I think everyone needs to get some perspective here. SUV were essentially an explorer who were yet to firm up their resource with a plan to become a producer. SUV had only been listed on the ASX for less than 6 months when BOOM !! for just $2M they became a producer overnight, and in the process obtaining 3 Victorian mines with years of resource, a production plant, IP, staff with a wealth of experience, a global sales network AND a turnover of $13M (with @$2M EBITDA profit).
It is worth remembering that the plant is working right now, producing salable product right now, making profit...... right now. I have seen other mining deals with takeover/acquisitions and more often than not the deal requires the new owner to take the mine and operation out of mothballs and spend millions to re-start production - not the case here, as of day one of ownership we were producing and selling and making profit.
If the BOD achieved only the Imerys deal in the first 12 months I would have been surprised and ecstatic, however they have also squared away a transport/bulk handling deal with CBH potentially saving up to $20M in capex expenditure (my estimation) as they move towards a production in WA, and have locked away a private land use agreement.
Despite any challenges to come the SUV BOD have delivered beyond expectations, and appear to be continuing to do so. Considering all the facts I am more than happy to back the BOD and the SUV direction.
For those that may not have considered it some other down stream benefits from the $2M Imerys deal, that may include;
- Faster licensing in WA as an existing producer, (as SUV can now practically demonstrate the processing of kaolin - not via theoretical modelling)
- Easier environmental approval, again by practical demonstration of how it works in Vic as an existing producer
- Resource increase in the Vic mines, including the mouth watering medicinal grade kaolin selling for $2500/t - potentially leading to increased profits
- Faster PFS and DFS process for WA development leveraging off the experienced staff in Victoria, and existing plant design and processing methodology
- IP - from a world leader in this space which could have cost $$$$ and significant time to develop ourselves
- Competition between VIC/WA state and Federal Governments, who are presently throwing money at companies like SUV to invest in their areas and in manufacturing
- Ability, as a kaolin producer and seller, to place a value on the inground resources based on actual sales and offtake agreements (helping with the PFS and DFS and access to finance)
- Establishing the SUV kaolin brand globally and securing market share.
I'm sure there are other benefits that I have not thought of, perhaps others can add their thoughts, but $2M to become a profit generating producer is a bargain, without any shadow of a doubt. All IMO and DYOR.
(20min delay)
