Member Info for tedoby

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If the licensed area stays unaltered and we take Prems highest target resource we get 160mt's @1.06% Li2O. That’s been derived from the known and measured strike used in the EPS and extrapolated on a straightforward pro-rata basis. As I say there were some further strikes that were identified towards the end of the drilling campaign too and drilling carried out purposely to delineate those strikes up to the boundaries.

So if we assume the 160mt's is about right. LCE prices are currently about $10.5k/t and the conversion factor to get from LCE to Li2O is x 2.473. So for ease of maths let's say the current Li2O price is $25k/t. That would give Zulu an “in-ground” value of 160m x 1.06% x $25k which is $42.4bn. It’s worth reiterating as I've used it later. $42.4bn!

The largest hard rock lithium resource in the world is in the DRC and the resource there was recently increased to over 400mt's @1.66% Li2O giving it an ”in ground” value of $166bn. Some 4x higher in value than Zulu’s. Zulu is often benchmarked against Pilbara's mine in Australia too given it's a similar size with similar grades. But it's three years or so ahead of Zulu and is in production now. It's resource is 216mt's @ 1.13% Li2O or something like that. So it's “in ground” value is $61bn just less than 50% higher value than Zulu's.

These mines are massive and highly profitable by any measure. Pilbara's original mining plan was to produce over 300kt’s of battery grade Spodumene from a ROM of 2mt's/annum giving the mine a LOM of 100 years. But that's now been changed. Pilbara have doubled the ROM to 4mt's/annum and halved the LOM to 50 years to catch the current market outlook I presume.

Now here's the sting in the tail. Well for other miners at least. Prems EPO application increases Zulu's mining area from 350ha currently under license to over 22,000ha. That’s 57 x bigger!

So if you imagine the resource continues at the same density across the EPO area applied for it would give Zulu an “in ground” value of over $2.4 trillion which is 15 times higher in value than the largest mine of it's kind in the world. 15 x higher!!!

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Some like to value mines based on the value “in-ground“. It’s a quick and easy way and it’s a method adopted quite often. We saw GR do it on HBR in the recent Webinar. He quoted $22/ oz Au which is 1.5% or thereabouts of the projects resource. Most say between 1% & 2% is appropriate. So what GR did fits.

I'm not a fan of this valuation method to be honest. There's better ways to value Zulu. Far better. However now I've listed the two “in ground “ values it's just worth saying that using a factor of 1.5% Zulu's Market Cap on its current area would be almost $640m which suggests a SP contribution of 4p to 5p or thereabouts to Prem. But on its larger area Prems value would be many multiples of that. But whether it would be 57 times more on it’s larger area is questionable in my mind.

Apparently there's been two objections to Prems EPO application. One on economic grounds which I believe was rejected without much ado. The other was a "blanket" application that covered a much larger area that overlapped Prems. But it was made by someone that has no connections to Zimbabwe and never worked there.. A “try on” put simply and because of that it’s been said it too has little chance of full consideration.

As your probably aware in mining increasing the resource and/or extending the LOM has little impact on Market Caps and Share Prices in most cases. That's understandable given profitability usually remains unchanged. If the production level is unaltered it simply means the mine stays operational longer. So no big deal really especially when the LOM is reasonably long at its shortest. However I believe Zulu's situation couldn't be more different.

As I see it if the licence area remains unchanged we're unlikely to see Zulu plan to produce Lithium Carbonate from a chemical plant on site. Due to current site area constraints if Zulu want to produce Lithium Carbonate its more than likely going to have to opt for using the shared facility in Bulawayo under construction at the moment and that defeats the object to a degree.

On the other hand if the licence area increases by a reasonable margin in the current EPO it could be cost effective for Zulu to build its own dedicated chemical plant adjacent to mining operations and ship the Lithium in LCE form.

The difference between the appraisals of the two options is huge particularly in financial terms. One would be good but the other could be exceptional.Truly exceptional if my understanding is anywhere near right that is.

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For the purposes here I'm going to wear my positive hat and assume Prems EPO application is successful at least in part and that the new enlarged area will be conducive to Carbonate production at the mine site. I'm also going to predict Lithium prices at the point of production a two years out in the case of Concentrate and four to five years out in the case of Carbonate. I’ve been conservative but based my views on increases in market demand and forecasts published by experts.

So please bear those two things in mind. As I say I’ve tried to be conservative but in my view they’re factors that shouldn't be ignored and left unconsidered

Battery grade Spodumene is currently selling through offtakers at around $900/t & $1000/t. The current market price for Lithium Carbonate Equivalent on the other hand is around $10,500/t so perhaps through offtakers $7000/t some 7 x higher than >6% Spodumene Concentrate. That’s reflected in the BARA report too. So projected off takers prices then say $2k/t for >6% Spodumene and $20k/t for LCE.

If I count the Petalite and Tantalum I'll ramble on forever and it's going to make the maths quite difficult to follow. So I've assumed they cancel each other out and ignored them. I think it's a reasonable assumption.

I've also used Zulu’s EPS and Prospects Arcadia Mine in Zimbabwe where I can for references to make my statements and calculations more factual and less “dreamy”. There are some key non-disclosures on their offtake agreements in Prospects presentations which is a shame but understandable.

Prospect haven't long entered into a seven year offtake agreement with Sinomine a Chinese offtaker on a build and transfer basis. Sinomine have agreed to design and build the mine but then transfer ownership of it to Prospect in a share swap arrangement of $10m for 10% stake and an offtake agreement for 70% of the Lithium Concentrate produced for the next seven years. Prospect have a say in the mines design and take ownership of it when it's built. They pay for it’s cost then over a three year payback period I believe. It sounds a good arrangement but Sinomines payment rates under the agreement are undisclosed so I can’t be entirely sure.

Now here's an interesting part. Prospect have the right under the agreement to divert up to 50% of their Concentrate at any time to an owned Carbonate plant. That could be a future step change for them given they've got the room on site. Their licensed area is 4x the current size of Zulu’s.

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Arcadia are forecasting to start production within a year from a “spade in the ground” which is very quick especially considering the climatic conditions. They intend to produce 200 kt's/annum of Lithium Concentrate initially but bias more towards Petalite than Spodumene. Zulu should be capable of producing a little more overall and weighting will be more in favour of the higher value Spodumene I believe.

The Arcadia mine in Zimbabwe is said to be one of the largest hard rock Lithium mines in the world. At 0.2% cut off I think they have a resource of about 75mt's at similar grades to Prem. To put that into perspective Zulu has an assessed but well founded target of twice that! That's just on its current licensed area. Like all appraisals logistics must be considered. It will be the pinch point for Zulu in my view. I doubt we will be able to ship more than 250kt's to 300kt's/annum of by road to Bulawayo.

So with my positive hat on I like to imagine Zulu in 3 phases. Viz:-

Phase 1 DFS. I think Zulu could command a $100m to $150m Market Cap at this stage or more subject to reasonable fundamentals which I'm confident we'll see. If there are offers from suitors at this point Zulu’s value could be more. Substantially more and I see that as a real possibility.

I've derived the basic value from Prospects deal with Sinomine where it was given a similar value in the same time & space. So if we have say Prem has10bn shares in issue then we get to a 1p share price contribution to Prem. Fairly straightforward.

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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% loss of equity 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 in the metric and in turn a contribution to Prems Mare Cap of $2.1bn. Prem having retained 75% ownership.

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 profit margins.

Projected revenue from the sale of 80kt's Carbonate should be near $1.6bn/annum and projected C3 costs should be around $5k/t so perhaps $400m/annum. The cost figures have come from benchmarkig agaist what would be 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 that notional Market Cap isn't the highest in the space most but not all of the others are miners processing the lithium from solution rather than hard rock.

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 ratio of values to costs has been derived from the EPS and there’s some rounding for ease of maths.

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

There is a way of giving Prems BOD’s the same powers as AIM’s takeover Panel through amendments to Prems Articles Association I believe and If I'm right that could help thawt unwanted approaches considerably.

Prem are currently mobilising the drill rigs on site to begin the new campaign. Of the amount of $400k raised by the recent placing for the work no more than $20k of that should be allocated to the mobilisation costs in my view. The hard access routes are there in the main and it's just the hard-standings for the rigs that need to be
constructed. Of the $380k remaining if the assay work is as much as $80 I'd be surprised. We're then left with $300k for drilling and the drill rate through KME is about $50/m. So 600m of drilling then and perhaps 25% of the total needed. That should tell us we have roughly three months before further cash is required.

And finally I believe we need to give the HBR deal very serious consideration. I have a feeling Zulu is linked both the new proposals in many ways and the last thing we want is to jeopardise it

I hope some of my thoughts are of interest. Any Constructive comments/suggested amendments are welcome. But please keep any disingenuous criticism and discourtesy close.

AIMHO

GLA all genuine shareholders.

Thumbs -up!

Thumbs -up!

Smilemore your post earlier has the most ??I've seen.

That must mean much more than words!

I'm with CF73 on his post too.

You'll know who to chat with and who not to now if you decide to change you're mind and there would be no disgrace in doing that. There are far more that would like you to continue to post your views on here than those that don't.

The ones that say their genuine shareholders but denigrate the stock at every turn day in and day out obviously aren't and you could always filter them if it would help.

All the best Smilemore whatever you decide.

Smilemore. I'm wholeheartedly with Snowking on that!

Smilemore thanks for your ode. It's excellent.

It's made me do exactly that in fact - smile more!

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FWIW here are my thoughts again on the HB opportunity. My post is very similar to the one I posted before but not exactly the same. My understanding has improved just a little since then.

Honey Badger has two gold projects that fall within the deal Prem is being offered and is considering. One being labelled the “Ran Mine” and the other the “Option” for now at least.

The “Option” is over a nearby mining lease which, has historically supplied high grade ore from existing underground shafts to the previous owners nearby gold facility. The previous owners declared an internal, non-compliant resource target greater than 500,000 ounces at a grade of 4.1 g/t Au. I know no other details so I'm guessing ROM might have been around 100t’s to 150t’s/annum via the shafts which if right would have produced roughly 15k oz’s Au. So revenue at today's prices would have been in the region of $20m. Cost information unfortunately is undisclosed.

The Ran Mine has two mining locations under its current licensed area which it plans to bring back into production as quickly as possible. Ran & Fishpond one is called and Kimberley the other.

Both locations were operational at different times during the last century. Ran & Fishpond between about 1925 and 1970 during which time it produced 2.3m grams Au at an average grade of 6.6g/t and Kimberley between about 1905 and 1990 during which it produced 6.5 m grams Au at an average grade of 7.0g/t by the looks of things. So it appears 8.8m grams or 260k oz’s Au was produced overall.

There is a JORC resource of 535k oz’s Au at just 2.1g/t and 0.33% Cu for the mine. The current licensed area is 188Ha and a further 108Ha is under application for new tailings and infrastructure improvements we’re told. Even though the current resource is well defined over the two mining locations further and extensive drilling is also planned but over a much larger area.

The combined target resource for the Ran & Option mines is a very attractive 2m oz’s although the split is not given. Regardless if the total is anywhere near right that would give the projects roughly a 40 year LOM.

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The Ran mines are ready for open pit development and processing in the short term. It's suitable for underground mining too where the grades are ever likely to be much higher as suggested by the historic records. The use of a third party off site sulphide treatment plant will be made available in the short term to facilitate early production whilst a new facility is being constructed on site appears to be an integral part of the start up plan.

Commercial Production for the gold is targeted to be achieved within nine months to twelve months from a spade in the ground start and from then on the mine should start to become profitable and throw off positive cash to its owners.

Commercial Production for the copper will run a few months behind I think. The plant for the separate process exists but needs to be relocated to a new site and upgraded slightly to bring it up to date and optimise.

The ramp up to full and steady state production is said to be achievable within two years from the start which is relatively quick. At that stage target annual production is forecast to be be 36k oz’s Au & 1300t’s Cu.

The Au will more than likely be produced in Dore bars shipped for further refining and the Cu will be shipped in around 6kt's of 23% in concentrate form for treatment at a designated smelter. So logistics shouldn't be a problem at all. There's sure to be offtake agreements needed to be put in place which is no bad thing. Offtaker finance may come in handy is my line of thinking here. They’re known to offer very attractive rates at just a couple % points above Libor.

C3 costs or AIC’s at the Ran mine are forecast to be a low $750/oz Au due not only to there being no debt but also the physical shape of the ore bodies resulting low strip ratios and mining costs etc I imagine. The skills needed are also in place and there's a large workforce available locally in Bindura that would provide the necessary semi-skilled and unskilled labour and that surely would be a bonus point in the Government's eyes.

So a “fag-packet” financial appraisal for the Ran mine indicates that with Cu in the mix at 1300t’s/annum at 0.33% grade the increase from the price of gold to the all important “gold equivalent” price should be about 20% with the Cu price being $7000/t currently.

Therefore at today's prices Revenue should be 36k oz’s @ $1580/oz AuEq = $57m/annum.

C3 Costs should be 36k oz’s @ $750/oz =$27m/annum

Net Profit should be in the region of $30m or £24m/annum at today's exchange rates.

So a very attractive net profit of over 50% then. Assuming from there that a P/E ratio of 10 is reasonable in an earning metric assessment that would give HB’s Ran mine a notional Market Cap of £240m in its own right.

I could imagine the “Other” project producing a further net profit of at least $10m/annum So again another £80m notional Market Cap for that one too. Making a total Market Cap of £320m for the two.

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My guess is that Prem might have 10bn shares in issue at that stage and again assuming that's about right HB would give Prem a contribution to its SP of roughly 1.6p in a 50/50 split j.v. in two years time.

Working back from that in theory there's no reason why the opportunity shouldn’t add at least 0.30p to Prems SP of entering into an a formal agreement in less than three months from now in my view.

Also on this basis at the point of Commercial Production of gold at around Christmas time or just after we could be looking at close to a 1p contribution to Prems SP from the projects at that stage.

I’m not sure if any of this analysis helps. But for me the diversification factor and risk mitigation the opportunity has for Prem are equally if not more important than financial fundamentals such as these as attractive as they appear. Not to mention this opportunity will undoubtedly have political connotations too and do us no harm whatsoever with the new Government. They really must be regarded in the decision process.

But transcending all I've said the opportunity will give Prem the chance to restructure and inject new skills at all levels. Skills that we currently lack and we desperately need if we're to monetise Zulu - for me Prems jewel in the crown and by a long way. Prem will be left wanting if we don't do this.

As much as anyone I'm against huge dilution to service this at the current SP levels. Like most of us I've had more than enough of that!

But the fact is we don't have to do it with heavy dilution when there are far better ways in my view. I've made my objections of heavy dilution known and if you're aligned with me in some ways I suggest you do the same. However I do accept KME and HB will have their needs to in the deal and they as the other parties must be given due respect.

AIMHO as usual.

GLA genuine holders

"the Ministry has secured a proposed investment of US$6 million investment into RHA Tungsten (Private) Limited ("RHA"

"the Ministry has secured" ......from the Government? ?

IQ157 It must be the way you tell em'! "99 and three quarter % guaranteed" Ha ha ha.

Thanks for the constructive comments CF73.

I'm personally not deflated in the slightest by the "Briefing" either. It's mis-representative. To compare miners with resources at an EPS stage with those at a DRS stage is naive and makes the "Briefing" virtually worthless.

As you rightly say CF Zulu's potential to increase its resource is very high and many times that stated in it's Scoping Study. Conversely I the others miners will have a very low potential which is a very significant point completely missed by the analyst. Perhaps intentionally given he's a vested interest in one.

Take for example AVZ Minerals. It has the largest hard rock resource in the world at it's jointly owned mine in the DRC. It announced a 54.1% increase in it's resource covering it's licences area last December. So any future increases there are likely to be modest by comparison to Zulu.

GLA genuine shareholders.

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Here’s my thoughts on RHA as each day takes us closer to the Government's sign off. For me now this has become just a question of when and not if. It's at the Governments behest as it always was!

With the current price of Tungsten APT European at $27k/t RHA should get to break-even in no more than 6 weeks or so from a fresh start in my view. The ROM being not only ore extracted from newly cut and existing stopes in the underground mine but also ore from the pit and material from the tailings.

The pit and tailings were locations Bara were instructed to specifically exclude from their consideration and report. This has led to some confusion so it's important to note the report is not meant to be a guide to RHA’s mining plan. It's simply meant to be a third party expert validation that the mine can operated as a going concern.

From there KME should ramp up production to achieve the milestone targeted in the original Heads Of Terms agreement within 16 to 20 weeks or so. We know that milestone was set at 16kt's/m ROM from the three sources. The underground mine, the pit and material from the tailings. Revenue at that point should be approximately $1.10m /month and $13.20m annualised from the sale of 5.3kmtu's APT/month. With “All In Costs” extrapolated from those previously stated by Prem positive cashflow at that point should be around $500k/month and $6.00m annualised.

Apart from possibly a slight improvement to say 20kt's/month ROM the next huge and effective step00. change should be in about two years time when the semi-mechanised decline to the underground mine is brought on line. Access will also be gained to the higher grade ore blocks at width and depth in the pit when the old shaft becomes redundant then too and the benefit of that is also huge.

Very quickly thereafter production should be optimising and running in a steady state at 500kt’s/annum with the ROM again from the three sources. Unless the tailings material has been exhausted by then that is. Optimised revenue should be approximately $ 2.50m/month from the sale of 14kmtu’s APT at todays prices and positive cashflow should be around $1.20m/month and $14.40m annualised.

On the assumption that corporation tax and royalties will become payable net profit at todays prices should therefore be around $10.00m or £8.00m . Based on these figures RHA should in theory contribute 0.75p or slightly more to Prems SP if we have say 10bn shares in issue. If you would like to be positive that jumps to nearer 1.10p if the price for APT rose to $350/mtu which it may well do.

Also on the assumption that the new Shareholder Agreement reflects a revised 90/10 split in line with Prems proposal and the loan stands but perhaps with a reduced liability for the Government adjusted by any finance from them Prem should be receiving any positive cashflow from when it starts. So possibly $500k/month for years 1 and 2 and perhaps the $1.20/m for year 3. Less any corporation tax and royalties payable of course.

This all sounds complicated I know and RHA is a very complicated mine. But with the right team operating under the right governance and with the new semi automated decline RHA could be a very good asset at today's prices and exceptional one if the price of APT price went to $350/mtu or more. Despite the fact that cashflow will be shared once Prems loan is repaid and the grades of WO3 aren’t the best together with the complexities of dealing with a spotty resource.

AIMHO

GLA genuine shareholders.