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Essa

205 Posts.

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19/06/20

12:20

Post #: 45323489
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Originally posted by 2ic: ↑

Hi Essa, you're up late, or another sandgroper. Yeah 2019 was pretty good, but that was pre-rona. I agree that the transition cost cash and productivity but the reality is 2019 was almost new nameplate for Sth Dune at 18M tpa. Grade will slowly drop off but not too bad until Nth Dune (if that actually makes sense and get's approval).

I don't know but it only takes ~15% drop in prices for revenue to drop 15% and Kwale is back to ~$20M cash earnings. Remember in 2016 Base had shipments cancelled by off-take buyers who walked. 2017 revenue lifted 27% on 2016, while costs stayed the same. Not saying they have or will this time, just that costs stay the same, or probably go up during a covid19 crisis, but the revenue will drop with falling commodity prices. It's a risk the market is discounting, overly discounting imo. IMA has it's own issues with an owner offtake partner.

Sth dune had 3.5 years left at June 2019, so only 2.5 years left end of this month. I agree that with the world seemingly rising out of the covid19 slump in a V-shape that Kwale should make good money the next couple of years if prices hold up. I said $12-15M per quarter, maybe that is a tad low but don't think I'm far off the mark. Nth Dune looks very low grade and not much exploration action is moving other options forward from what I can see. Happy to stand corrected.

Tolliara is the main game imo. Share price drivers include:
Access back to Madagascar for more drilling and early works.
An agreement on higher royalty with Government locked in for development finance etc. Market doesn't like it but the rona has been a perfect background to negotiations, Reminds the guv that commodities are a risky and cyclical business, that equity/finance for high capex African mines is limited and requires everything rock solid to go ahead. Most importantly it reminds the guv that a reasonable free carried royalty like everyone else is much better than nothing for another 10 years until the next development window opens.
Exploration results form LSU-West.... mmm chubby just thinking about it
New improved DFS moving to LSU-West after the first 2-3 years of Tolliara 9% high grade is mined. The other 6% grade can wait.
Then the big one, a JV funding deal if not outright TO because Tolliara is just that good for a world heading into TiO2 deficits.

All while Base is under written by almost cash backing form Kwale ticking over in the back ground. Yes, I'm hard to please but happy to find some babies thrown out with the covid bathwater.

Cheers

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Hi 2ic,

Yep, I’m a sandgroper and was up late! Thanks for the posts - there’s always some good stuff to consider in them.

With regards to your 2.5 years of remaining Kwale production, are you including the extra year of production from the southern extents? I know the mining lease extension isn’t approved yet, but one expects it’s just a matter of time.

BSE Price at posting: 15.5¢ Sentiment: Hold Disclosure: Held
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