Roundtable Discussion; The Future of Mineral Sands. Watch the video here.
Sorry just to clarify "multipurpose drilling"
As I understand it there will be three types of drilling needed for the DFS. They are core drilling, ecological drilling and geotechnical drilling. There will be an overlap of at least two of these disciplines I believe and in some cases possibly all three.
GLA
Acker - “multipurpose drilling”
Some of the core drill holes can be also used for drilling the ecological holes too I believe. So there's a overlap of both activities.
But there's also economies to be had in establishing common hard access routes to and hardstandings/working platforms at the drill locations for both types of rigs.
Hence the term “multipurpose drilling”
Not sure if this helps and having read the RNS I have no hesitation in giving my opinion on this stock being a "strong buy".
AIMHO
I'm aligned with your comments Snowking.
I think the outlook for battery grade Spodumene (6%) has never been more bullish and perhaps $1500/t for Zulu's come the day might even be conservative.
Just my take.
Nice post Snowking and a very useful update.
Two things to mention that will set Zulu above its peers abs they are.
Firstly Zulu's Spodumene has been tested to show it's higher than 7% grade. It should therefore be more attractive and comand a premium to the normal market prices.
And secondly Zulu’s costs should be less than its competitors for two reasons. Zulu will have Tantalum in its Concentrate.we know from the Scoping Sudy Ta is present at grades of up to 200 ppm. It's much higher value will be taken as a cost cedit collected at the Convertor off the mine site whatever the Concentrate is shipped to.
Also unlike it's competitors Zulu's Pegmatite contains very little iron. This means the production process will not need a demagnetising line to remove any Fe .
These two metrics should make quite a difference in any codt appraisal .
AIMHO
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Reabold Resources plc (RBD) is an investor in upstream oil and gas projects with several as yet under-developed assets in its portfolio. But there are just two taking centre stage at the moment.
Potentially the larger of the two assets is an oil and gas opportunity at West Newton in Yorkshire. RBD has a holding in excess of 56% in this one. The other one being a low risk offshore gas opportunity approximately 80km NW of the Shetland Islands known as Victory. RBD now has upscaled its holding to 49.99% in the project via a share swap a couple of weeks ago.
Notably there’s been some selling since the transaction. But I think that’s understandable given the new shareholders in Corallian, the majority shareholder on Victory and a private company would have been given a route to the market and able to liquidate some of their holdings.
I don't want to completely lose sight of connection between these two projects given there's newsflow expected to start imminently on both. But for now I'd like just to make a bull investment case for the one we should be receiving the news on first. That’s Victory.
A Competent Persons Report exists on Victory but that is currently under review. The new one being prepared is thought to be substantially to the upside. I doubt we’ll have to wait very much longer now to find out if that’s the case as it’s due this month.
RBD intends to sell and liquidate Victory later this year or in the early part of 2022. They've made that known which is perhaps the main reason why a new CPR has been called for.
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There are many methods that can be used to value Victory for the sale or indeed any of the assets in RBD’s portfolio. Victorys’ valuation (NPV10) is currently stated in it’s presentation to be around £146m. That’s based upon a gas price of 50p/therm ( link attached). According to Staista the forecast price of gas for the relevant period we’re looking at however is more likely to be around 38p/therm (link attached). If the lower rate was used the NPV would be nearer £111m all other things being equal.
https://www.google.co.uk/url?sa=t&rct=j&q=&esrc=s&source=web&cd=&cad=rja&uact=8&ved=2ahUKEwiIjcmXmeDwAhXs1uAKHQaQALgQFjAJegQIAhAD&url=https%3A%2F%2Fwww.statista.com%2Fstatistics%2F374970%2Funited-kingdom-uk-gas-price-forecast%2F&usg=AOvVaw35JlqX5aaVyu4oi7YpmhYx
https://reabold.com/investor-relations/reports-and-presentations/
But I also recognise the method posted on bb’s sometimes based on an earnings metric. It's simple to use which makes it one of my favourites. So on that basis the current CPR tells us the flow rate from the field should be approximately 12000 (rounded) bopde when Victory is operating in it’s optimised state in 2024/2025 and that the field's life expectancy is approximately 8years.
Based on the CPR then I think it's reasonable to assume the annual profit to be 12,000 bopde x $30/bo profit x 365 days when it's fully operational. Which give us $131.4m/annum
I also think a p/e of 10 looks reasonable given the anticipated life of the field and it's location.So if that’s right that would give Victory a notional Market Cap of $1314.0m or £957.8m at the current exchange rate
Also I think a reasonable Discounted Cash Flow factor from 2025 I should be around x 40% for the three to four years anticipated lead into production given the high annual ROI and other business fundamentals . That would give us a present day value of £957.8m x 40% = £382.9m
We also know that RBD now owns 49.99% of Victory which puts RBD’s value at approximately £191.5m (£382.9m x 50%)
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And finally assuming RBD has around 9bn Shares In Issue we get to £191.5m ÷ 9bn to give us 2.12p per share.
Amongst other valuation models generally used, most common is one that benchmarks the opportunity against similar ones in the same space and time. Those producing gas that is.This can be the most appropriate. But what’s coming out of these assessments is the NPV given in the current CPR looks skinny and perhaps that’s behind the reason for a new one. We’re about to find out if I’m right in a fews days.
Professional Analysts or rather the better ones will use several methods and then take a weighted average. But of course the real value of anything material will be what an offeree is prepared to pay for it. In other words more of a commercial approach taking expert valuations as references.
A commercial offer from a suitor may be more than or less than their respective valuers assessments. As often happens an initial offer may be less but is likely not to be the only one the offeror may make.
So overall in a sale situation I think a suitor might look for as much as a 33.3% discount to a reasonable valuations by qualified experts. If that's right I believe we're looking at an acceptable offer of around 1.35p to1.50p per share as things stand. At the time of writing RBD’s SP is just 0.70p! That’s a demonstration that Victory could possibly have a sale value of RBD’s current Market Cap to the upside of 2x in it’s own right without counting any of RBD’s other assets.
If the new CPR gives us a bigger resource as the Corallian & RBD the JV partners believe then we may have to reconsider the metrics I’ve used in the equation, not least of all the p/e ratio. It seems the owners are basing their judgement on new found information if they believe the current CPR is too conservative. I very much doubt they’re simply guessing. A clue lies on page four of the presentation on Victory, RBD states that "SLR has been appointed and an interim CPR of the resource range completed". That was in November 2020. Although the Interim CPR was never published it’s evident the information it contained must have indicated notably better metrics. Hence the new CPR having been commissioned.
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There's a direct correlation between a suitable p/e ratio and the life of the field. So for instance if the life is more like 15 years that would suggest the p/e should be more like15 so quite a difference. For now that would be my best guess and if I'm right that would put a reasonable selling price for RBD’s shares at between1.95p and 2.25p.
Under the AIM rules one part of me is anticipating notice of the disposal of Victory within two months of the revised CPR and shareholders approval sought as appropriate under the class test rules. One part of me thinks that could well be the next update we hear on Victory and I very much doubt it’s far away and it’s needed as the first step to enable RBD to monetise the asset in Q4 this year or the early part of 2022 which is it’s intention.
Zooming out however the other part of me is thinking a takeover of RBD could possibly be on the cards. I say that believing there’s a potential suitor is lurking and very interested in both Victory and West Newton and it seems too much of a coincidence that two CPR’s on the projects under interest are running at the same time. It makes sense for both any potential buyer and RBD to wait until both CPR's are out.
I’ve rounded some of the metrics used in the calculations for ease of math.
AIMHO
Guys this is an extract from the recent update on West Newton. Can I ask for an opinion please as to whether the 12% and 15% is good bad or indifferent please? Opinions and/or any references would be really helpful and greatly appreciated.
GLA
"Various thin section images taken from core plugs obtained from the West Newton B-1Z well show porosity throughout the core with the better samples exhibiting porosities of between 12% and 15%"
I couldn't agree more mwhite22!
This news could and should be good for ARB's given it's lead position as a green energy user. Viz;-
We agree. Mining with fossil fuels - espically coal - isn't cool.
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A good buying opportunity may well present itself this morning and if it does I'll be near the front of the queue ready!
GLA
Guys one of the reasons the price was drifting yesterday could have been that Spreadex changed its rules for spread betting.
Spreadex now need 100% ie. they are not offering any spread. Investors must have had cash calls to address the change 10am by this Friday and some may have decided to liquidate stock to raise the amount.
Investors were given a short 8 days notice last Thursday and some no doubt some would have been placed in a forced sell position if they weren’t in a position to pay.
A similar thing happened a few months ago wit another provider and that too affected the markets as some of you may recall.
Onwards and upwards guys. ARB’s fundamental metrics are improving by the day and the stock looks now to be extremely oversold in my view!
AIMHO
The drop today was caused by Yellen talking of higher interest rates!
https://www.google.co.uk/url?sa=t&rct=j&q=&esrc=s&source=web&cd=&cad=rja&uact=8&ved=2ahUKEwiQgqqA17DwAhVklFwKHZ5CAN8QxfQBMAB6BAgEEAM&url=https%3A%2F%2Fwww.investors.com%2Fmarket-trend%2Fstock-market-today%2Fdow-jones-slides-tech-stocks-dive-as-apple-sells-off-tesla-stock-breaks-key-support-level%2F&usg=AOvVaw2LeMqywmQwoBi7VFGeevdI
A increase in HODL of 172 coins in the month. Nice!
Not sure what ARB's Hashrate is at the moment. But MARA who are on NASDAQ who made a loss last year mined roughly the same number of coins and theirs was over 1.3 EH for April.
MARA has a Market Cap of over $3bn. That's three times higher than ARB's yet ARB are performing better with far better prospects! Bring on NASDAQ for the re-rate!
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