There is a thread called 'Chart', so it is only fair we have a thread called 'Fundamentals'.
If I were living in a hut in the Amazon with no access to share price or charts but had someone deliver me all the AUZ announcements once per month, I'd be thinking that the SP would be sitting pretty strongly right now, certainly not half the pre-SKI-announcement value. Let’s think about that again… people currently value AUZ as half the value it was before the SKI announcement.
Let's look back at what's happened since Feb:
*Landmark deal with SKI. You know the details.
*Levelled up to All Ords
*Joined the US sharemarket OTCQB
*Survey results for Thackingara seem promising
*80% interest secured in Marymia
*Realised there was a lot more cobalt at Sconi than they thought (as the original mineral study was focused on Scandium not Cobalt). So much so, that it was in the way of the planned concentrator and haul roads. This delayed the BFS but not the overall construction schedule (what would a few months delay be anyway if we can increase the resource?)
*SKI samples exceeded their requirements
*Partnership to develop scandium alloy
*100% interest acquired in Flemington (the immediate continuation of CLQ’s Sunrise deposit). Updated mineral resource and PFS scheduled for early 2019
*More nickel found at Sconi, at Greenvale. Updated mineral resource estimated scheduled for April 2019. BFS to be prepared will be conservative base case and fully optimised to be released after resource upgrade
*In discussions with 9 financial institutions plus SKI for funding
There have been some hiccups along the way with regards to announcements; mostly to do with Ben’s saying unconfirmed things (revenue and finance). Cobalt price has dropped, but that’s not all together a bad thing as too high a price would mean more research into alternatives, which would result in reduced market and an even further reduced price. Keep it a happy medium. Dropping AUD is helping us. Delay in releasing the BFS means base metal price and therefore overall NPV will now look worse, but better it’s based on reality when looking long term.
If AUZ had any concerns about the deal going through, one would expect that they’d want to keep Norwest, but this has been spun-off as a separate company (but with AUZ still keeping a 30% stake in the company).
The funding caught me by surprise and many people were not a fan of this, but payment is due TWO YEARS away. No way could someone suppress the price to less than current values by that time. Even if Bergen can bring the price down, it’s in their interest to get it back up again. If you are still here in two years, you’ll still certainly be there for the time the price will be up again. The only people that should worry about market manipulation are people with short-term view, yet interestingly enough these are the people worrying about an event two years away. As to why we have funding, remember the 12c option for SKI is up to 3 months from BFS. BFS was delayed and people need money to run a business.
BFS has been delayed but nothing else is delayed as things are running in parallel not in series (financial institutions are already reviewing the BFS). People don’t like delays or uncertainty, therefore a price drop was inevitable. I don’t see anything that has warranted this level of drop though.
Our MC is $122M (not including oppies). That is not bad at all for a company that has a 7+6 year offtake agreement, BFS about to be released, existing infrastructure at site, partnered with a global powerhouse and significant upside with tenements next to COB and CLQ. That’s really cheap when you consider SK thought $80m for 20% of the company was a good deal.
Many get persuaded too much by the charts and sell due to fear. A sudden sell-off could be due to bad news but it can also be due to market manipulation from the Big Boys. It can also be both.
Therefore, let’s ignore the chart and think “Is AUZ worth more than $140m right now?”. I think so and that’s why I topped up.
Interested in your opinion. Please no references to the chart. Discussion only to be about whether announcements/news/market adds value or reduces value and if AUZ is currently under/fair/overvalued.
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