculations you make. For instance, Boliden will use "long term" 10 year metal price assumptions for its mine planning which are $3/lb for copper, $1.10/lb for zinc, $0.95/lb for lead, $1200/oz for gold, $17/oz silver, etc. So you have to be very wary of PEAs or feasibility studies using prices significantly higher than that, although its probably some of them will be revised upwards slightly next year. https://www.prnewswire.com/news-releases/boliden-mineral-resources-and-mineral-reserves-2019-301004303.html

"SW - Is a 3 year payback period a standard / benchmark for the mining sector?"

There's really no such thing as an industry standard for the entire mining industry, as I said above - horses for courses. I think actually by upscaling Parys Mtn we move from small scale to mid scale mining operations, and that slightly improves what would be considered an acceptable payback. Intuitively I'd say for small scale projects (NPV < $50m) - you need a 2.5 year payback from first production absolute max. For midscale projects (NPV $50-500m) - you might get away with 3.5 year paybacks, but AYM need to be looking at less than 3 years to get the markets attention IN MY OPINION.

"It’s a tough call to rule out / state that something will never be built if the payback period for a project is 4 years or beyond. I suppose there are dozens of projects around the world and presumably only the best (most profitable) 5% to 10% will ever get funded?"

There's no hard and fast rule that it has to be x years, but if AYM comes back with 4 years again, its pretty safe to say, Parys Mtn will remain dormant.

"So, in that respect, SW is correct and the Parys Mountain PEA is much more important and if the proposals don’t point to an early payback then it may remain dormant for ever?"

Exactly!

Payback is probably the crudest of the measures that investors and financiers will look at, but its still mentioned because its nice and simple to understand, and gives a very basic level of risk of default on debt. IRR and NPV are the more professional measures, and in the mining industry - for this kind of project - IRR should be the main priority. IRR is just basically the discount rate required to create an NPV of zero.

In terms of references, no - I have not seen a decent guide to these things online, and what tends to exist seems to be fairly basic at ebst. Looks like you've read the first thing that comes up on google from "https://miningman.typepad.com" - I can't fault you, its not easy to get relevant information on these things. I know of some books like "Introduction to Mineral Exploration (Moon, Whateley, et al)" and "Metals and Energy Finance (Buchanan)", but these are pretty hefty texts, there are probably better summaries out there. But what I am telling you is not from a book, but just from experience of following dozens if not hundreds of development stage mining companies over the past 10 years through PEAs, feasibility studies, etc. From that I can say with confidence that if you were quoting a 5-10 year payback for a small-mid scale mining project like Parys Mtn at current metal prices, the market will consider your project to be completely worthless. You will not be financed a penny to progress the project, you are done. Finished. You need to be looking at sub 3 year paybacks. If you need proof of this, just look at the fact Parys Mtn's last Scoping Study had a 4 year payback, and look how far its been progressed since 2017 - nowhere - a PEA is the same level of study as Scoping basically, just the Canadian word for it, and really nothing has been materially spent on the project in terms of developing it - Parys Mtn has been a desktop exercise since 2017, and really since about 2011 (maybe before?) was the last time any actual drilling or testwork was sunk into the project. So yeah in this junior market with these small-mid scale projects, you really need to be delivering outstanding outcomes, or you will be shelved. Simply because as Sammybow says there's so much else out there, only the best projects will be progressed.

I agree LIM could add value to AYM, but I disagree it can be the long term catalyst for growth or that it is the more important of the 2 PEAs. Simply because we own a 6% stake (12% of the listed entity) - so any rise in LIM will only have a limited effect here. Our stake is currently worth £2.5m - if it goes up fivefold (which it could on a positive PEA followed by a production decision) then it still only accounts for our current market capital. So its crucial the Parys Mtn PEA is strong. LIM is never going to be a company maker for AYM now we own a 6% stake instead of the 33% stake in 2011, its just a nice to have that could add some value.

As for Parys Mtn... the reality is we will need to be projected in the PEA to be making at least £20m/annum, especially during the capital payback period (first 3 years) - otherwise the mine will never be built. Simple as that, its done, finished - worthless. £20m as an average project cashflow is manageable, but its going to need to be more during the opening few years.

Why? Simply because the pre-production capital required for the upscaled project presuming it lands at 3000tpd, will probably be in the region of £60-80m. So if we aren't making £25m+ in those first three years, the payback wont be quick enough, the project is finished - dead in the water - it will never be built. Thats what some people here dont seem to understand, yes you are generating huge cashflows - but you need to be! If the project was generating £4m cashflow per year as Brent suggested, you might as well forget it permanently. Because you have to pay back that capital, and moreover you have to be able to pay it back under a variety of metal pricing scenarios and forecasts. Because who knows what the copper or zinc price will be in 3 years time - no one knows, and financiers will need to know they will still get their money back under all possible scenarios. Thats what this is all about. For the record my models do have us making over £30m per annum for the 3000tpd operation, during some years. But please, do not start extrapolating cashflows into valuations for the company, that is not how this sector works. This is just about being able to finance the project right now, and if you don't have cashflows like that, the project is totally worthless, if you do - then perhaps it isn't, and perhaps - just perhaps - you might be able to apply a value like 15-25% of NPV for a project at this stage of development. So maybe £30m, or 15p, if the PEA is really, really good. There's no point even talking about trying to extrapolate cashflows into valuations until the project is financed though, and it wont be financed on a PEA, it will need at least a PFS - which will mean further drilling, studies, testwork, etc. So what Im saying is, there's a way to go yet, but there is real potential here.

Our stake in Labrador Iron Mines Holdings Limited (LBRMF) is now worth £2.8m, up from £1.2m at the start of the week!

This is good news. But lets keep this in perspective, the whole stake is worth 1.4p per AYM share currently, and the value added from the increase this week is 0.8p a share. All very welcome though!

*facepalm*

No you cannot take the value of the ore in ground and then just take off 5% or 10% "risk" whatever you mean by that - and then say that is the value of the asset. That is ridiculous. If we did that for every mining project in the world, they'd be collectively worth more than the entire world economy combined...

"I’ll go Parys value £50m Labrador £20m Sweden £25m and additional acquisition £10m ...total £105m by mid year 2021"

I mean sure that is at least a remote possibility although I would suggest we're well into the range of extremely improbable outcomes with those numbers, never mind the fact the Board of AYM will not be able to move forwards that many assets simoultaneously. But spenfolds £150m for the stake in LIM, valueing the whole asset at £2.5bn is patently ridiculous.

"Another day closer to the Parys and LiM PEA results, with Parys we should be looking at a £50m Mcap and with LiM up to £150m, they may seem like pie in the sky figures but with over 700 million tonnes of metal ore between them and metal commodities booming why the hell not ?"

Because its absurd. Thats why. 700 million tonnes of metal ore? What kind of ore, and of what grade. Thats like saying you have $1m, but most of them are zimbabwean dollars.

If you are valueing 6% of Labrador Iron Mines Ltd at £150m, you are saying LIM is worth £2.5 billion. Clearly thats not the case, because that would be a huge company, much larger than LIM was back in 2011 when it was actually in production... reality is the AYM stake in LIM is only worth £1.2m right now if you wanted to sell it tomorrow, based on the market capital of the LIMH listing which owns 51% of LIM. Maybe it'll be worth £6m in a few months if the PEA is strong and iron ore goes up more, but it isn't going to be worth £150m, ever.

£50m for Parys Mtn is probably achievable post-PFS if commodity prices keep going in the right direction over the next year or so, but to achieve a PFS will require significant further work. Right now, following a PEA, in the current metal pricing environment, £15-25m is sensible.

Bear in mind AYM has £4m debt and that needs to be taken off any valuations.

So if you add a base case of £15m (Parys Mtn mid-case PEA) +£1.2m (6% of LIM current value) - £4m debt = £12.2m = 5.8p per share - hmmm what a coincidence thats round about where we are now!

If you go with the most positive reasonable case... £25m (Parys Mtn post-PEA if its very strong) + £6m (LIM post-PEA if restart looks likely) + £2m (Grangesberg sale to LKAB for £10m) - £4m = 14p per share

So yeah there's definitely upside - realistically 10p a sensible target price immediately post-PEAs if things go well.

Brentharg; "Roll on 10p, I say. Feel free to believe the misinformation about a billion-pound company and 88p dead cert."

Hear hear! 10p is definitely achievable with a strong PEA on Parys Mtn in the current metal pricing environment which is as todays RNS says, looking increasingly positive! Movement on LIMH's shares could also add some value. It's objectively correct that AYM's valuation has drastically increased over the past few weeks, not just because of rising metal prices, but also because it was undervalued before as the market had given up on the assets being developed in any way. The Board's recent lurch into life is a welcome step change in activity, although todays announcement doesn't have that much new other than confirmation that the PEAs are slightly behind schedule but not too bad, and that the new project acquisition is at an advanced stage. I wonder whether the "new" project will be recycled assets from the unlisted "Buchans Resources" whose Board have some crossover with AYM?

On the flip side the 90p club based on AYM's 6% holding of the Labrador iron ore assets which is currently valued at £1m by the market through our 12% holding in LIMH, are either delusional or just plain old con artists. I'm sorry but no one that understands the value of mining projects thinks AYM is worth 90p just because it reached that in 2011 when LIM was actually in production.

The rampers posting abject nonsense are not helping this share in the long term, they are just creating needless volatility and sucking people into pump and dump schemes. I have a feeling some of them will disappear next week when the final warrant shares are sold into the market, they will have done their bidding and can vanish whence they came.

honestbob; "That said Rampart is quite correct the most recent RNS has interchanged LIM and LIMH which looked at in isolation could and has caused confusion"

To be fair, looking at that he's right they have... in the PEA press release on October 30th... good catch... borderline misleading but probably not deliberate. They referred to "Labrador Iron Mines Holdings Ltd" and then abbreviated that to LIM. Its not wrong to say we own 12% of Labrador Iron Mines Holdings Ltd, thats obviously true. But then they only own 51% of the operating subsidiary, Labrador Iron Mines Limited. If you look at the front page of http://www.labradorironmines.ca/ - they use LIMH to refer to the holding company and LIM to refer to the operating subsidiary.... but then AYM have muddied the waters by using LIM for the holding company - anyway, there is no doubt we actually own 6% at the asset level so thats the end of that.

Greg; "Sentiment killers are now costing people money here!"

I think ultimately, its for the best to get all the pump and dumpers out of this share, because they'd only crash the share price by selling out shortly after the PEA anyway, along with all the others they have dragged along in their ramping, because of their ludicrous expectations for what the assets are worth, literally "billions" according to some of them. Ludicrous. Im still holding part of my original purchase, and if it dips below 5p to buy I will add more. I'd like to see fair value, and then a rise from a positive PEA, not a massive sell off as all the opportunists pile out leaving long term holders high and dry as per usual.

"Honestbob, you and me both... I'm as confused as the next man"

It's actually fairly simple, and was announced in RNS by AYM in 2016, there should be no need to bother poor ole' Bill about it. See here; https://www.investegate.co.uk/anglesey-mining-plc--aym-/prn/limh-plan-of-arrangement--placing-of-new-anglesey-shares/20161216121850PBE8C/

I quote; "Upon implementation of the arrangement creditors of LIMH will be issued, as a group, approximately 22% of the shares of LIMH which means that Anglesey will then hold approximately 11.9% of LIMH and will be its second largest shareholder. Creditors will also be issued 49% of LIMH’s operating subsidiary Labrador Iron Mines Limited. "

So the creditors, as part of the 2016 restructuring to prevent LIMH going bankrupt were given 49% of Labrador Iron Mines Limited. AYM own 11.9% of LIMH, and LIMH own 51% of Labrador Iron Mines Limited (the actual direct owner of the assets). Ergo, AYM own 6% at the asset level, not 12%. Its all explained fairly clearly on the front page of http://www.labradorironmines.ca/

"You are not the only expert!!! Let’s leave it at that"

Hmm... okay.... well you don't HAVE to explain how the project will get funding based on a PEA and inferred resources. But I am interested what IRR and NPV(8%) you are expecting for this project at current metal prices? I'm guessing 45% IRR and $150m NPV, based on inclusion of all indicated & inferred resources. Last time (2017 Scoping Study) I was slightly on the optimistic side! The real figures will be coming out soon.

"I think this is why I find your posts slightly frustrating southwesterner. They are obviously well-informed, but grounded in the mining and not always cognisant of broader narratives that drive economics or political decision making. As somebody who worked for the government, this is exactly the type of project that with some well-placed lobbying could get significant backing. Just look at the debacle of freeports. Decisions aren't always grounded in what is sensible."

I can see it might be possible to link this project in with the "EV revolution" and the "battery metals" supply chain - which will both appeal to political decision makers and the market. In which case Anglesey Mining could do with some substantial rebranding, as they have done virtually nothing on this front so far. Of course in practise all these metals are going to be smelted abroad, so it doesn't really secure the supply chain at all, but I agree facts rarely drive political decision making so that may not matter so long as the narrative sounds good. May help with funding, but I doubt the Government will put up more than a small slice of the required funding.

"Funding for Parys won’t be an issue"

What makes you say this? This is going to be somewhere around an $80m capex for the full scale project I'd imagine. Quite a lot of $$$ to "not be an issue". I'm interested, what IRR and NPV you are expecting for this project at current metal prices?

I can get extremely attractive outcomes for the PEA, but only by including the inferred resources. No one in their right mind will fund a mining project based substantively on inferred resources, so I'm assuming further drilling will be required to bring some of those resources into indicated status. That could be organised for early next year if required I am sure it could be done in under 6 months if the PEA is attractive enough and AYM get on with it. I'm also sure the drilling could be done from surface for ~£2m, so there's no need for costly underground access. But still, some hurdles to jump before we get to a PFS, and then funding, and then construction.

"Just to take this away from the physical and back into the ephemeral, it is worth noting that LBRMF shares have increased almost 9 fold in value since the announcement of the PEA on 29 October. From 0.008 to 0.07(price today, high of 0.09). Clearly, the market is very excited about the possibility of the Houston project firing up."

I agree. I honestly think sure there is a chance LIMH/LBRMF (whatever we want to call it, but NOT to be confused with LIF.TO!) will go up a lot if iron ore keeps its momentum. Maybe another 5-10x if it lurches towards developments after a positive PEA. But the reality check is right now our stake is still only worth £0.8m. If LBRMF goes up 10x, its worth £8m, which is only just over HALF our present market cap. So if you genuinely are that confident LBRMF will go up 10x, find a trading platform where you can buy them, and you'll make a fortune. Doesn't make sense to hold AYM on that basis when presently the LIMH stake is worth just 5% of our market cap. Anyone that remembers the heady days of 2011-13, will also remember AYM traded at a significant discount to the value of its stake in LIMH...

Basically... long story short - people are getting too obsessed with LIMH! Which is a sideshow. And not focussed enough on Parys Mtn - the real value driver here. This is possibly because the rampers prefer the story of an exotic asset in a foreign land in a commodity whose price is soaring presently. I'm just providing a reality check. AYM at 7p is valued at £15m, thats quite a lot without even seeing the Parys Mtn PEA... investors should turn their attention to what they reasonably expect from this PEA and make sure thats realistic before buying more shares. This isn't going to be a slam dunk, to get funding for Parys Mtn we will need a PFS and further drilling. The best hope for LIMH is that it continues to rise so we can sell our stake to fund further Parys Mtn activity, rather than needing to raise for the PFS through equity dilution.

honestbob; "For my part thankyou for the trouble you have taken with those posts."

Thanks! Much appreciated.

Rumpole; "Southwesterner, if you bought in in October, as you have just stated, why have you been posting on this board since June 2017? Your story is unraveling."

I bought in October 2020 because I saw value in the shares. I was right. I've been posting since 2017 because I have a longstanding interest in the development of the Parys Mtn project as a UK based mining engineer. Had I not had that interest, I wouldn't have known to buy in October 2020...

Rumpole; "You obviously have knowledge of the mining sector, that isn't being questioned. What is being questioned is your motivation and why you consistently play this share down. Whatever the news, you have something negative to say. Even your so-called positive posts are just thinly veiled attacks on the credibility of the share."

I posted a buy recommendation in October 2020, at a 1.8p share price. You can see the post, its dated 01 Oct 2020 11:13. I stated I had bought shares, that I thought the PEA could deliver potentially outstanding outcomes, and that AYM was a better proposition now that it has been for years. That was me being positive!

Boom123; "Disagree .
Your talking complete nonsense"

What so brokers just happened to post the exact same prices on the exact same days for LIF.TO and LIMH?

https://www.marketbeat.com/stocks/TSE/LIF/price-target/
https://www.marketbeat.com/stocks/OTCMKTS/LBRMF/price-target/

Just a complete coincidence they have EXACTLY the same target prices on exactly the same days. For two completely different shares which both start "Labrador Iron". Really? You really think that? You really think a penny stock like LIM has brokers like RBC, Scotiabank, CIBC, etc commenting price targets on it regularly?

Hmmm... I think would say more about you than me if you did.

"Com,n thats pathetic reply .

Blaming a computer error.
There's 4 big banks , it gets adjusted every few days.
Plse"

READ THIS. https://www.marketbeat.com/stocks/TSE/LIF/price-target/

The recommendations for LIMH were posted at the exact same day and the exact same prices in all 4 cases as LIF.TO

It is a computer error, the recommendations refer to LIF.TO, which is a heavily traded stock capitalised at $2bn, with shares around $30. It is to LIF.TO which those target prices refer, not LIMH.

"I have read your posting history. You want to bring this share down and think by writing essays and sharing dubious links that you will be taken seriously. I would value what you said more if you had EVER been positive about this share. You haven't. You are a troll."

Thats not true. I have been positive about this share. I posted a buy recommendation on October 1st and 3rd. I said I had bought in then. Thats just a fact. Call me a troll if you want, but I think a lot of the longer term participants in this board will recognise that I have brought meaningful professional opinions here, particularly on the development of the Parys Mtn project which is of particular interest to me as a professional UK based mining engineer. I don't claim to be an expert on iron ore, I'm really just offering a basic reality check on some of the more foolish claims being thrown around lately.

Boom123;

"1) why has such a knowledgeable poster with such a post taken a 350,% rise to post .???"
I've been posting here long before you to be fair. Just cause I sat quietly whilst the shares went up 5x over the past 2 months, the fact is I've been posting here since June 2017!

"2) https://markets.ft.com/data/announce/detail?dockey=600-202010060726PR_NEWS_USPRX____NY49502-1
States 2020 --- your statement This has nothing to do with LIM. """""you or I have no idea what its for ive said it could be for regenerate lim . """"Thats the same as you saying it doesnt unless you have a hotline to Gerald metals ."
All I'm saying is you posted a link to a $300m syndicated financing stating that it was not a coincidence it happened before the LIM PEA. I'm just saying they refinance every year, and its working capital for iron ore trading, not building new mines. Believe what you want though.

"2) iron ore profit margin ..
https://www.forbes.com/sites/timtreadgold/2020/07/14/iron-ore-boom-generates-700-gross-profit-margins-for-big-miners/
I'd consider Gerald metals one of the big boys."
Yeah... sorry... that doesn't mean LIM's operating costs will be $15-20 per tonne. I can tell you categorically in a professional capacity that they won't be that low.

"Any thoughts on

https://www.marketbeat.com/stocks/OTCMKTS/LBRMF/price-target/

?????"

Thoughts here are the recommendations are clearly for Labrador Iron Royalties (LIF.TO) which sits around those levels, not LIMH. Its just a computer error its been double posted on both Labrador Iron pages, confusion caused by the name similarities. Check out https://www.marketbeat.com/ratings/by-issuer/scotiabank-stock-recommendations/ - it clearly shows they made price target recommendations for both LIMH and LIF.TO on the same day for $35->36. They are referring to LIF.TO, which sits at $30. Hope that clears up the confusion.