Benzo, and all you others out there no always having a go at me about "unrealistic ramping" and "spruiking" I'm getting pretty tired of hearing your one line baseless accustaions . There was nothing "unrealistic" about the valuations I and several others intelligent and experienced investors here were putting on the company at the different levels of cobalt price and information from the directors and the rate of their progress at the time.
We together ran IMO quite reasonable models that got the fair potential valuation at between 1-4 dollars AUD. These were posted with all details. why did you not pipe up then??? On the basis of that resreach, prices at the time and those reasonable financial models I was saying this could get to 1$ but more was calling it to 30-50 cents at that stage - (go back and look at the posts). (And remember that was when all indications were cobalt was going up longer term even to over 100,000 a ton which may well still be the case in the future) - we still used models of 70 and 80,000 a ton. What has screwed it all was the rapid recent cobalt price fall which most people investing in cobalt stocks and cobalt story did not forsee.(as so often happens in markets!! just as now the bears selling out at the bottom may well be totally wrong)
I have also been open in saying that IMO below 45-50,000 a ton Co this project is worth essentially zero in relatity, so what we have now is in effect an undated and geared call option on the cobalt price.(go back and look at the posts) Also have always said we'll live or die by the cobalt price and if you don't belive in cobalt rally coming dont invest here.
But Look if you guys are so smart and not just being "down rampers" or smart ass monday morning quarter backs now then lets do this.-ok? I will do just now what I consider a rough reasonable valuation now based on a potential price of 60,000 a ton cobalt. (which i think is easily achievable in the future) using only what the company has told us to date. (and adding in my own best - (and quite well researched) valuations on potential capex and opex (as unfortunately the company has still not given us those numbers!!)- so thats all we have to go on.
then I want any of you guys so critical now to tell me exactly where you think it is "unrealistic" or wrong and why.OK? otherwise please just be quiet with your constant tiresome and unfounded accusations and take responsibility for your own investment decisions yourselves.
Please bear in mind I am now sitting in a lost beach resort at the end of a dirt road over the central mountains near Port Barton half way up Palawan, phillipines, Im about to do another trail run event this weekend -so withnlittle else to do this morning I will do this valuation all from my head and hence quite roughly.(and my apologies -and please correct me if I get any figures wrong). (all in USD till end)
CLA Company has so far stated that:
1.they want to try to progress SS using a 5 mtpa plant model.
2.they are so far getting just over 80+% ore separation success
3. they are so far getting 80+% ore processing success.
4. SO...after processing and seperation in the end we should get net about 3,200,000 tons of ore. from that 3,200,000 tons per anum
5 - 0.12% is cobalt = 3,800 tons CO x 60,000 pt=228 mill USD
6. -0.41% is copper= 13,120 tons CU x 6,500 pt= 85 mill USD
7. -0.46% is zinc = 14,700 tons ZI x 2,500 PT =36 mill USD.
so total gross income at projected 60,000 a ton CO and todays prices on ZI and CU = 349 mill USD looking ahead resonably no? (you can take off 10% for payability too if you want)
so whats the potential cost to produce that? -Problem is so far directors have not yet given us a firm indication (which IMO is the main issue with the stock price now- and IMO also pretty incompetant after so long and so much expenses). So the figures I'll use here are just my own reasonable guess (please do not take this as gospel) these calcs are based soley on my own research of similar Fresh sulphide CO based mine projects in Zambia/DRC/OZ and also many discussions and questions with other metalurgists/miners and the directors.
Im presuming all costs are put under cobalt column and the Cu and Zi are just extra credits. Before in models we used 40,000 USD a ton ore mining and processing costs- but now to me it looks like its going to be more so I will use 50,000 a ton to be conservative in my view. OK? or unreasonable and if you think so please say why?
So Im taking Co processing costs for 3,800 tons at USD 50,000 a ton= USD 190 mill opex cost PA.
So income with CO profit +Zi and Cu credits = USD 349 mill
so gross opex (EBITDA) profit can be roughly USD 159 mill USD.- OK?
Im also guessing (from same reasonable research) that Capex costs for plant and processing will be around 500 mill USD - but lets take that up to 600 mill to be conservative. OK? I'd make that on a loan with 10 year payback at 8% interest meaning annual repayments of say 8% = So Capex loan repayments of roughly 70,000 USD a year.
so that could leave annual gross operating profit =USD 80 mill. OK?
less 20% tax= 64 mill USD net profit per year.OK?
lets take 10% off that for other undseen issues each year. = 58 mill USD.OK?
And CLA gets only 95% of that (Nambian partners get 5%) =55 mill USD. OK?
theres 750 mill shares on issue so that around 10 cents a share earnings PA
We can put that on a 10 x PE (as well have along mine life) and were at 1$ per share.
Now of course there may be more dilution, (moe shares on issue) or we may farm out etc part of deal, or get bought out. But that discount was what I was basing my calls of 30-50 cents a share potential price target on. OK? or unreasonable? And remember At USD 95,000 a ton cobalt (as it was at the time i was caling 30-50 cents) those net profit figures were significantly higher nearer 4$ a share!!.
So now please you guys so happily an easily accusing me of "ramping" either tell me why you think that above is "unreasonable" -and please explain exactly why - or please stop your endless one-line shallow, monday-morning-quaterback stuff about Unrealistic ramping without substantiating it that sucked you poor unknowing innocents in.
Look Im not proud im perfectly open to being wrong and learning. I'm no genius. but what bugs me is the now snide unsubstantiated snipes that i'm in there ramping for a profit. Ive got more integrity and have done more reserach than most on this blogside. I say and forecast what I think and stand by it right or wrong. and I'm willing to change my mind and willing to try to assist/help/support or criticise management of our company as i see it. I'm, like you guys, just trying to make some money for me and my mates without screwing anyone.
IMO basically 2 things have happened since the bullish glory days at 24.5 cents
1. The cobalt price has fallen drastically -and I and all others caught with pants down made wrong call on that. That price drop makes a harder working environment all round for directors with general investment possibilities in the sector, with potential buyers/with ASX regulators being stricter/ and with our consultants being more cautious etc etc...
2. The directors who at the time of the highs were chugging along nicely without seeming to put a foot wrong and keeping cost down at the time have (IMO) apparently started making some missteps since, as in underdelivering, getting distracted with other projects, probably overspending in areas and not keeping the CLA market well informed. (although again I qualify that statement by saying its "easy to criticise and hard to create")- theres also the caveat that I am woefully unqualified and comparatively uninformed in the gory details to pinpoint exactly where they could have done better.
so whats the solution?.
IMO only:
1. is the asset there -yes
2. is it viable to be sold to a buyer and developed- IMO yes -and more so at the right cobalt price.
3. will cobalt go back up to higher prices- IMO Yes -I believe so, as do many of the potential buyers and other potential investors.
4. Can current management competantly get project to that stage and sold off? - thats the main issue for me right now. IMO They need to deliver the resource upgrade and get a larger partner in which has more technical know how in Cobalt to get the SS out. However I am now told by all who have dealt with him Pine is the man who can potentially do it. I also believe in the integrity of BB in trying to get there too. I plan to contact pine soon after this holiday.
I respect what BB's done so far. And Im happy with the new moves a foot happening in the company cutting costs and reappraisng. It think its a positive rather than pushing on blindly believing with heads in the sand.
OK not much else going on here on the beach, some cool painted fishing bankas comming in with their catch now, beutiful sunny day here, white sand beach, palm trees, a cute girl coming over with a basket of mangoes to sell me some, think ill have a swim then a couple of mangoes.
waiting to hear your response hater mates?
CLA Price at posting:
2.1¢ Sentiment: Buy Disclosure: Held
(20min delay)