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07/11/22
10:56
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Originally posted by chuk:
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I might have worded that better. My point was that they were confident enough to order and spend millions on plant on the back of the scoping study without waiting on the DFS so I can't see why they wouldn't keep going now with the DFS completed and a lot more cash on hand now ($23mill at end of the quarter) compared to the amount of cash on hand when they made the decision to proceed with the plant. Good to see all three major US indexes up 1.3% after several days of correction. European markets were up by more - around 2.5% It's difficult to know if markets have priced in enough of the gloom and doom yet. One article over the weekend suggested a soft landing is possible for the US following the strong jobs report while many prices that led to the higher inflation numbers have dropped significantly enough to suggest inflation may come off without the need to hike too much further. We'll have to just wait and see on that, but one thing that is easier to be confident of is that MNB has been way oversold, recession or not. MNB's share of project NPV is around 5 times higher than the current mc and around 9 times the current enterprise value (market cap less the $23 mill cash on hand). Those numbers are factoring in a 15 year average fertiliser price so that suggests the mc has gone far too low. You can't worry about continuing inflation and assume fertiliser prices to fall to some long term average at the same time. It seems that is what the sp is currently pricing in - a fear of a continued bear market caused by higher interest rates which might make funding the balance of the capex more difficult. NRZ has capex needs measured in the billions of dollars not the tens of millions that MNB needs. No one seems to care about the hundreds of millions to billions that lithium stocks will need to produce either a concentrate or lithium hydroxide, plus the large technical challenges that some face. Yet there are some asking how Mnb will be able to raise US $40 mill, whe a US $25 million debt facility is already on the table. Whether it's used or not will depend on what other options are available and which ones are preferred but we are talking about a relatively very small amount compared to the needs of other resource companies and compred to MNB's A$$600million share of NPV at dpot price assumptions. That's phosphate only. We still have the green ammonia project study currently underway and the market still is giving no value to that project which I find extraordinary. If that was spun off into a new company with a mc of $60 million, I'd say it would be undervalued given it's cost base is better than most gas based ammonia projects and it looks extremely competitive compared to any other green ammonia projects. No other project I've looked at comes close to 1.1c/kwh. 4.5c is the next best I've seen for any new project being proposed. 5c plus is more typical for large scale green ammonia project's. Based on that alone, a spun off green ammonia company with our project could have a mc of $100 million and look reasonably priced with good upside on offer following the release of its scoping study. That study will probably show a project with much more upside than our phosphate project. Recession risks or not, Mnb should be trading comfortably above 20c right now IMO, with a lot of upside to that price ahead.
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Yeh I agree. It seems there are currently two bottlenecks that are worsening our scheduling delays:1. Purchase of land: There are a bunch of important things that could / should be happening right now (e.g., earthwork and roadwork, building and lab construction, installation of power and electrical utilities etc). None of this has started because the land still hasn't been purchased yet. 2. Angolan gov approval of AFPPP MOU: For whatever reason, the draft MOU has been sitting on someone's desk for several months. Minbos can't afford to finalise the purchase of major infrastructure components until it unlocks the US$25m Jayson debt facility. But in order to source this debt, it first needs to confirm offtakes. The AFPPP is likely to be the framework under which in-country offtake arrangements are agreed.