Ann: Opuwo Project Update and Board Changes, page-535

Originallypostedbyphuketguy

Benzo,andallyouothersouttherenoalwayshavingagoatmeabout"unrealisticramping"and"spruiking"I'mgettingprettytiredofhearingyouronelinebaselessaccustaions.Therewasnothing"unrealistic"aboutthevaluationsIandseveralothersintelligentandexperiencedinvestorsherewereputtingonthecompanyatthedifferentlevelsofcobaltpriceandinformationfromthedirectorsandtherateoftheirprogressatthetime.

WetogetherranIMOquitereasonablemodelsthatgotthefairpotentialvaluationatbetween1-4dollarsAUD.Thesewerepostedwithalldetails.whydidyounotpipeupthen???Onthebasisofthatresreach,pricesatthetimeandthosereasonablefinancialmodelsIwassayingthiscouldgetto1$butmorewascallingitto30-50centsatthatstage-(gobackandlookattheposts).(Andrememberthatwaswhenallindicationswerecobaltwasgoinguplongertermeventoover100,000atonwhichmaywellstillbethecaseinthefuture)-westillusedmodelsof70and80,000aton.Whathasscreweditallwastherapidrecentcobaltpricefallwhichmostpeopleinvestingincobaltstocksandcobaltstorydidnotforsee.(assooftenhappensinmarkets!!justasnowthebearssellingoutatthebottommaywellbetotallywrong)

IhavealsobeenopeninsayingthatIMObelow45-50,000atonCothisprojectisworthessentiallyzeroinrelatity,sowhatwehavenowisineffectanundatedandgearedcalloptiononthecobaltprice.(gobackandlookattheposts)Alsohavealwayssaidwe'llliveordiebythecobaltpriceandifyoudon'tbeliveincobaltrallycomingdontinvesthere.

ButLookifyouguysaresosmartandnotjustbeing"downrampers"orsmartassmondaymorningquarterbacksnowthenletsdothis.-ok?IwilldojustnowwhatIconsideraroughreasonablevaluationnowbasedonapotentialpriceof60,000atoncobalt.(whichithinkiseasilyachievableinthefuture)usingonlywhatthecompanyhastoldustodate.(andaddinginmyownbest-(andquitewellresearched)valuationsonpotentialcapexandopex(asunfortunatelythecompanyhasstillnotgivenusthosenumbers!!)-sothatsallwehavetogoon.

thenIwantanyofyouguyssocriticalnowtotellmeexactlywhereyouthinkitis"unrealistic"orwrongandwhy.OK?otherwisepleasejustbequietwithyourconstanttiresomeandunfoundedaccusationsandtakeresponsibilityforyourowninvestmentdecisionsyourselves.

PleasebearinmindIamnowsittinginalostbeachresortattheendofadirtroadoverthecentralmountainsnearPortBartonhalfwayupPalawan,phillipines,Imabouttodoanothertrailruneventthisweekend-sowithnlittleelsetodothismorningIwilldothisvaluationallfrommyheadandhencequiteroughly.(andmyapologies-andpleasecorrectmeifIgetanyfigureswrong).(allinUSDtillend)

CLACompanyhassofarstatedthat:
1.theywanttotrytoprogressSSusinga5mtpaplantmodel.
2.theyaresofargettingjustover80+%oreseparationsuccess
3.theyaresofargetting80+%oreprocessingsuccess.
4.SO...afterprocessingandseperationintheendweshouldgetnetabout3,200,000tonsofore.fromthat3,200,000tonsperanum
5-0.12%iscobalt=3,800tonsCOx60,000pt=228millUSD
6.-0.41%iscopper=13,120tonsCUx6,500pt=85millUSD
7.-0.46%iszinc=14,700tonsZIx2,500PT=36millUSD.
sototalgrossincomeatprojected60,000atonCOandtodayspricesonZIandCU=349millUSDlookingaheadresonablyno?(youcantakeoff10%forpayabilitytooifyouwant)

sowhatsthepotentialcosttoproducethat?-Problemissofardirectorshavenotyetgivenusafirmindication(whichIMOisthemainissuewiththestockpricenow-andIMOalsoprettyincompetantaftersolongandsomuchexpenses).SothefiguresI'lluseherearejustmyownreasonableguess(pleasedonottakethisasgospel)thesecalcsarebasedsoleyonmyownresearchofsimilarFreshsulphideCObasedmineprojectsinZambia/DRC/OZandalsomanydiscussionsandquestionswithothermetalurgists/minersandthedirectors.

ImpresumingallcostsareputundercobaltcolumnandtheCuandZiarejustextracredits.Beforeinmodelsweused40,000USDatonoreminingandprocessingcosts-butnowtomeitlookslikeitsgoingtobemoresoIwilluse50,000atontobeconservativeinmyview.OK?orunreasonableandifyouthinksopleasesaywhy?

SoImtakingCoprocessingcostsfor3,800tonsatUSD50,000aton=USD190millopexcostPA.
SoincomewithCOprofit+ZiandCucredits=USD349mill
sogrossopex(EBITDA)profitcanberoughlyUSD159millUSD.-OK?

Imalsoguessing(fromsamereasonableresearch)thatCapexcostsforplantandprocessingwillbearound500millUSD-butletstakethatupto600milltobeconservative.OK?I'dmakethatonaloanwith10yearpaybackat8%interestmeaningannualrepaymentsofsay8%=SoCapexloanrepaymentsofroughly70,000USDayear.

sothatcouldleaveannualgrossoperatingprofit=USD80mill.OK?
less20%tax=64millUSDnetprofitperyear.OK?
letstake10%offthatforotherundseenissueseachyear.=58millUSD.OK?
AndCLAgetsonly95%ofthat(Nambianpartnersget5%)=55millUSD.OK?

55millusd=78millAUD.OK?anythingunreasonablesofar?

theres750millsharesonissuesothataround10centsashareearningsPA

Wecanputthatona10xPE(aswellhavealongminelife)andwereat1$pershare.

Nowofcoursetheremaybemoredilution,(moesharesonissue)orwemayfarmoutetcpartofdeal,orgetboughtout.ButthatdiscountwaswhatIwasbasingmycallsof30-50centsasharepotentialpricetargeton.OK?orunreasonable?AndrememberAtUSD95,000atoncobalt(asitwasatthetimeiwascaling30-50cents)thosenetprofitfiguresweresignificantlyhighernearer4$ashare!!.

Sonowpleaseyouguyssohappilyaneasilyaccusingmeof"ramping"eithertellmewhyyouthinkthataboveis"unreasonable"-andpleaseexplainexactlywhy-orpleasestopyourendlessone-lineshallow,monday-morning-quaterbackstuffaboutUnrealisticrampingwithoutsubstantiatingitthatsuckedyoupoorunknowinginnocentsin.

LookImnotproudimperfectlyopentobeingwrongandlearning.I'mnogenius.butwhatbugsmeisthenowsnideunsubstantiatedsnipesthati'minthererampingforaprofit.Ivegotmoreintegrityandhavedonemorereserachthanmostonthisblogside.IsayandforecastwhatIthinkandstandbyitrightorwrong.andI'mwillingtochangemymindandwillingtotrytoassist/help/supportorcriticisemanagementofourcompanyasiseeit.I'm,likeyouguys,justtryingtomakesomemoneyformeandmymateswithoutscrewinganyone.

IMObasically2thingshavehappenedsincethebullishglorydaysat24.5cents
1.Thecobaltpricehasfallendrastically-andIandallotherscaughtwithpantsdownmadewrongcallonthat.Thatpricedropmakesaharderworkingenvironmentallroundfordirectorswithgeneralinvestmentpossibilitiesinthesector,withpotentialbuyers/withASXregulatorsbeingstricter/andwithourconsultantsbeingmorecautiousetcetc...
2.Thedirectorswhoatthetimeofthehighswerechuggingalongnicelywithoutseemingtoputafootwrongandkeepingcostdownatthetimehave(IMO)apparentlystartedmakingsomemisstepssince,asinunderdelivering,gettingdistractedwithotherprojects,probablyoverspendinginareasandnotkeepingtheCLAmarketwellinformed.(althoughagainIqualifythatstatementbysayingits"easytocriticiseandhardtocreate")-theresalsothecaveatthatIamwoefullyunqualifiedandcomparativelyuninformedinthegorydetailstopinpointexactlywheretheycouldhavedonebetter.

sowhatsthesolution?.
IMOonly:
1.istheassetthere-yes
2.isitviabletobesoldtoabuyeranddeveloped-IMOyes-andmoresoattherightcobaltprice.
3.willcobaltgobackuptohigherprices-IMOYes-Ibelieveso,asdomanyofthepotentialbuyersandotherpotentialinvestors.
4.Cancurrentmanagementcompetantlygetprojecttothatstageandsoldoff?-thatsthemainissueformerightnow.IMOTheyneedtodelivertheresourceupgradeandgetalargerpartnerinwhichhasmoretechnicalknowhowinCobalttogettheSSout.HoweverIamnowtoldbyallwhohavedealtwithhimPineisthemanwhocanpotentiallydoit.IalsobelieveintheintegrityofBBintryingtogettheretoo.Iplantocontactpinesoonafterthisholiday.

IrespectwhatBB'sdonesofar.AndImhappywiththenewmovesafoothappeninginthecompanycuttingcostsandreappraisng.Itthinkitsapositiveratherthanpushingonblindlybelievingwithheadsinthesand.

OKnotmuchelsegoingonhereonthebeach,somecoolpaintedfishingbankascomminginwiththeircatchnow,beutifulsunnydayhere,whitesandbeach,palmtrees,acutegirlcomingoverwithabasketofmangoestosellmesome,thinkillhaveaswimthenacoupleofmangoes.

waitingtohearyourresponsehatermates?

Check of PG's Figures in his post 6 Mar 14.14
PG have run thru your figures they make sense to me
Had different way of looking at Capex loan repayment but my bottom line was similar to yours

As you say likely to be more dilution as need some company to buy in to secure $600m usd Capex funding
So for that they may demand say 5 PE ( ie very longer term unknown of cobalt price)
Which gives as you say price target of 30c-50c (Which gives very big leverage from Cobalt prices above the $60000 usd pt  for the calculations used here)
My figures $48m usd  x 5 PE = MC $240m usd = MC$340m aud

Anyway does give an indication  just how much current MC may be way undervalued
Management and Team just need to have all the figures, Jorc's SSs processes mets and mine plans etc (which I think they are well on the way to) ready for funding partners or whatever when the Cobalt price, supply/demand begins to improve leading up to the EV/Battery revolution
All IMO