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TON triton minerals ltd

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DFS delay - pros and cons, page-3

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Milanese68

2,163 Posts.

49

20/10/15

07:43

Post #: 16209303

Originally posted by ozpolarbear ↑

@Milanese68 – Welcome back, mate. I was wondering where you had disappeared off, to.

As we know, there could be some delay in the DFS. Just some positives and negatives IMO –

1) Price could languish or fall further (negative)

Price could languish a bit till the DFS comes out.

This may or may not happen however since there is still a lot of good info due in the next 6 months
News flow Q4-2015 (this quarter)
YXGC JV (China) - Commence construction enhanced graphite factory -Q4 2015
Ancuabe T12 - Drilling activities update –Q4 2015
Ancuabe T12 - Mineral Resource -Q4 2015
Nicanda hill P66 - Drilling activities update –Q4 2015
Nicanda hill P66 - Mineral Resource -Q4 2015
Nicanda hill 100 - Resource re-classification -Q4 2015
Nicanda hill 100 - Reserves targeted for -Q4 2015

Still lots of great news this quarter including our jumbo flake Ancuabe T12 and Nicanda P66 resources, which could give very sharp spikes, as they derisk the company substantially.

New flow - Q1-2016
Ancuabe T12 - EIA & DUAT update –Q1 2016
Ancuabe T12 - Advancement of strategic alliance with GK –Q1 2016
Nicanda hill 100 - Early works and access update –Q1 2016

So, as can be seen, there is lots of news still which could give sudden sharp spikes. Price may or may not languish, but obviously since DFS is one of important events, price languishing should not be ruled out.
It all comes down to the level of insto support and this is why TON really needs to focus on selling itself to instos as I have mentioned again and again, since long.
What has been happening lately is half cent falls each day, and they obviously add up in longer run, mess up the charts, etc..

Column 1 Column 2 Column 3 Column 4

1 Time Price ($) Volume Value ($)

2 4:10:28 PM 0.21 493 103.53

3 4:10:28 PM 0.21 1,507 316.47

4 3:41:02 PM 0.21 2,300 483

5 2:51:44 PM 0.215 3,385 727.775

As can be seen, today’s ending fall was also probably bot action. Maybe a good sign too in longer run, if this is capping for accumulation but obviously it can be frustrating in short run for some.

As @mitta very rightly pointed out, TON always shows too much supply, where major upmoves are bashed with selling. Maybe as mitta says, a further big bash downwards might be a good thing in the longer run
http://hotcopper.com.au/threads/ton-chart.2578170/page-127?post_id=16207068

2) Uncertainty and change of plans (negative)

@insaf has pointed out some points here. I agree with some of the points and I’ll mention below which specific points I agree with
http://hotcopper.com.au/threads/ann-triton-corporate-presentation.2616477/page-59?post_id=16200925

Ideally, we shouldn’t have had to hear about the delay from GMP. It would have been much better for TON if it had come to us via a formal announcement from the company. I myself don’t normally comment much on the BRR reports and don’t even hear many of them, but prefer to analyse the official ASX announcments.

Again, it would have been better if it had come well in advance and not at the end. Obviously since GMP was aware that there could be a delay, it means that the company might have been aware even much earlier. As Insaf rightly points out, these things sometimes cause doubts in investors’ minds.

Additionally, I would like to add that if investors were aware earlier, then they could have made a more informed decision of their buy/sale decisions in the late 20s and the 30s.

I would also like to add that the presentation mentions Expanded DFS due for completion by -Q2 2016 while the webcast mentions Feb 2016. IMO, this difference should also have been clarified by company as it creates unnecessary uncertainty
http://hotcopper.com.au/threads/news-triton-minerals-corporate-and-project-update.2616615/?post_id=16187997

With the exception of this time, TON has done an exceptional job all along of keeping investors fully updated of progress and I’d like to believe that TON will continue on that old track.

3) Some comment of BB’s comments in webcast

I just noted some points mentioned by BB in webcast. Please hear the whole clip in case I misinterpreted anything

5:50 DFS delay – Objective at start of the year was to get Nicanda into production as quick as possible. Along the year, there have been many changes including YXGC offtake, JVs,P66 jumbo zone, Ancuabe T12 jumbo zone

6:50 - It does not make sense to complete DFS this year and then start new ones for P66, vertical integration and Ancuabe. So those are also going to be incorporated into DFS. Most likely push DFS to around Feb 2016, which will tie in with environmental approval schedule, etc. DFS will be used to finalise funding discussions TON is currently in.TON is in discussion with number of groups about project funding. DFS needed for things to become binding, and this is part of normal process.

8:10 SQZG was just LOI and not binding on them or TON. SQZG one of few groups TON is dealing with. Looking for best commercial transaction in short and long term. TON in the meantime is in discussions with groups in Europe, China, Japan, Korea, America and South America

9:30 Normal situation is to go into project funding once all boxes are ticked

@jackarooz has talked a fair bit on the webcast and DFS recently. So please read all his recent comments too.

4) Normal process (neutral)

This is really the normal way of going about things. Do the DFS and don’t aim for shortcuts. So, really, what the company is doing is the normal approach.

5) Risky without DFS (positive)

@Rat1973 has mentioned many times recently of the importance of DFS, and how he wouldn't consider companies without DFS. So, really this is an area which should not be compromised upon. So, TON is definitely doing well to give due focus to this area

6) Full comprehensive DFS and better offers (positive)

As can be seen above, TON is planning to go in for a full DFS incorporating everything, Obviously this much more positive for company in longer run, and would attract much better funding offers, as we would have one comprehensive one giving an entire snapshot

To quote @Rat1973 with what he said sometime back - “it is critical that TON completes a thorough DFS process to widen the scope to as many potential financiers (debt or equity) as possible” Well said, Rat
http://hotcopper.com.au/threads/ann...-and-ancuabe.2615139/page-52?post_id=16175402

7) Will show greater economic feasibility and DFS becomes a formality (positive)

To quote @Captain Morgan with exactly what he said sometime back – “I would think that the DFS will be delayed from Dec till approx Feb to include Ancuabe and P66 zone as it greatly increases the profitably of the whole project and saves a few $100k in dollars. Think BB has hinted at this is the recent bbr reports. It will also help to hook in investment as the project will pay back quicker and look more attractive.”

Here is a note from a recent announcement - “Enhanced graphite products such as composite sheeting and expanded graphite foil attract prices of up to US$50,000/tonne with the main uses being as formed thermal insulators such as gaskets, fire door seals, electronic parts and battery heat shields”
(Refer point 9 of below link, where I discussed in greater detail)
http://hotcopper.com.au/threads/ann...ite-products.2610561/page-70?post_id=16134154

Proactive has also mentioned of the margins and profitability from vertical integration. All that makes the DFS look like a formality. It definitely makes sense to include all that as the DFS becomes more of a formality including all that rather than just considering Nicanda. Everything taken together is worth much more than the sum of the parts

8) No duplication (positive)

Obviously, the plan changed from the earlier part of the year, and this has to be taken into account. There is no duplication now and this would possibly reduce time and cost in longer run, rather than doing multiple DFS for each project, which would probably also be a much more expensive affair.

9) Potential for further offtake, etc. to be incorporated (positive)

As TON says, it is in discussions with several parties across the world. In longer run, obviously this is a top priority as TON cannot be dependent on just 1 party YXGC. Most of the graphite companies seem too reliant on just 1 party and obviously this needs to change for all the graphite companies

If TON can manage to get one more offtake, then that too can be incorporated in some form in the DFS. Obviously this may or may not happen, but it cannot be ruled out, and especially considering that company says that it is in talks with companies across the world. But it is best not to get hopes too much unless there is some definite news on this front.

10) No dependence on SQZG or any party (positive)

As Brad mentions, this is just LOI and nothing binding. In hindsight, TON’s share price might have been much higher if SQZG was never in the picture from the start, as their introduction to the scene and subsequent delay caused undue uncertainty.

TON has clearly learnt their lesson well and is not willing to compromise this time around, and is going all the entire process. Once we are done with the DFS, we are not dependent on any party, as ongoing discussions with other parties for funding can continue parallel
@whisky49 discussed this point very well some days back.
http://hotcopper.com.au/threads/ann-triton-minerals-webcast.2616483/page-13?post_id=16191793

11) Better chance of getting another SQZG / YXGC type offtaker (positive)

YXGC is an offtaker and JV partner for vertical integration.
SQZG was to be an offtaker and financier

Once the DFS shows the feasibility of the projects as a whole, there is very good chance of it attracting other parties similar to what YXGC offers and to what SQZG was offering - potential new JV partners considering vertical integration, new equity partners, new financiers, or maybe just new long term investors attracted by what they see.

12) More suited for macro risks (positive)

I have mentioned my macro fears since long. While I have mentioned several bubbles which are IMO yet to burst (possible shale bubble, Aussie property bubble, financial institutions/bank share price bubble, global property bubble, tech bubble, start - up bubble, education bubble, overall broader equity bubbles, emerging market bubbles, bond bubble, junk bond bubble, USD bubble, derivatives bubble, etc. among others), as was the case with the last crisis in 2008, I think there is a very good chance that financial institutions will again be among the worst hit, and it could lead to lending completely frozen as was the case last time around. In such an environment, obviously companies seeking funding must have ready documents illustrating why they deserve funding. So, there is no question of a shortcut and DFS being compromised in any way

13) Macro fears (negative)

At the same time, TON needs to try and speed things up and not delay this indefinitely.Once a crisis starts, then even a DFS might be useless and would be a case of too little, too late.

I cannot predict when a crisis will take place. All I know, is that IMHO, the fundamentals (or rather the lack of it) are in place for a very deep crisis. 2 years ago, around Feb 2014, I was speaking to someone and told him that IMO there is a good chance of a very significant financial crisis by the end of 2016. I also warned him then, that iron could be hit by China slowdown. I’m assuming that iron and oil falls of last year already count as very significant events but IMO, there is so much still to come.
TON needs to focus on DFS and funding as fast as possible (without going in for any shortcuts) because a “Lehman moment” can come overnight. TON needs to maintain a balance between speedy completion of DFS and being thorough

14) Corporate finance vs project finance (positive)

It makes much more sense to do a thorough DFS reflective of the company as a whole rather than individual projects, as that would give a better chance of getting finance for the company as a whole rather than for individual projects, which could become very restrictive. Getting finance for company as a whole will give TON far more flexibility later on.

15) Conclusion

Without a shadow of a doubt, IMO, TON needs to take no shortcuts. Nevertheless, TON has to try its best to do things as fast as possible.

I’m happy that TON is doing the hard work without taking any short cuts which will yield better fruit in the longer run.

I’m also happy to see that TON is taking calculated decisions lately (expansion only subject to offtakes; thorough DFS, etc) which focus more on guaranteeing longer term success of the company rather than short term share price gains, which would not be in the company's longer term interest.

Expand

@ozpolarbear
Like always, you come out with these well detailed posts.
Since you've joined this forum, I've enjoyed reading your post.
Well done OZ, keep up the great work mate.

TON Price at posting: 21.0¢ Sentiment: Hold Disclosure: Held

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