JRV Cobalt, page-105

Hi @zempheth.

Thanks for sharing the report link with me on Twitter. I've been reading your comments here and on a few other threads. I understand you are highlighting leverage to the Co/Ni prices, and if that's the only thing someone wanted then perhaps they might consider a more highly leveraged play (if indeed it is actually out there). That said, having followed these threads for months now one thing that's clear is that most investors on the HotCopper JRV threads are here for a bigger play than just the current basket of assets, as excellent as one may believe them to be. It's about having a world-class management team of ex-Glencore/Xstrata heavy hitters, and transitioning from a dual miner/refiner even towards a trading house. I note you talk about Canaccord's 60c share price target, bear in mind this is not fully baked (for ever and ever) - they never are. It's a short-mid term price target, and when the next round of news comes out (whether its further positive developments with the ICO mine construction, or USG funding, or the SMP Refinery BFS, etc) the share price targets get revised accordingly. All brokers do this. This is pretty basic stuff, I'm sure you already know this. Australian Super (18.4%), Mercuria (6.4%) and Freeport didn't put literally millions of dollars on the line at 44c just to see it get to 57c / 60c and then drop out and go looking elsewhere. Players like this back businesses and management teams who they're confident can take an operating company to the next level.

You point out the size of ICO (something I was initially concerned about when first researching, as the LOM was around 7-10 years only), but it was pointed out to me by a wise poster here that junior miners need projects of this size where capex is actually achievable - which is exactly what JRV has demonstrated. They need something small enough they can bite off and chew, but big enough to get cashflow going. Bryce has said this on numerous presentations I've listed to in the past months, when quizzed on ICO. Anyway, that helpful HotCopper poster than made this comment: "Large deposits with long LOM often have significant upfront capex. Investors often focus too heavily on project size from a geological perspective without considering how such projects can be funded". I won't speak to SRL on this thread, I think the points I was going to raise have largely been made by another poster over on your 'Canaccord' thread on the SRL forum, so I'll leave it at that - except to say, it doesn't matter how big the NPV or EBITDA numbers are on a DFS, at the end of the day if the funding doesn't come along and the stuff never gets out of the ground, then there's really not a lot of leverage. Plenty of companies on the ASX sitting around with great big deposits, small market caps, and no real way to dig it out. Leverage only properly works if there's a pathway of turning a deposit into a product.

I for one am happy to invest in a business with lower leverage (potentially), yet whose top of house have demonstrated just in the last few months, the ability to secure funding, raise large amounts of equity backed by leading mining/pension institutions, pull off an ambitious acquisition, and start to get a mine actually built (all the while another refinery business will already be pushing out the EBIDTA). It's been quite a transformational few months. Wishing you all the best with SRL, I will keep my eye on it now it's come to my attention.

Cheers,
m