We would love to hear your thoughts about our site and services, please take our survey here.
Longonjo economics feed off infrastructure edge
https://www.mining-journal.com/resourcestocks/resourcestocks/4169643/longonjo-economics-feed-infrastructure-edge
This is excellent progress. Firstly it unlocks the last part of the jigsaw for financing; 5 years supply for a the first train is significant. Secondly and just as important in my opinion is that it de risks the ALK/TVL option for OEMs, Tier 1/2 suppliers and other potential feedstock providers. As things stand today there isn’t enough global lithium processing with strong ESG credentials to go round and getting this operation funded is going to increase its attractiveness and could potentially swing any 50/50 decisions ALK/TVLs way.
VSA, the broker, recently gave ALK a target price in excess of £15 and this news has to drive it firmly in that direction if not above….
Whilst ALK has had a few quiet months I don’t think this will be lasting for much longer. I have an automotive background and the word I’m getting back is that all the OEMs are very keen to secure processed lithium in their supply chains and, just as importantly, without any reliance on China. As such many of them will have ALK/TVL on their radar given that there isn’t enough current capacity to go round. It only needs a few of the mid market OEMs or maybe only one of the majors to firmly put ALK on the map as a front runner at which time the current market cap of c£10m will become a distant memory.
This BBC programme makes it clear that the TVL refining plant is going to be in huge demand and should lay to rest any sceptics about its future ….
https://www.bbc.co.uk/iplayer/episode/p0fzlswg
Shows how little you know Sunny Dummy. This was a verified email sent from the Chairman yesterday in response to shareholders writing to him. There is nothing in there warranting an RNS and it’s perfectly reasonable for a company to do some communicating outside RNS!
Part 2
To date FSDEA and M&G have invested US$68 million in the Company and we see them in conjunction with ABSA continuing to fund the project into production as set out in the recent announcement.
At a time when upfront capital costs for rare earth projects continue to rise, we understand that Hastings has recently increased its Capex to circa A$1 billion and that Arafura's circa A$1.6 billion is expected to increase, Tim George and the engineering team have done a great job in reducing the upfront Capex for Longonjo to circa US$200 million, making the funding so much more achievable.
I do appreciate that the recent collapse in the share price makes any revised funding and development strategy look unconvincing.
The market response to the recent revised funding and development strategy was initially quite positive however post June 30 the market in Pensana's shares was hit by revised Loan to Valuation (LTV) security requirements for leveraged borrowers.
The recent share price fall has been exacerbated by these leveraged lenders closing out highly geared (mainly Australian) shareholders. One highly leveraged holder from Brisbane is currently being closed out for 7 million shares, the sale of which we understand is being front-run by short sellers in London. We are working with our brokers in London to place this stock. We expect this deleveraging to continue for another two weeks.
That said Tim George and the team are not being distracted by these short-term issues and we remain firmly of the view that Longonjo will be financed along the lines recently announced and that we will be in full construction by early next year and into production towards the end of 2025 or into early 2026 - well ahead of Arafura et al.
Regards
Paul
Paul Atherley
Chairman
In response to a number of shareholders contacting the company about the current SP price, the chairman has sent out the following email which covers all of the issues and also goes some way to explaining the current SP (in 2 parts)
Subject: RE: Pensana plc
Dear xx
Many thanks for taking the time to set out your concerns regarding Pensana's development and financing plans.
Thank you also for the specific concerns you raise with respect to the funding arrangements and the examples you give of the pathway being undertaken by peer company Arafura with respect to funding and offtake arrangements.
As you are aware, outside of Lynas and MP Materials very few rare earth developers have been successful in attracting funding and bringing a mine into production. Lynas continues to be bailed out with soft loans from the Japanese Government and as you are aware MP was reversed into a US$500 million SPAC and has relied on several large equity rounds to fund its US$2 billion development.
Arafura, Hastings, Northern, Peak, Mkango, Rainbow et al have all been around a very long time and despite repeated announcements of conditional financings and offtake agreements none has successfully drawn down finance and put a mine into production.
The challenge Pensana has faced is having its main asset in Angola and the very limited pool of capital available to fund the project. Hence the plan to move downstream and capture the separation premium at Saltend in the UK, the Green Bond rating from Cicero, the bond offer from ABG Sundal Collier, the equity support from M&G, together with the (albeit small) conditional support from the UK Government Automotive Transformation Fund.
We also entered into a 25% offtake deal, not with an intermediaries or OEMs as we have seen with Arafura et al, but directly with the world's largest and most important non-Chinese magnet manufacturer. It is my understanding that this is the only such agreement in existence.
As you point out the combination of weak equity market conditions, unexpectedly low NdPr prices and interest rate rises have made our circa US$500 million funding requirement unobtainable in the short term which is why we entertained the US$220 million equity injection from the strategic investor and associated ABSA project finance which, for reasons unrelated to Pensana, fell over at the very last moment earlier this year after both Boards had approved the transaction.
We acknowledge that the release of the Interim Accounts shortly afterwards could have been better handled thereby avoiding the adverse market response.
In response and in relatively short order we have announced a revised development and funding strategy backed by our major shareholders FSDEA and M&G, supported by the Angolan Government and have mandated ABSA to provide the project funding.
Theori****, you haven’t read this article properly have you? Instead you e chosen to just attack it because it doesn’t suit your own agenda. You’ve been proven to have posted false claims on here before so isn’t it time to come clean and tell us why you are intent on driving this share price down against the conventional wisdom, what is your agenda, you cheap little *&%?
I’ve known PA for much longer and don’t recognise your description, I can only assume you are mischief making …. What makes you think you know more than anyone else on here?
Do you need some support Basey? That last post with expletives was completely uncalled for … have a look in the yellow pages under “support for people who can’t help but be critical of anyone who don’t agree with them”. I’m sure it will help
You obviously don’t become any more pleasant towards the weekend Basey. So put your money where your mouth is and quantify what you mean by masses of incoming news? How many RNSs over what period, this would at least allow us to judge your rhetoric and may even give you the credibility you currently lack. Masses of incoming new my ass…..
I know some of my posts are taken down and I’m assuming it’s Baserite who is reporting. I choose not to report his posts as I would like people to judge for themselves his single vision views. Doesn’t it strike people as odd that anything mildly contradictory to his own view is taken down, a little like Putin really! The question is why isn’t he prepared to listen to others views…. That’s a cautionary note in itself I would have thought.
Laura, just be very careful what you take from BR…. He has been talking up this share for a long long time and it has never fulfilled his aspirations. He is a chancer that doesn’t convince me he has the financial acumen to make judgments - that doesn’t matter to him, but it should matter to those who may choose to make decisions based on his baseless rhetoric. His typical response is bluster and abuse because he can’t argue anything rationally. There is a very personal reason why I haven’t posted on here for a few months which I don’t wish to share but it makes no difference to my view which has been help consistently over many months and the years (probably 15) since I’ve held PYC which I view as a long odds gamble and not a hot favourite dead cert like baseless
China, I’m invested in both PRE and ALK. Your comments are confusing! PRE is much further established with current market cap around £150m whilst ALK is around £6m - the fact that the share price is higher is irrelevant. Your argument would suggest that ALK is nearly 3 times bigger than LLOY ??????