Member Info for tedoby

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PHASE 2 in 2021 Zulu should be producing Lithium Concentrate. $80m Capex or thereabouts will be needed to build a Concentrate facility. So we should expect something like a 25% dilution to raise Capex finance.

Zulu should achieve a rate of 2m/t ROM/annum @1.06% Li2O grade quite easily and similar to it’s industry piers. That would produce 300 kts >6% Spodumene at a quality better than battery grade. With a $1.5k/t offtake agreement that would give Zulu a $450m/annum revenue. C3 costs from the BARA report should be no more than $550/t or $165m annualised . "Earnings” therefore would be $285m giving Zulu's a notional Market Cap of $2.8bn using a P/E ratio of 10 and in turn a contribution to Prems Mare Cap of $2.1bn. Prem having retained 75% ownership. That’s very much in line with Pilbara’s appraisal.

Even if Prem had say 12bn shares in issue by then Zulu would contribute roughly 13p to it's SP at current exchange rates.

PHASE 3 in 2024/2025 - Zulu could be one of the largest producing Lithium Carbonate mines from a hard rock source in the world. If not the largest. At least $500m Capex is going to be needed to build a chemical plant capable of producing 80kt's to 100kt's of Carbonate. I see most of that being funded out off WIP though with very little or no dilution or debt looking at the margins.

Projected revenue from the sale of 80kt's Carbonate should be near $1.6bn/annum and projected AIC’s costs should be around $5k/t so perhaps $400m/annum. The cost figures have come from benchmarking against Zulu's piers.

With earnings then of $1.1bn the maths tells us we're looking at a Market Cap of $10bn and therefore a contribution to Prems SP of 75p or thereabouts. I said at the beginning of this the figures would be breathtaking and I think that one certainly is! Whilst Prems notional Market Cap wouldn’t be the highest in the Lithium space most but not all of the others are miners processing the metal from solution rather than hard rock.

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It's worth reiterating that the figures I’ve arrived at for the Concentrate alternative are projected two years out and those for the Carbonate alternative are projected five years out. We could well be looking at a huge mining operation in Zulu. Perhaps the largest of its kind in the world.

The ratios of value to cost have been derived from EPS’s and there’s some rounding for ease of maths.

It's not too difficult to imagine Zulu and/or Prem coming under pressure from hostile takeover offers at or even before the point of DFS. Especially if the licenced area is increased. I've made Prem’s management aware of my concerns and asked them to do whatever they can to protect us all as much as possible and to take steps to mitigate this risk.

AIMHO & GLA genuine shareholders.

Even though I don't say it as often as I perhaps should you have my full support and thanks too Smilemore!

Although yours may appear to be a never ending battle at the moment it will change. It was good news yesterday and there's more to come.

GLA genuine shareholders

Well done NaPoM for the part you played in this.

Many thanks.

glosman FWIW I think if the KME agreement to drill Zulu was affected not only would it have been incumbent upon Prem to have said so but it would also have also put them and the Nomad breech of the AIM rules by not doing so. It being a "material" issue.

I'm not absolutely sure but I imagine two pricing levels are in the drilling agreement with KME. One if Prem have a part ownership of the equipment and one if it doesn't. It's all fairly standard stuff in supply chain contracts. There would also have been a "conversion" clause I that would enable the costs to be switched to reflect ownership from the outset. Again fairly straightforward.

In that way progress along the DFS's critical path will be unaffected.

AIMHO

The agreement reached with KME on Zulu is unaffected.

This is what I said on Momdat.

"By simple deduction it's quite apparent that Prems BOD's have little taste for further dilution at the current SP levels. I believe we'll here the HBR isn't being pursued any further and the SPA with KME is under review at the moment. Despite the scaremongering about a further placing being needed soon Prems current situation and simple maths paint a very different picture. "

I lost the end bit here it is.Sorry.

The new decline shaft is unlikely to be a straight run. Picture it as following the same profile as an external staircase on the outside of a tall building if it helps. It’s more than likely going to be to be zig-zag in longitudinal section with multiple turning points or "landings". That way the plan dimensions for the shaft may be no more than say 100m x 10m and be positioned relatively easily over the strike. In cross section the shaft will be about 4m x 2m and the total length perhaps 3km to 4km to gain access down to the 870m level and below. The total amount of material excavated to construct the shaft assuming a conversion of 4t's/cu.m in the solid I have as between 120kt's and 150kt's so perhaps 10kt's/month initially reducing to 6kt's towards the end of an 18 month construction period. As we know the grades improve at depth so perhaps starting 0.3% WO3 initially and closer to 0.7% WO3 at the 870m level.

The new shaft if dealt with this way should be cost effective and should make a substantial contribution to the WO3 delivered to the ROM pad from the other sources whilst at the same time saving on waste disposal. Even if the intersect between the shaft and the strike was just 50% it should in theory increase revenue by as much as $400k /month at today's APT price which should put the mine into a positive cash flow position in no more than four to six weeks. Several weeks in fact before the underground mine is optimised and running in a steady state.

As far as I can tell there's no impediments to prevent KME making an early start on the new shaft. The design is relatively straightforward so there's no lead in time needed for that and there's no permitting required either.

I’ve made my thoughts on this and other issues known to the company. The responses I've received from them have mostly been very positive and I hope my thoughts are of interest to some of you too.

AIMHO as usual & GLA sincere shareholders. Keep those fingers crossed!

The new decline shaft is unlikely to be a straight run. Picture it as following the same profile as an external staircase on the outside of a tall building if it helps. It’s more than likely going to be to be zig-zag in longitudinal section with multiple turning points or "landings". That way the plan dimensions for the shaft may be no more than say 100m x 10m and be positioned relatively easily over the strike. In cross section the shaft will be about 4m x 2m and the total length perhaps 3km to 4km to gain access down to the 870m level and below. The total amount of material excavated to construct the shaft assuming a conversion of 4t's/cu.m in the solid I have as between 120kt's and 150kt's so perhaps 10kt's/month initially reducing to 6kt's towards the end of an 18 month construction period. As we know the grades improve at depth so perhaps starting 0.3% WO3 initially and closer to 0.7% WO3 at the 870m level.

The new shaft if dealt wi

FWIW whilst we await news I’d just like to give my understanding on a couple of points too that may not have been made well known or seem to have been understood for whatever reason.

By simple deduction it's quite apparent that Prems BOD's have little taste for further dilution at the current SP levels. I believe we'll here the HBR isn't being pursued any further and the SPA with KME is under review at the moment. Despite the scaremongering about a further placing being needed soon Prems current situation and simple maths paint a very different picture.

On Zulu. Prem have already paid KME for the cost of mobilisation and for initial drilling. The amount agreed and paid in shares was approximately $400k eq. To suggest that the $400k was to raise cash that can somehow be used to pay for Prems own costs or that we’re going to need another placing to start drilling is patently wrong.

Prem received no money whatsoever in the transaction. So how could any be used to cover Prems other costs as propositioned by some. RNS 1152R issued on 26th February was explicit and left no room for misinterpretation. Viz:- “the Company has today issued 212,413,793 new Ordinary Shares....at an issue price of 0.145p per share to KME as pre-payment for mobilisation and drilling”.

With the cost of mobilisation is likely to be no more than $20k and the drilling somewhere in the region of $45/m to $50/m if considered along with the total drilling needed being around 20,000m most of the fundamentals in the drilling cost exercise are fairly easy to equate. There are a few extraneous pieces missing in the cost jig-saw such as borehole drilling and processing the assay results together with fees but I don't see those being costs landing early in the DFS process.

It’s also not difficult to appreciate that mobilisation and drilling costs will have been agreed with KME beforehand. Some of you more experienced than I in supply chain management will now how it's dealt with in contractual terms I'm sure. But to suggest otherwise is naive.

Turning to RHA I'm probably stating the obvious I know but it’s proven to be a millstone round Prems neck for several years now. It's been an extremely difficult and costly mine to manage not helped by what's turned out to be a prolonged and deep price route.

Most genuine investors with a much better appreciation of RHA’s history than me so I see little point in raking over those old coals again. Mistakes have undoubtedly been made and they’ve been laid bare many times for all to see. As far as I can tell Prems BOD’s recognise those mistakes too and are not in denial for their part.

The BARA report and Technical Study as RNS’d last October was targeted primarily on the underground mine and very little else. It was undertaken to evaluate the options for re-establishing production and to provide an independent assessment. It’s scope excluded the open pit and the tailings. Neither does the study review LOM economics t

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Prior to receipt of the Governments letter received late last December Prem had decided to restart the mine by focussing on the underground workings where it left off over a year ago. The option of constructing a new decline shaft although preferred was not under consideration at that time. Receipt of the Government's letter appears to have opened up the options completely and reversed that decision now.

The $6m funding will be transformational for both RHA and Prem in very many ways. Most significantly it will be a demonstration of the Government's full support for both the mine and Prem at all levels political and financial.
It will also enable Prem to calculate an up to date valuation for RHA and remove the impairment Prem currently carries to name but two.

What I’m now seeing is a shareholder split. There are those that believe that government funding will almost certainly come although the exact timing is unknown. Conversely there are those that will believe it when they see it happen. A “cry wolf” approach to it all I guess. I can totally respect that view particularly when their comments are sincere and honest. It’s perfectly understandable.

There may even be a third group. There’s a small number of posters that misrepresent the facts. They do their utmost to denigrate the stock at every opportunity whilst at the same time would have us believe they’re sincere shareholders. Whether they’re acting individually or in concert who knows. But evidence that it's going on quite strong

For my part I believe the Government intend to enter into a revised Shareholder Agreement and invest $6m in RHA quite soon now. I personally don’t need to see the Governments promissory letters to be convinced they exist and their offer is genuine. I believe what the RNS’s are telling us is true. Prem are prevented from disclosing the letters by law and wouldn’t be allowed to do so by the Nomad even if they wanted to. There’s enough professional third parties involved in the reporting process that have a responsibility for me to believe the letters exist and say what we've been told without me having to see them.

I would also like to clarify a point. It isn't the Government that's secured a proposed investment of $6 million to invest in RHA . Therefore I can see no reason whatsoever to conclude there’s a third party that may be lending the Government the money and who may want their interest recognised in Prem as a third party. Prem have now RNS's that the MOI have now been assigned the $6m specifically for investment in RHA so I'm not sure how that could be made any clearer.

From a cash perspective Prem should begin to receive an income from RHA both as the Manager under The Management Agreement and the owner of the plant under The Rental Agreement. The income to should be triggered by the re-start and effectively reverse the current Care & Maintenance cost burden. I’m not exactly sure how much the combined income to Prem

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The timing of any finance payments to be made by RHA against Prems loan will depend how it’s dealt with under The Loan Agreement. If the repayments are recognised as an steady cost accruing after RHA’s AISC’s then payments should start on the mine reopening and made on a regular basis say monthly. I have this as the most likely situation and payments could be around $250k to $350k/month over the next five to seven years or so.

If on the other hand in the unlikely case the loan repayments can only be paid out of net profits then clearly they're not going to start until the mine reaches that position. In this case however payments are likely to be made on an ad-hoc basis such that the mine is left in a neutral profit/loss position at the end of each of the accounting periods. Either way Prem should anticipate an income either from regular payments or out of positive cash flow from within a few months if not sooner from the restart of operations.

It’s common knowledge that the mine will begin to produce WO3 from its three well known sources to make up the total ROM. We know that the underground mine will take a couple of months to ramp up to its steady state of around 6kt’s/month of ore delivered to the ROM pad and we probably can also imagine WO3 from the pit and the material from the tailings complimenting its delivery virtually from day one. There may also be some material from dumps and temporary stockpiles too that can be utilised but the quality of material in those is largely unknown and difficult to quantify.

But there’s another very likely source of WO3 production that's not well so well known that could substantially increase production. It would come from the material excavated to construct the new decline shaft. Prem has very good idea of the shape of the mineralisation and it makes perfect sense to position the new shaft in the mineralised strike where the grades are the highest and deliver the WO3 excavated to ROM pad as well. There is a “trade off” situation as some of the ore above and below the decline shaft may have to be sacrificed. But nevertheless from the maths I have the finances look extremely attractive to me.

The new decline shaft is unlikely to be a straight run. Picture it as following the same profile as an external staircase on the outside of a tall building if it helps. It’s more than likely going to be to be zig-zag in longitudinal section with multiple turning points or "landings". That way the plan dimensions for the shaft may be no more than say 100m x 10m and be positioned relatively easily over the strike. In cross section the shaft will be about 4m x 2m and the total length perhaps 3km to 4km to gain access down to the 870m level and below. The total amount of material excavated to construct the shaft assuming a conversion of 4t's/cu.m in the solid I have as between 120kt's and 150kt's so perhaps 10kt's/month initially reducing to 6kt's towards the end of an 18 month construction perio

Great research NaPoM. Well done and thank you.

Looks like the SA is heading towards the "out tray" if it isn't already in it!

CLA genuine shareholders.

Thanks for the reminders today NaPom.
All very valid points that some posters conspicuously choose to ignore and others like me find easy to forget.

Just to add on a cash point. Prem should begin to receive an income from RHA both as the Manager under The Management Agreement and the owner of the plant under The Rental Agreement

The income to Prem should be triggered by the re-start and effectively reverse the current c & m cost burden.The numbers under the Agreements are however undisclosed as far as I'm aware.

GLA genuine shareholders.

Thanks Ken. Much appreciated.

I've been invested in Glencore for years but I hardly ever post on it.

Guys why is there no discussion on the " Canola Crackdown"?

Is it significant?

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Thanks to everyone for their contribution and posts today. They all make very interesting reading.

Smilemore I would like to thank you especially. You're leadership skills shine through almost as much as your tenacity and courtesy to others. You have my complete respect.

I haven't voted yet. But I'd just like going to throw a spanner in the works and I’d like to apologise upfront to those that may take exception to it it as some undoubtedly will.

As a backdrop we've been taken into provisional agreements on both KME and HBR and the Government as a third party will have an indirect but vested interest and is sure to be watching. We need to be mindful that withdrawing completely from these agreements without just cause could have consequences that as outsiders we may not be aware of. Without knowing more I'd say the deals are inextricably linked and they may well have strong political connotations too. That's the first thing to say.

Secondly I can't emphasise enough how keen I am to see changes to Prems management. If we don't change I very much doubt we have the ability to make a success of RHA but moreover Zulu. The skills just aren't there and if we're not careful and reject these latest proposals we're going to be left wanting. I think we really do need to be mindful of this too.

The two aspects for me are far more important than the fundamentals maily being discussedtoday.

Now here's the spanner I mentioned. I don't like what I've been seeing in Circum over the last two years. I've not been a fan at all and it's an increasing concern to me.

If Circum was attractive it wouldn't have taken anywhere near the length of time it has to move to a Corporate Event of some kind. Why would it? Circum has had its mining licence for two years now and seem to have achieved very little since and a simple deduction tells me it doesn't have great appeal.

MOP & SOP prices moved up slightly from their lowest about nine months ago but since then the prices have stagnated and plateaued. At the current prices miners continuing to struggle to show a profit. That said SOP continues to command a premium over MOP of around $200/t I believe and that does help the Danakil appraisal.

As with all low priced commodities logistics and shipping costs play a very important part. But never more so than Circums case as it intends to ship from its mine to port by road for several years. Whilst that's not going to be cheap it could be the only real option.

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Circums original DFS told us it planned to ship 5mt's /annum of potash by road to the port at some 600km round trip. That of course was nonsense. Firstly on the physical logistics of it would have taken far too many deliveries even if "road trains" were used. And secondly but most significantly the costs.

We see now a radical change to the original plan and now the intention is to ship 750kt's/annum by road though in Phase 1. That may well resolve the logistics but it does nothing to help the costs. The value/costs are important because Circums plan it fund it's ramp up to 3.5mt's /annum within two years financed out of WIP. At 750kt’s/annum I would suggest Circum will be making a loss unfortunately. It’s shipping costs and it’s finance payments are going to be far too high even if "road trains" were used and production was 100% SOP which I doubt it will be.

So let's imagine that Circum go the IPO route and further to the debt finance of $750m it's been offered it needs to raise a further $350m in equity to fund it's initial Capex. The effect of that will be to dilute Prems holding from just over 5% to nearer 3% as a guess. But that's not going to be the end of it in my view. There is likely to be more to come.

For Circum to ramp up to its phase 3 target of 3.5mt's /annum and beyond it's going to have to ship by rail at some point. To do that it's undoubtedly going to need to more finance. I'm aware that Italy will be financing Eritrea's network but surely shipping across that Country would be risky even though tensions have apparently eased.

Overall Circum doesn't appear be in a good place to me. Covering the cost of $750m debt finance for Phase 1 isn't going to be easy from a low gear start in a difficult market let alone generate a profit sufficient to pay it's ambitious ramp up costs.

Producing 3 5mt's/annum in a steady state may bring in say $750m revenue after off-takers commissions. But Danakils profitability will always be be low for many years because of the markets it's in and its level of debt. It could be 1bn or more by then if they manage to raise it at all that is.

My calculations suggest that Prem may well face more dilution and could easily end up with a holding of no more that 2% of Circum when it becomes profitable. So Prem might enjoy a $15m to $20m contribution to its Market Cap in say 5 years time and that's if it all works out well.

In the other hand the HBR deal could contribute over $125m to Prems MC in a much shorter period and satisfy Prems the more important needs of restructuring and so on .

If what I'm saying is anywhere near right it could be better to liquidate our holding in Circum if only in part now and use the money to finance the KME & HBR deals and Zulu. Surely if eight funds are interested in the equity there’s a sellers market out there.

If it all boils down to either holding on to our Circum shares or completing the deals with KME & HBR I know which I prefer an

Ha ha ha ha!

I couldn't agree more CF!

One of the reasons I do my best to put numbers to it all is it then leads to a far more important piece and question that shareholders should be asking in my view.

Which is " what do we need to do to make it happen?"

Thanks as always CF73.

Good link and great research!

Zulu's potential is simply breathtaking. The lithium there has a low iron content making it one of the highest quality hard rock resources. I've no doubt it will be very sought after come the day!

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Smilemore you asked for my thoughts on Zulu. So after reading this you may want to think twice before asking me to do the like again. Ha ha!

Most genuine shareholders believe that Zulu could be really good. But just how good isn't easy to say or estimate. Well to begin with we have Zulu's Scoping Study or EPS if you prefer to help us. In that we’re given some reference pointers that are extremely useful. But although the EPS lays a marker in sand per se it gives very little guidance on scale and therefore potential which is what investors are also keen to see and naturally interested in.

What BARA have done is prepare a statement of fact on a fully compliant but relatively short length of just one known lithium strike on the licensed area. That's all they're allowed to do and remitted to in any event. Consultants like BARA not allowed to speculate. They have to be “mechanical” and deal with what they're asked to do and allowed to. So BARA put together their excellent report and built a business model around what they considered. That's the extent of it!

But as I say their appraisal and model has been based upon just 15% of one known strike. It’s a small fraction of what's been identified so far on the current licensed area and Zulu’s potential. Their business model must therefore be minimalist and read in that light. In just about every case mining reserves and resources increase over the LOM and plans changes. That will apply nevermore so than in Zulu’s case I'm convinced and that shouldn't be lost sight of.

So Prem took the EPS and from it estimated an overall resource and made their estimate known to shareholders saying it was for guidance only. But what it does is give an indication of scale much better than the EPS. It's based upon drill results and shouldn't be considered as simply as Prems guess. It’s much more accurate and scientific than that.

If anything Prems estimate is more likely to be conservative than not. Latterly in the drilling campaign Prem undertook further drilling to delineate newly discovered strikes that appeared to run on beyond the site boundaries. I believe those findings are just drillers notes so far and are neither disclosed of included in their estimate.

To get an idea of scale here's some benchmarking and my calculations. If I'm near right they’re simply breathtaking!