PNR (ASX) Ann: Half Yearly Report and Accounts

Originally posted by speculator101: ↑

Once I start really digging into PNR, I just cannot stop.

I mean... for starters they are sitting on north of $240m in accumulated losses.... let alone what they have added since October last year.

Compare this with successful producers like RMS (less extent so far WGX) who are sitting on... no losses for RMS, so they are going to have a heck of a tax bill this financial year, I mean, they just added $70m in the past 10 weeks alone! WGX has perhaps 12 months of breathing room before it too starts paying tax.

Which goes back to what the few of pottering around on the PNR threads are wondering... why no-body moved on PNR when it was in dire straights....

Before I delve into the DFS and the changes that occurred since it's release, I still feel the MD and some of the board need to go, irrespective of how well PNR does now that it seems to finally becoming a profitable producer....

This from the annual report 2023. A big list of excuses as to why PNR has struggle... not a single admission that the board decided to turn the plant on before they had both open pit and U/G operating (let alone fully staffed), who changed the mine plan post DFS but did not explain why, who have never admitted that above all, every decision made has been theirs and they own the truly terrible performance of the share price and the amount of dilution PNR holders have seen....

PNR acquired 50% of Norseman in 2019.
Share Total before acquisition of 860m shares.
Today.... 5.2 billion shares. A mere 6 fold increase....

Whilst not all of that dilution was capital raisings, the majority was (some was the merger with Tulla).

This is all the worse because Norseman had much of the infrastructure required to restart mining!

Suffice to say, that is a pretty impressive level of dilution to only now finally becoming cash flow positive.

This slide from the initial purchase presentation really... say it all. In fact, point 3 & 4 have been a major failure (but not totally, Ok Mine has been the saving grace to date). The exploration has been fine, albeit, why did they not heavily drill Scotia and Green lantern considering they were the most important deposits within the whole project (first to be mined).

Let me be clear though, Norseman is basically an entire gold field unto itself, with a plethora of exploration targets, let alone deposits that require very little work to be brought into the mine plan (this from back in 2019).

It is also worth showing this again... Norseman did not get shutdown because it was unprofitable, it was shut because of hedging, something that PNR luckily has not shackled itself with.

The sheer amount of capital that has been ploughed into this project to date is... quickly catching up with Wiluna! And that is not a title PNR was

The DFS from 2020 is worth a read for those that have the time (or the presentation if you are time poor - DFS 2020 )
Full DFS - all 240 pages of it - Full document

On the left is the DFS plan, versus on the right, what they have done to date (Scotia includes Green Lantern)

I cannot find exactly why Cobbler and Gladstone got basically shoved aside for Scotia/Green.

I would argue that PNR has some of the most prospective tenements in Western Australia. Yet... to date, has really not see a drill bit because everything has been focused on firming up known resources.

Hopefully over the next 12-18 months (a little optimism here), PNR can bed down the debt, which will enable them start focusing on the 3rd U/G operation, which surely they will look as they look at how profitable pure U/G mining operations are (like BGL is showing and WGX is doing).

St Pat's looks like a great option... huge amount of sunken capital and not requiring any large upfront capex.

Grades are not far off OK mine....

I guess I stand by my belief that Norseman should be 80-90% U/G ore... small plants need high grade. Norseman has it, just needs to be dug up.

Though.. for fun and just to show that there is nothing wrong with open pit mining, just that, it works best with larger pits (except when the grade is high and it actually meets expectations), here is the full list of deposits/resources that Norseman holds.. might take a lifetime to drill them all! (there are some crazy grades in some of these deposits).

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Happy to continue with my view that PC has to a degree been a victim of circumstance and the management is in no way as inept as you portray.

I don’t see the list of struggles as excuses … Covid, border closure, labour and equipment shortage, contractor delays and cost increases are all well known occurrences across all projects in WA not just PNR.

The mill infrastructure failures were accepted by the manufacturer as a legitimate claim negating any fault of PNR.

The contractor clearly failed to keep to the required timeline ( some of which was new equipment mobilisation out of their own control ). When you ultimately get replaced with only 9 months to mining completion speaks volumes for the performance imo.

All the above was a pre cursor to the additional funding and cap raises … something that once again hasn’t been isolated to PNR alone.

It’s easy be to be critical but it was a very difficult time in the industry.

I have spoken to Paul twice, he’s no CEO spin doctor or marketer, I was impressed with his level of understanding of day to day operations. I also sensed the level of pressure and scrutiny he was under in the first call compared to our recent discussion.

I actually rate him and as you know I am not one to be that praising of management at times.

I would start with the resource grades …you did point out yourself small mills need good grades.

Some of my best investments weren’t necessarily the best companies but ones that presented a window of opportunity at a point in time … my view is that it’s much more important to understand value forward then dwell on the past as that isn’t part of your own investment journey. Hence why “timing and time in”mining investments is more important than the wider picture.