Member Info for Tornadotony

Just dropped back 0.5p. Same old game as liquidity disappears.

DP at some point we get another placing.

https://en.azvision.az/news/158375/deputy-assistant-secretary-of-us-bureau-of-energy-resources-arrives-in-azerbaijan.html

Theo

It was written by a current Director at the company (not PA). Theo I do not make things up and I am not the kind of person. I have topped and tailed the email I was sent. I frequently communicate with the company and when they can I get a reply. What I put on was an extract from an email I received last year when you made a lot of suggestions about their departure. I was just happy to get a reply at that time.

Finally, I do not want to be responsible for misleading anybody on their investment choices. Everybody should be grown up enough to do their own homework. The message board is primarily about sharing knowledge its not about ramping or deramping to play one's own stock positional interest. All I have done is shared what info I had from the company and its your own personal choice to dismiss or accept what I shared. Tony

If the company achieves what they say they are doing, we have only one difficult month before the big turnaround.

Certainly has not helped volume or the share price. Hopefully it will improve as the day progresses.

Theo and other readers,

This was from a communication I received from the Pensana last year regarding the two directors who left.

They are both hugely experienced business men in their own rights and the reasons for their stepping off the board was nothing more than transitionary. Mark is based in Australia and in addition to Covid restrictions the companies migration to the UK meant we were always going to look for a replacement in the UK who was closer to the Saltend operations which came in the form of Dr Jeremy Beeton who rolled out the UK Olympics. Similarly, Neil Maclachlan, with respect to his age, was always looking to step down at age 78 once another Board member/s was in place and Baroness Lindsay Northover and Sandra Bates fulfilled that position.
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Theo, I do feel you are trying to read into situations to fit your bias and are just as guilty as others who take a contrary view to yourself which you criticise them for. Its easy to become seduced in looking for things to support your own established opinion.

As for HZM and Pensana. Both will offer the kind of volatility that may allow investors to manage or create a degree of free carry as this arises in most investment scenarios. If it does not arise and works on the model you say it would destroy public green investment as the public would not want to serve as a charity to the banking sector as they would expect some kind of investment return. Otherwise COP26 objectives and Green bonds etcetera would not get a worthy reputation as future investments. Media would soon jump on the rip off exploitation as you describe it as leaving everyone with next to nothing just destroys future innovation and creativity. The incentive instead would be to go back into oil companies finding new oil fields and turning the planet into a furnace.

regards Tony

Theo

To give you an example HZM is seriously undervalued against its future return rate. It was valued poorly when its financial studies were completed, but doubled on agreement of bank funding. It has only gone up 5% post funding when the company raised capital from creating more shares and completing off take agreements although overshot by 30% before doing so. At some point HZM will shoot up in value when they actually delivered product.

Pensana arrived on the scene in the UK much later then HZM. However, both shares along with Rainbow Rare and many others in that space shot up in value because of the commodity price increases. Both gave up a lot of their gains although the volatility of Pensana was greater in both gains and retreating back down. I therefore disagree with PRE share values being given a higher value equating to future earnings until funding terms are known and agreed. Once that becomes known and real construction starts with contracts awarded and work programmes being delivered then the value of Pensana goes up. Furthermore if the Pensana share prices rises it is not uncommon for the share price to fall in year 1 of production. This can be due to teething issues with routine processing or its costing in the delivery of a full processing circuit in all of the operational plant. If targets are met the company share price goes up in year two depending on market demand conditions. It gradually fits with a PE rate and its post tax earnings.

I presume you read the last AGM minutes of Pensana before they deleted them from their website a few weeks later. It gave an insight on what the Board would agree to do and what was acceptable targets in agreeing the finance for both the Angola mine and Saltend. If you had read them it would explain why the correct share price should be mid-80's at this particular stage.

What would be critical is the announcement of the first bond for Saltend as this would re-rate the company. All the gains afterwards could be smaller in comparison.

Its not just production to improve they were delivering 300,000 metres of drill results in the second half.

Underground expansion study underway - completion H2 2022
· Doropo Project (Côte d'Ivoire) pre-feasibility study underway - completion H2 2022

The mineral resource and reserves were expected to rise after 2022 depletion over 2021 levels. They also were committed in managing costs over the year below $1450 per ounce on the AISC.

AAZ does have two key issues to address.

1. They should employ someone well skilled on ESG and they report on such matters annually and have a handle on how environmentally friendly their future copper production will be as it will impact the buyers of at least half the product. A person directly on the board would have responsibility of managing the output of this ESG officer. the company version of what they think is ESG is outdated.

2. The company has to get itself into a position of delivering a clear future strategy. They need to give guidance over a 5 year plan they are pursuing that has achievable targets and pay bonus to staff is demarcated on hitting those targets or proportional rewards of where they get close or fall within a target range. This gives transparency to investors.

If the above two are dealt with the company would be a very attractive proposition and would get more trading and investing activity.

Knock knock on skull is there anything in there. No just us cobwebs.

It started on Friday. The last 5 occasions it lasted 2 to 3 sessions and has then sold off again. We shall soon see what will happen this time. It has been churning in a 13.5-16p range for quite awhile. I can not see any reason why it would either pump or dump.

The management team better deliver. They have promised a lot in H2 and they have zero excuses and must hit the targets.

Hopefully we are just 7 days away as implied by the Chairman of the company. It would be hugely significant for the company. 1M tons of copper in the ground has a value. At $7,000 a tonne revenue price and taking $70 a tonne in the ground valuation equates to 50p on the share price.

Nobody knows the future gold price. In Q1 of 2022 it was $1874 per ounce. In Q2 thus far it is $1894 although drifting down unless the gold price can get back above that figure. The company impairment model on page 72 of the annual report was working on $1842 gold price for 2022. It therefore works thus far for H1 with just 5 weeks to go. Eric has said the company needs $1800 gold price to achieve all their objectives. Singuida is half complete and it was not harmed by inflationary costs. If an agreement is reached with the Tanzania Tax authorities on VAT repayments owed to the company , it would have no debt on the delivery of the new Singuida mine.

I have left an order on the book if they want to offer further HZM discount prices. I dare say other investors may have orders going in. It depends if someone has a cash call somewhere else that sometimes give opportunities for book orders to get filled.

Next higher low is 13.5-14p range after 13.25 double bottom on sell side. Next higher high on a bull chart track is 15.5p-15.75p on the close. A higher low then makes way to a higher high. The next higher low at 14p will need news in late June if the chart pattern continues. Rainbow has made these type of chart patterns in the past and we are observing if they can repeat.

I am beginning to understand the phrase " being wet " may have came from.

Fingers crossed that when the proof in the pudding arrives CD rejoins us at 14p later in the year. He is more than welcome.

Valuing in the ground assets.

Shanta existing producing mines. 365,000 probable reserves plus 40,000 proven reserve ounces.
$100 x 365,000 + $140 x 40,000 = $42.1M enterprise value. The g/t at 3.05 is economic at $1350 gold price.

Resources value at 1 million ounces approx adds $20M to the enterprise value.

Singuida has 218,000 reserve ounces valued at $21.8M. It has 180,000 measured ounces valued at $5.4M and 700,000 inferred at $7M = $34.2M on the enterprise value.

West Kenya has 378,000 ounces as resources and is worth $15.1M ($40 taken as having higher grade). The inferred resources has a value of $16M.

The in the ground enterprise value of all assets is $62.1M + $34.2M + $31.1M = $127.4M or £102M.

It is reasonable that plant value is greater than any on-going or slight build up in debt.

The company is therefore trading at worse at its in the ground value which is equivalent to fire sale prices. Companies usually trade at 1.5 times to 2 times the in the ground value of its assets where it has a functional mine and especially if it was to add a second mine.

Other factors are the security of the asset, can the asset be mined out commercially, does the team have plenty of experience and are they reputable and competent with delivery and do the projects offer scale in production volume. I believe Shanta scores well on many of these aspects.