Member Info for wasarunner

Everyone has their own criteria for what makes a company investable and what they are looking for over what timeframe. Mine is 3-5x in 3-5 years. Can I reliably see that with a company I invest in. In Armadale's case I think I've been invested about 1.5 years so 3.5 years to go. My average must be low 4s I don't have it calculated exactly. So equation for me becomes - do I see 12-20p in 3.5 years? That would be mine first producing but no expansions (probably). Answer is yes, whichever way I spin the numbers and however it gets financed, I don't see numbers less than that. Nobody complains about more, and I would be happy with more and sooner but that would do me. People chase higher returns in shorter timeframes and that's fine but you always offset risk vs reward. I am 100% certain (from speaking to him directly) that MB and I are aligned with what we both want to happen here. Can he deliver it? Nothing is ever certain but I believe he can.

I've dismissed financing as an event for my own purposes because I will hold to production. MB can't if he wants to raise equity as nobody (including he) wants to raise at 3-4p. My only experience of financing in a miner I have been investing in is Horizonte which may/may not be relevant example but what happened: £450m was raised, around half equity half debt. That put net cash ~£225m on the balance sheet. Mcap of co following financing was £250m so valued at barely more than cash on the B/S. Nothing in the mcap for future expansions, nothing in the mcap really for the NPV which is much bigger than the mcap. So it would appear that AIM at least gives you relatively little on financing will that be different for ACP I don't know. Perhaps because the build is 2 years, here it will be 1 year so a nearer horizon once financed and building the mine. One of the challenges for people who invest on short timeframes is, apart from the equity price to finance the mine build, I don't necessarily think the BOD care about the equity price until production because it doesn't affect them directly. They won't be selling, maybe they'll be buying. So people hoping for a re-rate on finance - I don't know if that will work out. But holding for production - earnings don't lie and there will be earnings here at production. So I see Armadale as a hold for 2 years+ and see the returns, personally happy holding till 2026+ as 2025-2030 is where I think the critical shortage of battery materials will really manifest and we will get stupidly high commodity and company valuations.

Tricky because I don't know how many shares there will be. I am guesstimating 700m-1bn which is quite a big range. We should get £100m mcap+ at mine complete assuming a $500m+ NPV? So I would settle for 10-15p mine complete, then rising once production gets going. 20p 6 months+? Am hoping 30p+ is possible down the line but that gets more complicated with expansions etc. Also the basket price matters and we won't know what that is until we see DFS/Offtakes and graphite pricing in the next couple of years? I've got at least 10m shares ringfenced for mine expansion and that would ideally be the 30p+ number.

I tend to estimate relatively conservatively to other PIs I talk to but we all seem to be overly optimistic in these dire markets. But if you are holding to the 'EV crunch' then that should be much more exciting times as majors will be licking their chops at assets be it graphite, nickel, lithium whatever. Boom hasn't really started yet. So you can always factor a bit of FOMO if there is a hot commodity but that's hard to predict right now?

One thing I'm pretty sure of. Mine gets built we won't be at 3.5p.

I'm not suggesting BTW that this will take 2-3 years to close finance. I am hoping this year, can live with next year. It has to be easier to raise $40-50m when your IRR is 80%+ than $600m+ when your IRR is ~20%. Even as a factor of MCAP we need 2x at one point Horizonte needed 10x. All these things count towards 'financeability'.

My hope still is he brings a partner on board for a chunk of equity and builds a bigger mine than in the original DFS so we get the benefits of more production earlier, and then potentially the mine expansions can happen sooner. We will see. I would really like to hold a big chunk of my holding (which now inc family is well over 3%) for at least the first mine expansion phase if the company doesn't get sold entirely earlier. My best guess right now is we will reach production end of 2023 or early 2024 (which unfortunately is the same timeframe as Horizonte - had really hoped this would be earlier) if finance is completed this year and the build starts early next. If they are more advanced than that and it all happens sooner that's all fine by me but I think blackrock are aiming for Q1 2024 going by the recent investor call - Q3 to close finance then +18 month build.

Why? No meaningful update on financing is just that. No update. Horizonte contracted Endevour to do their finance deal in (I think) autumn 2018 or 2019 and completed the finance package in winter 2021. Was it a lie? No it just took 2-3 years (during which we had the worst pandemic in 300 years). No update means no update not no progress. If ACP issue an rns to say no finance is possible, they failed, then we know it failed and until they do that we don't. Don't assume what we know is what the company lnows, I rather hope they know a lot more than we do.

What we know so far: BKT had no problem raising $25m which is around 2/3 of the original capex requirement for ACP, perhaps now inflated to $50m so call it half. Back when we spoke to MB he said debt should be straightforward because the rapid payback means you don't have to dwell on the interest rate too much (you can accept say 15% instead of 10% if payback is 1 year/1.5 years). But financing environments change, perhaps things have tightened in a year don't know. It was never going to be 100% debt so the rest has to be found somewhere too, perhaps from the equipment suppliers as financing loan (similar happened on Horizonte for the plant equipment via credit export ECA albeit a much bigger project), perhaps equity (we all hope not too much and done at a much higher price!). Obviously if I thought he couldn't get it financed I wouldn't be invested so I believe it will happen and on decent (enough) terms, but you can never 100% guarantee it of course.

There's other stuff to do as well as finance still but I'm sure they are working it in parallel. Need the final improved DFS, govt stake agreed, probably other technical things as well to get signed off.

One thing I know from talking to MB last year is he won't give it away cheap - that's what owning 10% (plus another big chunk via friends and family) gets you. If it takes him a while to get the best deal on his terms he will do that and I can't fault that approach. Too many CEOs without enough skin in the game give stuff away cheap then as the early investors you don't get the returns you looked for, or worse, are diluted down significantly.

Hopefully not long for news now. We're into dry season in Tanzania (I think).

>>I'm not sure there is a big difference between Teck owning the shares vs Glencore owning the shares as far as further investors are concerned.

Actually that's nonsense and happy to admit it. If other investors see Glen buying they'll think it's sound and buy. Apart from anything for the eventual possibility of T/O at premium. I'll eat humble pie on that one - although it doesn't de-risk delivery, it makes it appear less risky to other investors to see a big cheese buy in.

I'm not sure there is a big difference between Teck owning the shares vs Glencore owning the shares as far as further investors are concerned. I am actually clueless as to the technicalities of what would happen (heaven forbid) if they couldn't complete the build on budget. Do the banks allow you to raise more cash via equity via the equity parties? And what price would Glencore / Orion and La Mancha want if you got your budget wrong first time round - they could take you to the cleaners in that situation. Back when I spoke to the FD he said running out of cash was a big no no and that's the main remaining risk I would imagine (if people are confident the nickel price will hold up - I'm pretty confident on that one, and the jurisdiction is sound - pretty confident on that one too).

I agree Glencore buying Tecks share is a very good sign long term (and makes them pole to take the lot one day IMO) but I don't necessarily see it as de-risking the project from a PI perspective. They won't want to see it fail but they will also take advantage if the BOD don't deliver. I also don't think the share consolidation de-risks much I can't see how - less shares and higher share price doesn't change the fundamental risk which is now all about execution (now that finance has been agreed). We don't build the mine in time and on budget and we're relatively foooked whether there are 4bn shares at 7p or 200m shares at £1.40.

It should move eventually but really since the financing approval not too much has de-risked as the build is only just starting. Closing contracts within budgets is of course very worthwhile but not sure the market gives you too much for that until you've delivered the contracts on the ground.

Next main (from a risk perspective) milestone I think is the drawdown of the debt because at the moment I think the cash that is being spent is the equity. When the banks have handed over the cash physically equity (as in new IIs) may see that as a favourable point to move. I think that happens later this year, don't know when, but I'm sure it would be an RNS if a big chunk is drawn down in one go (I don't know if they draw it all in one go or in stages).

Either way I wasn't expecting a big rerate up or down just with the consolidation, but if it makes it more attractive to North American buyers and bigger institutions then very happy with the new setup. Just wish ii wasn't showing £0 as my current value and -100% as a total loss against my HZM investments, it's just that tad disconcerting to be wiped out. Hopefully that gets fixed in the next few days.

Looks good! They haven't adjusted the number of shares yet so the mcap looks overstated :). I wish our mcap was £5bn+ but hopefully all in good time.

Open
7.22
High
7.50
Low
7.10
Mkt cap
5.64B
P/E ratio
-
Div yield
-
52-wk high
9.40
52-wk low

Also some news about Akrokeri in June is possible? The drilling rig was making its way physically to the site when the investor call took place.

Hopefully 'soon' is a shorter timeframe than 'imminently' which I've seen used on AIM for something that then took 3 years....

https://mobile.twitter.com/goldstoneres

Underneath the pimned post, nothing too material yet.

Kind of what I am saying. Can but try. But my point is more general - lots of people are prepared to finance things with big returns. And 35m gbp is not quite outrageous money

It's an article about the project/product. You need that before finance. I am talking to people (right now) who could finance it at a pinch - not about this but other stuff. £35m/$50m not huge investment for a $500m+ project - have some ambition. Lot of money in the world even in austere times looking towards future profit. GLA

What's worrying? The stock is majority institutionally owned. Lack of trading activity means the margins aren't being traded, I'd be much more worried if the institutions were selling them.

1 ASIAN INVESTMENT MANAGEMENT SERVICES LTD Malaysia
122,000,000: 26.58%
2 PARACALE GOLD LTD British Virgin Islands
115,853,754: 25.24%
3 BCM INVESTMENTS LTD British Virgin Islands
50,000,000: 10.89%
4 VIDACOS NOMINEES LTD United Kingdom
25,631,172: 5.58%
5 INTERACTIVE INVESTORS SERVICES NOMINEES LTD United Kingdom
20,947,990: 4.56%
6 FISKE NOMINEES LTD United Kingdom
16,764,300: 3.65%

Lots to be optimistic about. In the recently linked investor call the CEO said on track for $18.5-22koz production this year (that's $35m-$40m gross). All you have to have is any patience and wait for the update of how it's going. As usual too many assume no news is bad news and patience seems a rare attribute on AIM. I'm expecting news in June, personally, as that will be around a quarter since the last operational update and on the call she mentions quarterly updates.

We all want news we all want progress. Where I disagree with others is they treat the lack of news as bad news. The market often does that and I think that often presents opportunity. A report to 31/12/2021 does not mean nothing has happened this year it just means a. It isn't in the same rns and b. It may not yet be reportable.

Its obvious the lack of news is making people nervous and making some sell. That and whatever cash call they have elsewhere. But there is no negative in the rns - the cautionary notes are prudent and obvious.

It's equating no news with bad news I take issue with. That's just impatience. Has anyone on this board negotiated a government stake in a mine with Tanzanian government? If so interested in your view - is Armadale takimg too long, or not too long? Also has anyone negotiated binding offtake witha Chinese major? I haven't so I don't feel qualified to say whether the elapsed time is too little, too much, or just right.

I remain optimistic because timescales aside, I don't yet have anything not to be optimistic about. Blackrock raised $25m at a pinch as a starter package. We only need twice that for the whole mine. Our resource is no worse.

If I was cynical I could spout fud and pick up some more even cheaper than I bought today. Seems plenty of panic without needing to get embroiled in such antics. Gla

Glengarth - indeed agreed, but this was the backward looking RNS. I am very much hoping for a forward looking RNS anytime soon - sooner the better :) Lots could have happened that we don't know about.

Notwithstanding and I did put this on another post the other day - I have realigned expectation on ALL my investments to hold till production and accept that production may happen later than I expect also - this is simply a fact I have learned on these AIM juniors. If you accept that it becomes less about doubling your money in 6-12 months time on certainties and more investing in the evolving EV/commodities space on the longer term in companies that can make steady (not necessarily stunning fast) progress towards the goal. Then you weigh up your expected multiples by the number of years you think it *might* take to get there and figure out your cost/benefit taking into consideration risk.

One thing I know - the graphite space is hotting up, and MB knows this and wants to strike 'while the iron is hot' on financing etc. See the inbound interest on Blackrock in the interview - they are getting enquiries they were not getting 12 months ago apparently from the kinds of players who were not in the space 12 months ago.

We will learn more in the weeks ahead I expect. The initial timeframe of my expectation - which was we would be financed during Q1 and start building the mine when the rainy season finished (around now) is clearly out the window. I can wait an extra year if needs be, perhaps others can't, I am invested for the long haul anyway and the deficits in the key commodities ahead mainly my PF targets the second half of this decade.

Cash position - is strong - at the low burn rate MB can get the deal right rather than rush it which is good. Definitely needs some news before the September warrants as of course there is a risk they won't convert if the SP is subdued as it is now. GLA

Also it's Africa. Things happen slower than elsewhere. But the chap on the blackrock interview says its one of the best jurisdictions in Africa he has worked in now - there is real government support and impetus to get these projects off the ground. They understand that with the free carry + tax they have around a 50% real stake in these project so the govt (plus the jobs it creates).

The way I look at it if you COP is $400 and your income is $1300/t call it $1k/t GP and you give half of that back to Tanzania. 60ktpa (initial Armadale production) at $500/t net profit gives you $30m revenue. Say the mine costs $50m to build (including inflation) capex payback is 1.5 years. That's bloody stunning and after that expansion to 1m tonnes+ in year 4 (by which time hopefully graphite even more in demand with higher pricing) this is cash cow generating more FCF per year than the current mcap. GLA

Strummer - yes it's that - what happened last year and only a little more (cash position now). Basically - this company:

- last year got the mining licence(s) and proved the viability of the product
- this year will secure finance and start building the mine

Is that good progress over a 2 year period (of course the mining application went in 2020) - probably not bad considering - the president passed away - Covid happened.

Clearly if people don't believe the second set of things will happen this year/ever then it isn't a good investment and they should sell.

I would urge anyone to watch the Blackrock interview (was linked here I think? I picked it up on twitter). Very clear on the demand side, how to secure the funding, and what order you have to do things to get the project progressed. Hopefully MB/Armadale can follow suit, at least they can watch and learn from any mistakes or challenges Blackrock face if following in their footsteps. GLA

confirmed natural flake graphite from Mahenge graphite project as a premium quality product with the exceptionally high purity and characteristics required for use in lithium-ion batteries
Environmental and Social Impact Assessment ('ESIA') was formally granted
formal confirmation and receipt of the Mining Licence (ML/007744/2020)
completed with positive results received confirming a premium quality high purity graphite concentrate, also suitable for the battery anode market

All permits licences granted, confirmed suitable for EV, highest purity. If that's an uneventful year you're reading a different RNS to the one I'm reading. Confirms the viability and economics of the project.