Member Info for StarBright

This only gets more interesting on further digging...

Wombat Resources Pty Ltd appears to be 100% owned by Sorrento Resources PTY Ltd.

Who are the directors of Sorrento Resources PTY Ltd? Daniel Smith, Mark Culbert, Thomas Redicliffe and Laurence Kirk.

https://www.sorrentoresources.com/projects

Two of whom are directors of UFO. I await the company's response with interest.

I'm not trying to make anyone nervous, and I have no negative agenda regarding UFO. I've been a holder for a long time, and hope that it will prove to be a successful investment.

I am a professional investor by background, so have a disposition to critical analysis. It's quite evident from this thread that several of you have not read the RNS's properly.

That UFO's Chairman may have a financial interest in a company UFO is looking to buy an asset from is a legitimate concern. It can be dealt with by either (1) confirming that he doesn't have such an interest, or (2) outlining the steps taken to manage the potential conflict. Dip666 - I emailed the company on this earlier today, and will share any answer here.

This board is filled daily with nonsense regarding market maker corruption and price manipulation, whilst posters are apparently entirely happy to look straight past bigger concerns like the potential for CoI on connected-party transactions...

Max111 see my post 10:39. "Does Dan Smith have a financial interest in Wombat Resources Pty Limited today, or not?"

In your post 10:26 you said "Dan used to be director of Wombat."

Do you know whether he has a financial interest in Wombat today, or not?

That is is the first critical question.

The March RNS says: "The Company has entered into a 60 day exclusivity arrangement with the owner of the tailings on site within the Elizabeth Hill Mining Licence, using this period to carry out further assessment of the tailings in situ and potentially negotiate an acquisition by Alien of the rights and title to the Elizabeth Hill tailings project, if terms can be agreed between the parties."

So the idea is that UFO acquire (presumably for shares or cash) the rights and title to the EH tailings project from Wombat.

Meanwhile our chairman is a director of Wombat, so potentially has a financial interest.

I find this uncomfortable.

That - napthman1 - is precisely the point. If UFO has to negotiate with Wombat as to who keeps what (whether this is achieved through a fixed-fee or a % makes no difference in the end) I would like to know that all our directors are interested in obtaining the best outcome for UFO. If one (or more?) of them has a financial interest in Wombat then there is a conflict that needs to be managed properly.

Some more questions. Thoughts welcomed.

Will any value that might be generated from the tailings have to be split three ways - between UFO, Wombat and whoever does the processing? If UFO is neither the owner nor the processor, why would it expect to capture anything other than a tiny % of such value?

Does Dan Smith have a financial interest in Wombat Resources Pty Limited today, or not?

If he does, how is the potential conflict of interest being managed?

The RNS today says: "Alien has extended the exclusivity period with the Project owner for a further 45 days..."

The March RNS said: "Alien has signed an exclusivity agreement with Wombat Resources Pty Ltd, the owner of the historic tailings on site within the Elizabeth Hill Mining Licence"

This document https://www.asx.com.au/asxpdf/20180116/pdf/43qvcwj3xms99x.pdf (admittedly dated January 2018) identifies Daniel Smith as a director of Wombat Resources Pty Ltd.

Daniel Smith is UFO's Chairman, appointed 12th April 2019.

So we are negotiating a deal with a company that our Chairman is (or was) on the board of?

Max111 - you're the expert on all things UFO. What have I missed or misunderstood here?

As time passes without clarity on order volumes + margin, ODX's optimistic army of get-rich-quick PI's are losing patience and selling up, and the SP is sliding as a result. A motley menagerie of maliciously motivated posters here are trying their best to help this process along, possibly with some short term success as 10 of the last 12 days have seen negative moves.

For those still holding, little has changed other than continuing "top-up" opportunities which are largely irrelevant if you were already at your preferred size. At some point, greater clarity will arrive and the SP will correct quickly - either upwards or downwards.

If the news is favourable and the correction is to the upside, those waiting (and posting!) in search of a low entry price will miss the boat because the recent fall will be unwound too quickly for them. They won't admit - least of all to themselves - that they got it wrong, so I predict confidently a blizzard of posts from the motley menagerie telling us they bought on or around the bottom tick. These posts will of course be fantasy, but I look forward to exhuming this thread and pointing them out.

Unfortunately a better option for creditors is not the same as a better option for shareholders. The interests of the two groups are not aligned, and it is entirely possible that existing equity holders will lose 100% here.

By starting with Fenix's MCap, Hopscotch's methodology implicitly incorporates three major factors that are missing from 944T's calculations:

1. Corporate taxes at 30%
2. The time value of money (944T mentions a mine-life of 64 years)
3. The risk-adjusted cost of capital associated with the project

Additionally, 944T's method embeds punchy assumptions about grades (particularly %Fe65) and the LT sustainability of Fe65 pricing which is presently near its ATH.

These factors account for the large difference observed between the MCap of Fenix and 944T's illustration.

Valuation is an inexact science, so it is useful to consider and compare alternative approaches. Thank you both for taking the time to share your thoughts as you have.

I wouldn't say "surely", but yes. That's essentially my rationale for being a buyer below £4. I think the balance of risk and reward at this level is favourable.

I agree alamo55 that caution over what is and isn't priced in is required. The SP and - to a very extent - discussion here reflect the reality that at 350p the share might be materially under- or over-valued.

Applying (in a simplified way) the idea that an SP is the aggregate of market expectations; if 50% of investors believe NCYT is worth 100pps, and 50% believe it is worth 600pps then the market clearing price will be 350p. All those who believe in 100p will be convinced the SP is way too high, and all those preferring 600p will be saying it is too low. Neither group is “satisfied” by the current SP, hence the heated exchanges on this board. Particularly from those who approach the LSE forums as an opportunity to influence rather than to discuss.

The current SP is to a large degree the aggregate view of those who think the DHSC issue will be resolved favourably, and those who don't. Thus there is increased holding risk and expected volatility at this point. It is precisely this risk that creates the opportunity for returns...

Yes - agreed. 2020 earnings will be way above those reported for 2019, and valuations are necessarily forward looking. The sooner the company is able to clarify the 2020 position the better. It's likely that we'll see a positive re-rate at that point simply because of the removal of uncertainty. I missed NCYT on its initial rise, and had to wait a long time to get the entry price I wanted. FWIW I am a buyer below £4, as I expect that the non-DHSC income streams alone will support the SP at that level.

Onwards and upwards as per thread title.

Porky9 - to go back to the hypothetical posed in your 18:02 post, the minimum consideration rules would mean only that AZN - if contemplating an offer - would avoid acquiring any shares in the open market, as the price it paid would set a threshold below which it couldn't subsequently make an offer. Assuming that AZN hasn't bought in the open market, it is free to make an acquisition offer at any price. So if there is collusion as you propose - and such collusion would be illegal - as NCYT shareholders we aren't "protected" by the £12.25 high. I hope this makes sense.

Wilson63 - my post on the ODX board (I own both btw) was in a discussion with someone who didn't understand the difference between Turnover, EBITDA and Earnings. The poster there "Bedhead" was trying to justify a crazy valuation methodology for ODX utilising NCYT as an example. His start point was that NCYT had reported earnings of £187m for the last calendar year, which isn't correct. The word earnings, when used in comparative analysis via PE multiples has a specific definition. He didn't know that so his point was nonsense.

I doubt that anyone is "struggling" with my post above. It is pretty clear. I think you have just latched hesitantly - and mistakenly - onto the idea that I am negative about NYCT and are doing your best to throw some shade. As you say, it is all far too technical for you..!

Porky: "IF it is FACT that under French law a business on the Bourse can not be acquired for less than the ATH share price in that 12 mth period then the Take Out price would be a minimum of £ 12.25 or £ 880m as it stands."

"Minimum consideration rules" are frequently misunderstood (or misrepresented...) by posters on these boards. These rules, which are common in many jurisdictions, don't apply in the way suggested above. Their effect is typically limited to situations where an offeror acquires shares in the open market prior to making a formal offer. The rules are intended to stop an offeror from building a position at Xp before launching a bid at X+Yp. They don't require the offeror to match the highest price paid by ANYONE in the open market, only to match the highest price it has ITSELF paid on any shares bought in the open market.

The notion that a company can't be acquired below its high in the last n months is thus entirely incorrect.

Bedhead - wherever did you get £187m for NCYT last year earnings from? Their last years reported earnings figure was -£6.8m.

Some silly posts here today. If you can’t demonstrate at least a rudimentary understanding of your topic matter, then your views aren’t useful. No different to a football supporter yelling “offside” when their team has conceded a goal, despite the two goalside defenders. If you don’t know the rules, then why make the comment?

Bedhead. ODX reported TURNOVER (not earnings) of £9.8m for last year. Post-tax losses (earnings) were -£6.8m, giving earnings of -4.8p per share.

In your calculation, you have tried to apply a P/E ratio to the turnover figure. This is entirely incorrect, and the remainder of your post is rendered entirely useless by this basic error.

Bedhead - do you think you know the difference between the fleshy thing you sit on, and the hinged joint between your upper and lower arm?