Member Info for Tornadotony

Yes worse case not waste case.
Yes 4 x PE ratio. EV is enterprise value.

The South Africa stacks on a waste case scenario on world Rare earth prices leave the company with at least $400M net profit after 70% take, all costs to deliver the operation, Opex, taxes and everything you can put on it. The baseline figure I gave for NdPr was $48 a kg and considering its near $80 at the present time I have allowed huge margins for things coming out of left field.

Then we have Gakara and if we took a worse case of just $5 a Kg of NdPr as profit otherwise, why bother, the net profit from 2024-2028 years at least is $60-65M each year. the production of course goes on for another 12 years but lets operate on a brutal 4PE rate. Lets say the profit is £45M a year. The EV at present is £97M. So at 4PE the share value is 38p. Of course exploration result may give Gakara another 4 replacement years in 2022 and perhaps a 6PE rate may get offered and the share price is valued at 57p. Of course we have rare metal price inflation and perhaps my $48 per kg really does become $96 and we hit 114p. On top of that new licence areas may be acquired and the story evolves further. The message here is that the boat has not been missed. We could see a day and wonder how on earth this share was valued less than 5p in 2020. Of course this is just my opinion but I think its the kind of share the former Bank of England chief would now be hoping that we are supporting. Hopefully a few fund managers may feel the same way.

It has a huge rare metals resource in Angola and far exceeds its competitors ( factors of 600% on some rivals). The company owns 75% of the resource. 25% goes to Angola. The company is running a high value chain from a concentrate all the way to pure oxide into magnets. A number of other companies are lower risk and split off at different production levels which make Pensana a unique play in the sector . It will have a significant debt, it has multiple risks in delivery as what it aims to achieve is more comprehensive, but has higher profit margins. The company is unlikely to dilute shares, it has a lot of helpful sources and terms to manage any debt. Its likely to be cash generating after 3 years into production free of all debts with a significant life of operations of say 30 years. It generates into a huge cash cow. So having a 5 year horizon this is a $150M profit a year business after all the Angola costs and if we take 1/4 off for UK corporate tax the profit is say around £80M plus a year at the lowest. The company would get say 18PE rate and it gives an enterprise value of £1.4B and that would be a £7 share price with a 3% divi per annum. All these figures ignore the ever climbing rare metal prices which is where £10 plus comes in when inflation is thrown on top a few years down the road. In fact £15 is not impossible with all the printing going on for infrastructure spend. The key for Pensana is to operate at God's speed for the rest of this year and in 2023. Its a company that moves from maximum risk to a very low end 4 years from now. Folks have not missed the boat if they believe the company will succeed. It will be possible to nip in and out for years or to be a very long term investor for those on that horizon. I have come back to investing as the other half did not want the house in the country so now defending against the inflationary effects that are coming with plays in rare earth companies. Its also fun to learn all about the chemistry and who knows may give me an edge in pub quizzes.

https://rainbowrareearths.com/wp-content/uploads/2020/10/Technical-Report-on-the-Gakara-REE-Project-Burundi_Final-v2-rs.pdf

This tells you a lot about Gakara.

I bought some more. If you have a 5 year time horizon , where else would you a achieve between 500-1000% return. If you want to protect against inflation 0.5% of your wealth on rainbow returns 4.5% on the entirety of your wealth. 1% gives 9% inflation protection. Like gold increasing from $1700 to $17,000 in 5 years. It makes sense to invest in good rare earth companies.

So at the end of all this made end up with say 32M tonnes of clean gypsium which has a retail commercial bottom price of $30 per tonne in the building industry. 30x 32M say =- $ 960M which is a final waste product going to full commercial use. That is of course $56M produced every year from the 2.2 M tonnes processed. Its a great project and that is before you get to the $250M revenue from rare earth mineral sales in 2024. Holding my rainbow shares for sure.

138p is an area of huge support. I have written to the company asking when the April up date will happen. If they share a financial diary date I will let folks know here so we all have a heads up for 7 am read here in the UK. I am waiting on news before going overweight on AAZ. I am back on my August 2020 allocation.

Come and get them. Will soon find out if gold is off to the races.

Bought the last lot as the April first quarter report has to show up soon.

Hi Gaias,

I agree with your assessment on Pensana and Rainbow. The Rainbow position for me is quite small but gives some additional energy materials exposure. Tony

They are more or less the same on the 3 monthly. The Greenland withdrawal of mining expansion removes 25% of rare metals supply off the western markets. Pensana is well up this morning and I was expecting Rainbow to follow.

Waiting to see if gold breaks out. Holding back last buy for time being. I expect some big news in the pipeline for AAZ. Hence delay in guidance to date.

Instead of insulting each other, please use the filter button. Its there for a reason.

Happy to see people question things but it does help to ask the question clearly so its in the right context.

I am waiting for the investment talk to be posted. My own analysis has a preliminary target price of 70p. However I have assumed a lot of broad averages and have not gone into the tax on profits and whether past losses can off set future gains and the like. So I have a lot of homework to do. If anybody has that kind of knowledge to add its helpful to know.

All the best Tony

All changed when they changed the CEO in August 2019 and he then built a team of people to do things properly. From there they have been learning to get the mining right and build a production resource from more than one country that is meaningful. The Greenland vote result was the tailwind to jump in. Once the company is making profit, has established competency and is then growing its production output and reducing costs on the higher production, this share will be a lot higher than 20p. Its one to put in a draw and see it grow.

Enterprise value is $26M in the bank, lets say 2.4 cents a share = 1.73p a share.

This is cheap share price.

Got some more in my non-ISA portfolio. Now moved to 20.15p after my last buy. I wonder could be £1 by year end.

Got 10,000 into the ISA to go with my Pensana. If it dips back can average off. Hopefully they will earn serious money soon.

Labour party wins in Greenland. No extension to digging for rare earths. Bang on with the news Pensana goes up.