VAN 0.00% 4.7¢ vango mining limited

from speccy to mid tier producer, page-57

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    Can I just take this opportunity to clarify a few points as I think investors may get the impression that there is a degree of uncertainty/risk in bringing some of these projects to fruition - if anything the risk is tiny.

    Fistly we must think about who is running the company. I keep bleating on about this point but The Chinese will source the capital or the resources to fulfil the needs of the business. ORD is in a very unique position, and I personally have not encountered a stock on the ASX that is being run, in today's terms, like ORD is. The strategy is clear: China has been handed a mandate, and that is to secure the raw materials required to sustain China and the rest of the nearby developing world for growth. This includes nearby emerging markets like India etc. ORD is 'case in point' as to the execution of this mandate. Additionally, I beleive the investment opportunity in a stock like ORD only comes around maybe once a decade. Obviously the Chinese are actively investing in other companies and projects but ORD is coming off a much lower base. The strategy being employed indicates that ORD has the potential to become a behemoth.

    Secondly, we must consider what I have just mentioned re: strategy. There are no plans (from what has been communicated to me) for any form of resource dug out of the ground in Laos to send it down the Mekong. The most likely path to transportation is combo road-rail. The company is still running through the feasibility of this and has yet to make a decision on infrastructure requirements. It does however have a plan and that plan has been built into the costs associated with the SARCO float. Additionally, when we look at the over-arching strategy of the company as it exists today, it is clear what is being played out. As with a lot of micro/small cap miners, the internal business does not have the capital, equipment and technical capabilities to do everything in-house. The Chinese realise this, and have developed a plan around it. The plan is to seek farm-in partners, JV-structures, and free-carry on the drill. This is physically being played out, evidenced by Laos (with NFC) and CF with GRAM. This has meant that very little cap. expenditure has been required on ORDs part.

    We talk about CR for SJ. Nothing has been communicated to me that would even remotely indicate that a CR will be required to fund SJ drill as targets have yet to be identified. We must also remember that the targets are not going to occur over the entire tenement. The first priority is to expand a indicated gold resource across the western half of the tenement near 1. Five Mile, 2. PHD, and 3. PHD North. Further north from these areas there are interesting gold steam occurances...but one step at a time. After this is completed drilling will re-commence on existing areas around 4. Tregony, where the 55K ounces are. This is located in the eastern half of the tenement. The areas in the eastern half also present themselves with further gold occurances. All of this has got the company extremely excited and I have underplayed it to be honest. There are at least 10 areas where ORD needs to drill to define the total gold resource to an 'indicated' state. Getting back to funding: The GRAM JV should not be underestimated. Its not just about CF, the JV was specifically set-up to explore other opportunities. CF is just one of them. There is a real possibility that GRAM will fund SJ IF needed. This would be consistent which the strategy employed by ORD management. ORD have openely stated that the GRAM JV is waiting to take-up other projects - having said that the focus of ORD is Laos.

    Then on the GRAM/CCD option. I personally have assigned a zero value to this. I have not factored any value to this as I believe the value from it will not be realised for at least 2-years. To understand this you need to look at where Caledon will be in the future. I dont want to go into too much detail here but CCD will not be value accreditive until it starts production ramp-up, and then sales. Additionally I believe that the option will not be exercised until the intrinsic value appreciates significantly - I'm talking min 50%. We cant even put a high-level figure on it as the value isnt the purchase price of CCD, it will be the sale price of the option (whatever that is) less the purchase price at the time of takeover. As you can see its all unknown.
 
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