Member Info for tedoby

That sounds about right Bottompicker. I think GR mentioned a SP of $3 at the point of an IPO if it goes that route in the recent Webinar .

Circum's Development Plan gives a start for the construction of Phase 1 in 2019 and production to start in 2021.

Working back from the timing given and allowing say six months for a lead-in period the indications are that a corporate event needs to happen quite soon now.

AIMHO

GLA genuine holders,

Great research again knicol!

Thant you.

Sorry I should've put my last post on two pages. Here it is in full.

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Agreed CF.

Although you've not listed it I'm hoping we hear the DD on HBR is positive too.

At annual production rates of 36k oz's Au and 1300t's Cu inside two years the mine has a very attractive cost/value ratio for Prem. Perhaps as much as 1:36. Compare that to Prem investment in Circum which will be more like 1:5 from the point of IPO to Phase 3 and it put's the potential in HBR into perspective. So the maths suggest Prems investment in HBR could be more lucrative than its investment in Circum. Far more lucrative perhaps by a factor of 7 in fact over the same period.

I'm not saying Circum won't be a good investment for Prem. Clearly if it five bags in a couple of years it will be. What I'm saying is that Prems potential return from an investment in HBR looks huge on paper and it's certainly worth going through the current DD process to make sure what Prems been told is about right in my view. Circum should be getting near an annual revenue of $825m from a sale of its SOP & MOP in the mix planne. A reasonable guess on the net profit margin I think would be $250m to $300m, But Prems holding is sure to slip in the equity raise of the $350m needed for Capex and for this purpose I have it sliding to 3.3% at the point of its IPO. If I'm about right then our share of the profit when Phase 3 is complete should be around 10m which would produce a SP contribution to Prem of around 0.80p in theory come the time.

Here's some maths on HBR for the purists and for comparison. I've used present day values of $1325/oz for Au and$6600/t for Cu.

So annual reveue should be 36.0k x $1325 from the gold + 1.3k x $6600 from the copper. So $58.9m in total which gives us the important rate of $1636/oz for AuEq which is useful for benchmarking agaist HBR's piers.

C3 costs on the other hand we're told are forecast to be a low $750/oz Au. So $27m in total. The net profit therefore should in theory be around $31.9m representing 54% on turnover.

The grades at 2.1g's/t Au and 0.33% Cu aren't particularly good but the ore bodies appear to be well concentrated to give a high density and economic pit design which makes quite a difference to C1 costs . A strip ratio of around 7:1 I think also supports that view although no debt finance is the major advantage in the C3 consideration.

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Anyway from there we get to a value of the mine for Prem in a 50/50 j.v of $159.5m. That being derived from $31.9m x 50% x10 using a P/E ratio of 10 in an earning metric calculation. At today's exchange rate and assuming 10bn shares in issue that's a notional contribution to Prems MC of £127.5m and to it's SP of 1.28p. All from an initial investment of just $3.9m.

To repeat and emphasise I've assumed we have 10bn shares in issue and you may want to consider whether that's a reasonable assumption or not.

For me the HBR investment is a no brainer providing it's the level of return suggested after the DD review. I think savvy investors cleverer than I should apply their minds to not whether we should invest in HBR but rather how we can best finance it!

Push comes to shove theirs a clear argument to say we could dis-invest some of our holding in Circum provided we're not in a "lock-in" that is after it's IPO should we need to. After all the return from staying fully invested in Circum appears to be nowhere near as attractive. It may not come to that however and I personally doubt it will. Things change almost daily in Prem so I'm keeping a completely open mind on the financing aspect for now.

I hope some of this "on paper" appraisal helps to consider a like for like comparison. I've set it out as best I know how.

I've given MHO so please bear that in mind too.

GLA genuine holders.

Agreed CF.

Although you've not listed it I'm hoping we hear the DD on HBR is positive too.

At annual production rates of 36k oz's Au and 1300t's Cu inside two years the mine has a very attractive cost/value ratio for Prem. Perhaps as much as 1:36. Compare that to Prem investment in Circum which will be more like 1:5 from the point of IPO to Phase 3 and it put's the potential in HBR into perspective. So the maths suggest Prems investment in HBR could be more lucrative than its investment in Circum. Far more lucrative perhaps by a factor of 7 in fact over the same period.

I'm not saying Circum won't be a good investment for Prem. Clearly if it five bags in a couple of years it will be. What I'm saying is that Prems potential return from an investment in HBR looks huge on paper and it's certainly worth going through the current DD process to make sure what Prems been told is about right in my view. Circum should be getting near an annual revenue of $825m from a sale of its SOP & MOP in the mix planne. A reasonable guess on the net profit margin I think would be $250m to $300m, But Prems holding is sure to slip in the equity raise of the $350m needed for Capex and for this purpose I have it sliding to 3.3% at the point of its IPO. If I'm about right then our share of the profit when Phase 3 is complete should be around 10m which would produce a SP contribution to Prem of around 0.80p in theory come the time.

Here's some maths on HBR for the purists and for comparison. I've used present day values of $1325/oz for Au and$6600/t for Cu.

So annual reveue should be 36.0k x $1325 from the gold + 1.3k x $6600 from the copper. So $58.9m in total which gives us the important rate of $1636/oz for AuEq which is useful for benchmarking agaist HBR's piers.

C3 costs on the other hand we're told are forecast to be a low $750/oz Au. So $27m in total. The net profit therefore should in theory be around $31.9m representing 54% on turnover.

The grades at 2.1g's/t Au and 0.33% Cu aren't particularly good but the ore bodies appear to be well concentrated to give a high density and economic pit design which makes quite a difference to C1 costs . A strip ratio of around 7:1 I think also supports that view although no debt finance is the major advantage in the C3 consideration.

Anyway from there we get to a value of the mine for Prem in a 50/50 j.v of $159.5m. That being derived from $31.9m x 50% x10 using a P/E ratio of 10 in an earning metric calculation. At today's exchange rate and assuming 10bn shares in issue that's a notional contribution to Prems MC of £127.5m and to it's SP of 1.28p. All from an initial investment of just $3.9m.

To repeat and emphasise I've assumed we have 10bn shares in issue and you may want to consider whether that's a reasonable assumption or not.

For me the HBR investment is a no brainer providing it's the level of return suggested after the DD review. I think savvy investors cleverer than I shou

Smilemore as you rightly say you can't associate yourself with these people!

They'll twist any agenda to suit there own.

HBR looks on the face of it to be a good opportunity to me and worth considering and doing DD. I can respect the view that it might be better to focus on what we have but that view needs "testing" and "demonstrating" properly.

If on the other hand you believe HBR could be good as I do then the tests need to be done as well but the debate from there has to be how best to finance it!

The HBR debate isn't about whether GR stays or goes . That's an entirely separate issue!

AINHO

GLA

At the moment I think they're excellent suggestions Smilemore. For me the shares needed to pay for HBR just in equity at these levels isn't the best way.

Timing will have been an important consideration in your reasoning I'm sure. Naturally Circums IPO will have been a large part of that too as will whether Prems shares will be the subject of a lock in or not

GLA genuine holders.

Smilemore I'd like you to withdraw your suggestion to resign in your post 11.09.

The process is undemocratic and discriminative as it excludes positive posters from voting.

That can never be right and hopefully you'll rescind it if only on the grounds I've put forward!

Everyone should have a voice on here including you.

GLA genuine holders.

Prem needed to raise cash we all knew that. Or we should have done! What I and most of the rest of us can't know is if this was the best way.

Some will believe selling the ARCM shares would have been better. Maybe that's true but ARCM seem to be in a similar position to Prem, They appear to have significant potential in the short term from their recent RNS's. So maybe Prem's BOD thought it best to try to keep them.

Some will also think it would have been better if GR lent Prem the money as he has in the past. I'm in the corner that thought that would be best. But that's only from where I was seeing things and maybe that wasn't the best option either.

I doubt we'll ever know if this mornings move was the best unfortunately. But what I also see is that Prems potential is now supported by the raise. The assets are enviable and there to see. Their potential has been validated by and large by third party experts so there can't be much BS if any on that score. That should give us all some confidence.

Prem needed to release the equity thes last two days to kick start its assets and start to bring back value. But as I say the Prems potential and asset values haven't changed and we're now one step closer to realising them!

AIMHO

GLA genuine holders.

There's been some tremendous posts these last few day's for a variety of reasons and they've certainly had a positive effect on sentiment which is so important in AIM. So than's to everyone who's contributed to that.

This mornings news is just great too. It feels Prem are just about starting to open the gates to it's Krackens cage to let it out.
"Zulu the Kracken" I like to call iu! Ha ha.

FWIW I cant see many others companies compare to Prem in any aspects very well. It's fair to say many have debt finance and some even Senior Debt finance which is far worse. Conversely Prem has a huge debtor in RHA. Probably as much as $25m by now before any agreement with the government is accounted for.

So no debt and a huge debtor on its books together with highly valuable assets sets it well above its piers on those fundamentals alone in any benchmarking exercise.

Because none of us know where the Share Cap is going for me it's the Market Cap that's all important. From the MC fundamental almost things financial flow. It's also worth remembering that dilution doesn't have to be negative. It can be positive too. The test which it is the ratio between a notional MC compared to Shares in Issue. I say a notional MC because there's invariably as assessment to make. If the ratio improves in the process then the effect will be accretive and that has to be positive.

Take Circum for example. It's very likely Prems % holding will reduce on it's IPO if that's the way it goes. I have it reducing by about a third to say 3.3% to the raise the equity part of the finance needed to cover its Capex. So assuming that's right whilst Prems holding may reduce in % terms it's likely to increase substantially in monetary terms. Possibly as much as three fold or more if the debt finance is agreed beforehand. So the dilution process for us should have a positive effect as the ratio between it's notional MC and its Shares in Issue will have improved.

I believe the same principles will apply to all of Prems assets. So the skill will be to improve the ratio as much as possible to the extent it's within Prems gift to do so.

AIMHO

GLA genuine holders.

I'm glad you did.

GLA genuine holders

Well it's very refreshing reading the posts on here this morning I must say.

Thanks to all who've posted positively but especially to your Smilemore. That goes with a warm welcome to the BB too!

GLA genuine holders.

fatsuperman and NaPoM thanks for doing the research on HB and posting your thoughts.

It's all "grist to the mill" and good stuff!

GLA genuine holders.

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The viability and economics of RHA when its ramp up is complete and operating in a steady state in say two years time is slightly complex but I don’t think this rough and simplified appraisal I've set out will be too difficult to understand.

From a restart brea-keven should be achievable in less than two months and if the first notional milestone is still 16,000t’s of ore delivered to the ROM pad within six months a quick calculation at that point indicates the mine should be producing 4,500 to 5,000 mtu’s APT/month and making roughly $400 monthly net profit.

To get to an optimised and steady state we’re now told the intention is to construct a semi-mechanised decline to extract the ore from newly cut stopes at depth in the underground mine where the grades are expected to be higher at 0.70% WO3 or more.

As a consequence the pit is sure be redesigned to give access th the higher grade ore blocks not just at depth but also those nearer to the old underground shaft when it becomes redundant and safe to do so. The grades there are subject to further analysis but conservatively are known to be not less than 0.35% WO3.

The intention also is to re-process the economic material from the old tailings. For the purpose here I’ll going to assume the grade equivalent is going to be 0.25% WO3.

The ROM is designed to be 40kt’s/month. The bottleneck being the XRT sorter I believe. For ease of maths then let's assume then 500kt’s of economic ore are delivered annually to the ROM pad in the mix of 150kt’s from the underground mine, 300kt’s from the pit and 50kt’s from the tailings. I don’t think that’s unreasonable.

Workin the maths through the average grade will therefore be 0.45% (150 kt's x 0.70% + 300kt’s x 0.35% and 50kt’s x 0.25% = 0.45%) and the product will be 2.25kt’s WO3. From there assuming a Metallurgical Recovery rate of near 80% we get to an annual production 177.5k mtu’s APT at the point of sale.

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Assuming a revenue after offtaker discount on the current price of Tungsten of $265/mtu APT European of say $210/mtu we arrive at an annual revenue just over $37m. Break even is said to be around 20k mtu’s p.a. without taking any benefit KME may bring and the saving the semi-mechanisation of the underground mine will achieve . So with cost and value running about the same after break-even the mine should produce a net annual profit of $17m or roughly £14m at todays exchange rate.

If you believe the price of Tungsten is going to be more like $300/mtu APT European in two years time as I do the net annual profit increases to around £17m. So on that basis assuming a P/E ratio of 10 in an earnings metric calculation RHA’s Market Cap should be around £170m.

From there keeping the current shareholder split of 49/51 Prem should receive a contribution of £83.3m to it’s MC and 1.1p to it’s SP. If on the other hand the shareholder mix moves to 90/10 in line with Prems proposal then Prem should get £153m as a contribution to it’s MC and 2p to it’s SP. That is assuming a $300/mtu APT European Tungsten and the current shares in issue stays the same which now looks unlikely. Nevertheless if Prems shares in issue increases to say 10m that would still make RHA’s contribution to Prems SP of 1.5p or so look attractive.

The Bara report did what it was mean to and demonstrated that the mine could be marginally profitable in a state where it was placed on C $ M. It assumes mining will continue in the mine where it was left off and simply assumes the ore is taken from the exposed blocks. It also takes no account of an increase over and above the 6,000t’s/m ROM and makes no allowance for the ore in the pit or the material from the old tailings. It was not intended to be an appraisal of the mines profitability at any stage and shouldn’t be regarded as such. It was simple a statement of affairs and an assessment of the mines viability at the time it was place on C & M. It shouldn’t be considered any other way and placing interpretation on it is likely to be misleading.

I'm not sure if any of my thoughts help but they're AIMHO and fingers crossed GR’s meeting with the MOI goes well today.

GLA genuine holders.

jessell that's cheered me up no end! Ha ha!

Agreed CF.

It feels like a compressed coil spring that's about to be released!

GLA genuine holders.

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Honey Badgers Ran Mine currently has two mining locations on it’s current licensed area that it plans to put back into production. Ran & Fishpond being one 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 when it was operational. I have no details of Cu production but we should make a special note of the historic Au grades which were particularly high.

There is a JORC resource of 535k oz’s Au at just 2.1g/t and 0.33% Cu for the mine. There's no date given for the certification but the disconnect between the Au grades and the change from JORC to SAMREC suggests to me it was done early in the LOM. 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 larger area.

The areas are ready for open pit development and processing in the short term. The use of a third party off site sulphide treatment plant will be made available in the short term whilst a new facility is being on site is built appears to be in the start up plan.

The ramp up to full production within two years is short and at that stage target production is said to be be 36k oz’s Au & 1300t’s Cu a year if everything goes to plan. C3 costs or AIC’s as they're sometimes called are forecast to be a low $750/oz Au mainly due to the physical shape of the ore bodies and resulting low strip ratios and the fact that there's no finance costs I think. No finance costs being the dominant influence. The skills needed are also in place and there's a large labour force available locally in Bindura.

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So a “fag-packet” financial appraisal should tell us that with Cu in the mix at 1300t’s p.a and 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 at $1580/oz AuEq = $57m. C3 Costs should be 36k oz’s at $750/oz =$27m and annual net Profit should be in the region of $30m or £24m at today's exchange rate. Avery attractive net profit of over 50%. Assuming from there a P/E ratio of 10 is reasonable in an earning metric assessment that would give HB a notional Market Cap of £240m in its own right.

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 1.2p in a 50/50 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 agreement in less than three months time in my view..

I know GR mentioned heap-leaching in the Webinar perhaps because of the sulphide content. But for me I doubt it will be considered much further. It’s a red herring I think. The Au grades are too high to lend themselves to that process and the climate would create too much down time. Moreover with a Cu content of the grades we’re looking at the copper would “drink” the Cyanide and make the process uneconomical. Best take a leaf out of all the neighboring miners books too and keep tank leaching in the plan. The alternative just seems a no brainer.

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 far more important than fundamentals like these as attractive as they appear.

AIMHO as usual.

GLA genuine holders.

NaPoM I agree. The partnership with KME (because that's effectively what it is) isn't just about finance or money.

Although finance is obviosly a consideration in this case I believe it's more about skills and commercial/political aspects than money.

Prem needs the skill set to realise it's assets and it doesn't have those at the moment. I think if Prems selection was bias towards finance and simply made on a monetary basis KME wouldn't be involved now.

KME must by deduction therefore have the skills and experience Prem needs not just at production level but at company/group level too.The fact that they're a national company with all the advantages both politically and commercially that brings is also likely to have been attractive

As with all good partnerships there has to be a win win and one of the best ways of achieving success are incentives.
We saw those very clearly in the Heads of Terms of the original agreement and from what I can tell that important ethos has been repeated.

AIMHO.

GLA all genuine holders.