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Ariana’s share price is somewhat below its real value because investors have lost hope of seeing a return on their investments in the medium term and worry that all the profit from Zenit will continue to be ‘invested’ in multiple prospecting companies throughout the world and that these prospects will only give returns on the long-term.
Assume that Zenit makes $800 per oz profit after tax and that Kiziltepe produces another 60,000 oz gold and that Tavsan produces 300,000 oz gold over the next ten years then the total profit for Zenit would be $288,000,000 (£228,570,000) of which Ariana will be entitled to £53,714,000.
Now this seems to be a large amount of profit, however it does depend on Zenit declaring and paying 100% of the profit as dividends payable to the three partners.
Assuming that all Zenit’s profit is distributed then the next question is how much of Ariana’s share of the profit would be taken by administration costs, tax etc. I have used £750,000 admin per year and a tax rate of 20% to give a total net profit of £36,970,000 over the ten years. The real question is what percentage of Ariana’s net profit would it return to shareholders as a dividend.
I hope that a large proportion of the net profit (at least 50%) is returned as a dividend to shareholders with the remainder being split between a strategic reserve fund and some funds to keep Kerim happy investing in prospects all over the world.
I fear that the share price will continue to languish and will never reflect the true value of the company if Ariana does not come up with a definitive policy to return value to shareholders via dividends.
Even more shares dumped today. How long is this seller going to remain active? The plant at Kiziltepe is probably going to carry on producing for another 5 years and Tavsan will come on stream this year (they are already mining and stockpiling the ore). It is apparent that Ariana is very undervalued. I suspect (hope) when this seller exits the market the share price will recover very quickly.
Hi
Lively debate on the future of powering EVs.
I have owned a MG5 for two years and would not go back to petrol. I also own a reasonable chunk of LAC and LAAC.
I researched the electric car market before the purchase my car and LAC LAAC and am reasonably happy that the future is BEV.
As for the MG5, positives are cheap fuel costs (about 50% of running a petrol engine car, cheap servicing as there is no messy oil change, love the regenerative braking (almost one pedal driving) and not having to fill up at a garage on a regular basis. Down sides are insurance is about 20% more expensive, long journeys have to be planned for recharge however only once in 16 public chargings have I had to wait longer than it took me to have a comfort break and a cup of coffee (it once took me longer to get served a coffee than actually charge the car). As for car fires research in Sweden shows that EVs are less likely to catch fire than petrol or diesel engine cars but when they do it is spectacular. https://theconversation.com/electric-vehicle-fires-are-very-rare-the-risk-for-petrol-and-diesel-vehicles-is-at-least-20-times-higher-213468
Lets agree to disagree. There is plenty to talk/moan about with Ariana and I have always enjoyed the discussion about Ariana. One must admit it is a love/hate relationship, maybe one day we will all be, if not rich, at least ahead of the game!!
Part 2
EV Battery Health - What 6,000 Batteries Tell Us | Geotab
Key takeaways
High levels of sustained battery health observed.
First and foremost, based on data from over 6,000 electric vehicles, spanning all the major makes and models, batteries are exhibiting high levels of sustained health. If the observed degradation rates are maintained, the vast majority of batteries will outlast the usable life of the vehicle.
NIO ET7 has nearly 650 miles range with game-changing battery (electrek.co)
NIO’s ET7 electric car has over 1,000 km CLTC range with its new 150 kWh battery. To put its new ultra-long-range battery to the test, NIO’s CEO William Li drove the ET7 for over 14 hours, covering 1,044 km (~650 miles) with some charge left to spare.
The future of E fuels
E-fuels: how big a niche can they carve out for cars? | Automotive industry | The Guardian
As for e fuels they are likely to find a small niche at most, experts predict. In their way stand fundamental constraints of physics, which would require even more green energy. They are made in stages: first by splitting water using electricity to create hydrogen, and then combining it with carbon from CO2 in a process that requires high pressure and a catalyst. Every stage wastes some energy, and all the electricity used must be zero-carbon.
“You’re basically trying to unburn petrol,” said Michael Liebreich, a consultant on clean energy technologies. “You need an insane amount of solar to do that.”
A question
How many of the people contributing to the discussion around the future fuel for cars actually owns or drives an EV?
The efficiency of BEV vs FCEV
Hydrogen vs. Electric Cars: Comparing Innovative Sustainability | Earth.Org
One of the most significant disadvantages of FCEVs is their inefficiency. Because of the complex processes involved both in producing and storing hydrogen and in converting the hydrogen into electricity in the fuel cells, FCEVs are generally only around 38% efficient, meaning that for every 100 watts of energy produced, only around 38 watts can be used to power the FCEV.
Unlike FCEVs, battery-powered electric vehicles are quite energy-efficient. While FCEVs are less than 40% energy-efficient, most battery-powered electric cars and other vehicles boast around 80% efficiency. This means that for every 100 watts of energy produced, nearly 80 watts will be used to power the vehicle.
Assuming that hydrogen is produced by electrolysing water then this means double the generating and grid capacity to sustain hydrogen cars, this together with the poor efficiency makes them much more expensive to run.
Fuel cells longevity, range and cost vs battery
https://www.hydrogeninsight.com/analysis/review-of-2023-the-key-developments-and-trends-in-the-global-hydrogen-sector-part-2-usage-/2-1-1577029
For example, the German state-owned public transport company responsible for introducing the world’s first hydrogen-only railway line in 2022 stated in August that it would opt for an all-electric future because it has realised that battery models “are cheaper to operate”.
Similarly, the French city that pioneered articulated hydrogen buses in 2019 said that because of four years of frequent breakdowns and a near-doubling of H2 fuel bills, the city would opt for battery electric buses in future.
Indeed, Swiss trainmaker Stadler, which builds both electric and hydrogen-powered models, said in August that battery models usually emerge victorious in technology-neutral tenders put out by German railway operators looking for low-carbon trains — and are suitable on almost every railway line.
Other problems, a senior Stadler executive explained, are that maintenance on H2 trains is more complex than on battery trains, and that their fuel cells need replacing within three years, on average.
Should be polluting the planet.
Kiziltepe
Production in 2023 was about what was expected – neither good nor bad.
The mining at Kiziltepe is going to finish in the next few years which probably means more than two and less than five years but is still good news.
Satellite pits should keep the processing plant operational for a few years after that – good news
When the processing plant is no longer being used at Kiziltepe the plans are to utilise it elsewhere, Kosovo has been mentioned – good news
Tavsan
The completion of the mine is delayed by a quarter as the heap leach liners cannot be put down at present due to bad weather. The legal challenge delayed the liners by about four months so without this the heap leach would have been completed before winter – bad news.
Steel construction and fabrication, along with the delivery of various plant components are being staggered in accordance with cash-flow considerations. There is little point in completing the processing plant before the heap leach pads are operational, so scheduling the construction of the plant to be complete when the heap leach pads are operational is just good sense. There is no point in spending/borrowing cash before you need to. – It is what it is.
Venus
Venust is now a PLC which means that the IPO can go ahead as soon as market conditions are right. The price of copper is depressed at the moment due to the slow growth of the Chinese economy (only 5%) and the low take up of EVs. The depressed EV market will turn around as consumers are waiting for the promised next generation of EVs that will cost less, have greater range (around 500 miles) and recharge times of 15 to 20 minutes. The fact is that by 2027 (three years’ time) EV manufacturers in the UK and EU must sell 70% ZE (i.e. EV) vehicles or face heavy penalties. In the US 50% must be ZE by 2027. The demand for copper (and lithium) will increase substantially over the next three years at the same time as currently depressed prices are delaying investment in new mines. Even in the US despite their love of polluting the plant it is cheaper to produce green electricity than fossil fuel electricity and EVs will become cheaper to produce than IC cars, just look at the price of EVs in China. The problem is that by having a head in the sand policy in regards to oil and IC engine cars the US is just getting left behind.
The fire at Luton airport was not caused by an EV but by a diesel car and the new solid state batteries being developed will be a lot safer than a tank of petrol.
I think that next year will be a good one for Ariana investors.
Zenit - Zenit is now in that sweet spot with a producing mine, a mine in development and some exciting future prospects to give a long-term future as a gold producer. Zenit will not be sold off nor will it sell Salinbas to another gold producer. The price of gold will stabilise at over $2,000 per oz as interest rates drop over the next couple of years. I hope Ariana will not sell its share in Zenit unless it is offered a really high price. Zenit should give an income stream for Ariana for many years to come.
Venus Minerals – The IPO will go ahead. In November Venus Minerals was changed from a private company to a PLC, a move necessary to float Venus. It looks like there will be an increasing shortage of copper in the future which should give a good lift to the price in the medium to long term.
The investments through Western Tethyan and Asgard Metals should give the opportunity to either sell the prospects at a profit or develop prospects in conjunction with third parties (such as Proccea) to give long term growth prospects.
My wish for next year is for Ariana to develop a dividend policy to return a proportion of the profit from Zenit to shareholders whilst retaining enough to carry on developing new prospects. CAML has done this very successfully. CAML’s policy is to return between 30% and 50% of free cash flow to investors whilst retaining the rest for future investment.
I hope that everyone has a great Christmas and that next year is a good one.
From todays RNS and the schematic of Salinbas it it can be seen that Salinbas is a medium grade gold ore body that runs parallel to a moderately steep slope to the top of the slope. The depth is not great and Salinbas appears to be an ore body that will be easily accessible using open cast techniques. It may not be as profitable as Kiziltepe or Tavsan but should still be profitable. I have concerns about Ardala as it is a much lower grade ore body.
Zenit is currently very busy building Tavsan and still prospecting to increase the reserves at the Kiziltepe pits, Tavsan and Salnibas/Ardala.
I think that the success of Kiziltepe is putting back the building of Salinbas.
Salinbas was always meant to become operational after Kiziltepe had finished gold production. I wonder if the plant at Kiziltepe, which is capable of producing up to 25,000 oz of gold a year, was always destined for Salinbas, where it would produce 50% of the output, after it had finished production at Kiziltepe. Why spend more capital than you must?
As Kiziltepe is going to be producing gold for several years longer than anticipated, and Tavsan is coming on stream next year, there is no rush to build Salinbas. Zenit might as well keep prospecting to ensure that the mine, when built, will be as productive and profitable as possible, and then can use the plant from Kiziltepe to minimise capital costs.
I suspect that Ozaltin brings more to the table than just enabling the JV to raise debt funding more easily. Ozaltin is a very large Turkish company with good political clout. The debacle over Tavsan when the 'environ mentalists' halted the build probably was sorted more quickly and in Zenits favour because of Ozaltins connections with the government.
Plus we all got our dividend and KS can happily indulge himself in investing in juniors and running their prospecting.
When Ariana sold half its share of the JV to Ozaltin one of the advantages was that with Ozaltin on board the JV would be able to raise its own funding for Salinbas. I remember that it was stated that Salinbas would be developed without any recourse to capital from Ariana. The JV will, of course, have to raise debt funding to build Salinbas but with Kiziltepe still producing gold and Tavsan coming on stream I suspect that raising capital for the mine build at Salinbas will not prove difficult.
Once again the good news sends the share price down. Kizilcukur will add at least 20,000 oz of highly profitable gold production to the Kiziltepe processing plant, or about an extra $20 million profit for Zenit of which Ariana’s share is about $4.7 million.
The RNS states that production for Kiziltepe will go on to at least the mid 2020’s. Kizilcukur is not going into production for 18 months (mid 2025) and will give at least an extra year’s production. I can see Kiziltepe producing gold until 2027, all the reserves of the pits that feed Kiziltepe are having further drilling programmes and resource upgrades.
Over the next ten years Tavsan will produce a minimum of 300,000 oz of gold with relatively low production costs (profit at least $1,000 per oz) from heap leach and Kiziltepe will probably produce an extra 60,000 oz of gold at a profit of at least $1,000 per oz. This adds up to $360 million profit for the JV of which Ariana’s share will be $85 million.
On top of this Salinbas will, hopefully, have been developed into a profitable mine, at no capital cost to Ariana, Venus will have had its IPO and be producing copper and gold, and some of the other investments may have realised some return to Ariana.
Why is Ariana languishing with a market capitalisation of only £24 million? I guess that investors do not see where the return on their investment is coming from, the worry is that Ariana will keep investing the profit from Zenit into more and more prospecting, where the returns are always in the future. Ariana desperately needs to have a dividend policy that returns some of the profit to the long-suffering investors. Ariana needs to take a leaf out of the playbook of CAML who return a good dividend at the same time as building a war chest to invest in new ventures.
I cannot understand the sell off of Ariana shares.
Ariana has £7 million in total current assets of which £6.2 million is cash or gold bullion. The change in cash balances between Dec 22 and June 23 is £4,545,000 of which £1,228,000 is changes in debtor and creditor balances and £1,382,000 is the purchase of gold bullion. The change in debtor and creditor balances are largely discretionary and reflect the paying of current creditor balances and the fact that about £400 million of the debtor balance was used in the purchase of the gold bullion (a debtor has given gold bullion rather than cash to clear debts). This means that a total of £2,610.000 is not a fundamental operating cash flow and the real ongoing cash flow is about £2 million in six months. Ariana is not going bust soon and Tavsan will be producing profit and cashflow well before Ariana needs to raise any cash.
When Venus is floated off it will be a separate entity and will not need cash from Ariana but will raise its own capital for any mine development.
So I can buy (blame the spell checker)
Once again Ariana seems to have disappointed a lot of investors.
The bad news is that cash and readily convertible current assets have fallen to £6.225 million because Arian has very unwisely invested in further exploration and licence acquisition in pursuit of its ridiculous strategy of investing for the future. It is sad news that Ariana is not likely to go bust in the near future.
More, and even worse, bad news is:
Kiziltepe;
New geophysical survey results from Kiziltepe and Kepez highlighted several new drilling targets in the proximity of known veins systems.
It is expected to define a high-grade Reserve at Kizilcukur project capable of being mined by open-pit methods and then trucked to the Kiziltepe processing plant.
Significant pushbacks at Arzu South and Arzu North are planned.
All this means that, unfortunately, Kiziltepe will continue production for considerably longer than was envisaged. Kiziltepe may well keep producing gold to 2026 and beyond.
Tavsan
Unfortunately the environmentalists lost their court case and Tavsan is well underway to commence full scale operations in 2024. Even worse it has, so far, been funded from the cash currently being generated by Zenit, Tavsan will be built using no or very little debt funding. When Tavsan starts producing 30,000 oz of gold a year the bad news is that it will be generating substantial profits and a strong cash flow from day one as it will not have to pay off loans or high interest charges.
Salinbas
Despite Salinbas only hiving a derisory 1.5 million oz gold reserve the bad news keeps piling in. There has been highly discouraging drilling results from the Salinbas Project, including the longest mineralised intercept ever recorded within the Ardala Cu-Au-Mo Porphyry of 461.8m @ 0.22% Cu + 0.23g/t Au and 155ppm Mo, it is bad enough that Ardala already has a reserve estimate of 66.4Mt @0.44 g/t Au + 0.2%Cu giving an estimated 939,000oz Au + 110,000 t Cu.. In addition, the team successfully drilled the first three holes into the Hizarliyayla prospect, located 9km to the south of Salinbas, and, unfortunately, identified an intermediate sulphidation epithermal base-metal-rich gold system.
The rest
Ariana continues to invest in Western Tethyan Resources, Venus Minerals and Asgard Metals and I am certain, that with Arianas disastrous record in finding and exploiting the reserves held in the JV, that all these projects will be just as disastrous.
Now all this news really fills the naysayers with doom, the JV might actually be in a position for the next few years to be producing about 48,000 oz of gold a year with an estimated profit of around $50 million giving Ariana a projected share of profit of about £11.5 million. Even when Kiziltepe is worked out Tavsan will still give Ariana a profit of $7 million per year for at least another seven years. Araina also says it intends to start paying dividends when Tavsan is producing a strong profit flow.
I say sell so I can me
i have just done a back of *** packet calculation of the value of aau.
venus minerals ipo puts a valuation (after ipo) of about £7.5 million so aau share valued at £2.65 million.
kiziltepe should produce 20 million oz of gold for at least three years at $1,000 profit per oz (aau have 2 years reserves but have indicated that life of mine will be extended) npv about $55 million, aau share $13 million or £10 million.
tavsan should produce 30 million oz of gold for at least 10 years at $1,000 profit per oz, say $50 million build costs still to be incurred then npv is about $162 million, aau share $38 million or £29 million.
total value kiziltepe, tavsan and venus about £41.5 million add in cash in bank gives about £50 million.
so i calculate that the real value of aau just with the projects that are fairly definite is £50 million and that does not take into account the value of salinbas and the other prospects that aau are involved with.
anyone care to give a more detailed (or accurate) valuation.
I must admit that we all think WTF at times.
From todays RNS
Stephen John Bingham now holds 57,643,000 ordinary shares with voting rights in the Company representing 5.04% of total voting rights. His previously reported position was 4.01%.
So Stephen has been busy hoovering up all the shares that have been sold at knock down prices by disillusioned Ariana shareholders. He obviously knows something and believes that there is a positive future for Ariana. I suspect that there may be a few people who have sold shares at the current low prices who might come to regret the decision in the next year or so.
I have only just picked up on this but its a good summary of where KS sees the future for Ariana.
https://www.youtube.com/watch?v=9diL7Zkmwlg&t=524s