Hi All, very negative thread considering. Well thats my view.
Iv taken my allocatio (paid the broker) and asked if i can get a modest surplus if available.
For a start the issue price is well under the current SP, which seems to be holding, and while the EIS draft didnt hit the timeline it wont be too far off. Sure when TNG gave notice in 2015 the NTEPA extended the public consultation time to 2 months and sure (assuming a clear run) a report or recomendations need to be prepared by NTEPA requiring another month or two, and sure there is the further imput required by the Fed Govt but then thats pretty well it as we head to finance and its make up.
I accept its disapointing that we have waited some 4 years to get to Refinery EIS (from filing the NOI) and i accept that its dissapointing that we've overshot the recent EIS timeline. Also I accept that rhe recent newsletter, while front footing the delay, is vague in many respects, but the bulk of the remaining work requiring completion appears to sit within SMS's control. They have every reason to progress the FEED and detailed vonstruction plans asap. Moreover as they are providing comprehensive construction timeline, enginering and product guarantees they have every incentive to get it right. There relationship with kfW and reliance on those guarantees is why the senior debt will come through on acceptable terms.
The recent independant research report valued Mt Peake at $2.2 billion. Taking a 70% derisked position and assuming 30% equity component ( requiring 1.5 bill shares to issu therefore total shares to 2.5 bill) they still valued the shares at 60 cents as at now ( all figures rounded out). If the theoretical equity component alters either by reduced % or by less shares requiring to be issued on account of increased SP then positive adjustments will be required.
It has been said finance is a given , the issue is the terms. This project will get to production unless some global meltdown completely derails life as we know it.
When the spot price for vanadium peaked at the end of 2018 every ma/woman and their respective dogs were anouncing commercially viable projects on the route to construction/production. Well the spot price has settled. V2O5 peaked at US$ 34.00/lb and Ferrovanadium at US$140.00/lb, they are both down more than 50% at US $14.50 and US$ 50.00 respectively. I see this as a positive for TNG. Firstly TNG has 3 plus products so is less exposed to fluctuation but more particularly the new trough is still well above production costs.
While the spot price has dropped off from its peak future demand is still predicted to be strong both in the steel strenghthening front and VRF battery front. So new projects are required.
looking back to the bone yard of the wanna be primary vanadium producers the likes of Prophercy (formslly American Vanadium) and Vanadium corp as examples could well struggle in this climate but not TNG. American Vanadium calculated its production costing at c US $10.00/lb before it went into liquidation. Vanadium corp still cant produce bankable figures. Even assuming they can they road to production is much harder and their due diligence will need to be backed by reliable proven production data. On the other side of the coin TNG not only has a safety margin with its low cost of ptoduction backed by well established, double BFS, SMS guaranteed production and product assurances.
There are primary producer's and bi product producer's coming on line. Bushveld is ramping up, largo the same, both in its current mine and refinery as well as new projects. Largo is a good example of just how much refinement must go into producing vanadium economically. From 2014 for a couple of years they struggled with benefaction issues, vanadium production costs were over US $5.00, now they say costs last year were US $3.50 /lb providing strong safety margins and showing just how important it is to get mine benefaction right. China is starting to gather steam after its 2018 mine closures for environmental reasons. It cannot meet its internal demand. Some of the Northern Hemisphere companies that have a uranium focus can also contribute to global demand by economically processing their vanadium bi product too.
As best i can tell Atlantics Windimurra project is the only fresh face with a shot at production near term. They of course arent a truely fresh face having commenced production on two prior occations and suffering from benefaction issues and then fire in 2014. Mid 2018 they commenced a comprehensive review of their project, incuding reviewing how to best use all their reserve has to offer, (titanomagnetite resource) Atlantics current refinery is vanadium extraction from traditional processes. They have committed to production mid 2020 i think snd have secured $130 mill to bring the exsisting refinery out of hibernation.
Then there is TMT's **anintha project. Im not totally up to speed with developments there but i think they are looking at a DFS anytime soon based on the traditional vanadium processing and will be chasing $500 mill to finance their way to production. That region is of course rich with other prospects too.
Bring in Bella Bella and Todd Corp, TNG entered into a HoA with them mid 2018 but at the end of 2018 Todd Corp sort and was granted an 18 month extension on its timelines for their greater Pilbara Iron production, Rail and Port project involving many other projects in the area previously locked out of production. That extension takes them into mid 2020. Coincidentally that is the time that Atlantic expects to have Windimurra up and running but limited to its exsiting albiet refurbished refinery.
Bringing all that together, vanadium demand is increasing, pricing is volatile for vanadium but the risks associated with that volatility can be mitigated if titanomagnete based projects look to extracting the titanium and iron as well. Titanium demand is on the up and traditional sources are depleting. Enter TIVAN, SMS and TNG. "Watch this space". Bella Bella and Windimurra are both titanomagnetite resources and proximate to each other. Both are privately held. TNG has the HoA with Todd Corp Todds have core agreements in place with WA Govt and are out of pocked , ball park $1 to $200 mill on Pilbara and Bella Bella. Atlantic have brought in the expertise to better develop their entire resource. I think their expected annual return on the existing plant is c $50 mill. That plant can continue while they consider alternatives. They can double that if they extract the titanium (based on TNG Mt Peake figures). Is TNG looking at an announcement in this area soon. Well to repeat " watch this space".
What cant be ignored is that SMS will want to get Darwin Refinery EIS draft filed and approved so they can show case TIVAN to the WA oppertunity that presents.
So thats why im taking up the current offer. Love a good punt.
TNG Price at posting:
10.0¢ Sentiment: Hold Disclosure: Held
