Nowclear, awesome response and thanks for taking the time to provide the detail.
I had a listen to the Smith Weekly Interview with Duncan Craig. It was great. Duncan is well spoken and sounds like he is an expert across the whole business. Thanks for the tip.
For the sake of this thread, i'll avoid mentioning DYL again, but I am interested to compare more of LOT and BOE as they are as close to apples and apples as we can get.
Quick re-cap of similarities- Both excellent management with Uranium One and Kalahari ex-execs apart of both
- Both have proven producing mine - both purchased from previous owner
- Both mines in care & maintenance mode
- Kayelekera has produced at 3Mlb/s annum and Honeymoon is gearing up to get to 3Mlbs (for this purpose lets just assume BOE is already at 3Mlbs)
- Both have exploration upside (lets leave this aspect out)
- Both have previous proven production and infrastructure in place (LOT peak of 2.93Mlbs/annum, BOE peak of 0.34Mlbs/annum)
- Both companies are gearing up to be "First to respond" with mine restarts to meet increasing Uranium price
- Both have significant share holding by institutional investors with Sachem Cove having a significant stake in both
- 5% of total shares held by directors and management of both companies
- LOT retail = 46%, BOE Retail = 55%, LOT institutional = 51%, BOE institutional =39%
Differences & Unknowns- Jurisdictions: LOT mine is in Malawi and BOE in Australia
- Mine: LOT is open pit, and BOE is insitu leaching (ISL) recovery (chemical injection & recovery of pregnant brine)
- BOE estimate US$63.2mil CAPEX to restart mine (stage 1 & 2), LOT previous owner estimated US$49.3mil with LOT conducting new feasibility study currently underway
- LOT reduced care and maintenance cost from 2019 budgeted $5mill/annum down to $1.2mill.
- BOE care and maintenance cost has also been reduced but to what cost is unknown
- LOT has $16.4mill in Cash with further 100mill options to be exercised by their institutional investors to raise further $5mill to fund the care and maintenance and new studies
- BOE has $3.82mill cash
- Kaylekera opened 2009 and in operation until 2014 - producing total 10.19Mlbs high grade Uraium
- Kaylekera entered care and maintenance in 2014 "due to sustained low uranium spot price and to preserve resource and shareholder value"
- Honeymoon was constructed in 2009 and finished in 2011 and produced from 2011 - 2013 with 312 tonnes (0.688Mlbs with peak of 0.34Mlbs/annum) - well short of the plant capacity of 0.88Mlbs/annum
- In November 2013 Uranium One announced "continuing difficulties in the production process and issues in attaining design capacity, combined with high mine operation costs." Honeymoon was shut-down and put into care and maintenance pending improved uranium prices
Thats a worthy one to keep in mind of difference is proven production - Kayelekera has proved production at max of 2.93Mlbs per annum where Honeymoon has not gone past 0.34Mlbs and admits to major production difficulties. But lets stay positive that the new engineering and leach test plants will get them up to eventual 3Mlbs/annum (18-24months)
Now, lets talk shares and how we are going to make money - because at the end of the day thats why we are invested right?
as above,
LOT: 738mill shares + 110mil options held with institutional investors to exercise at $0.04. (46% have been exercised to date to raise additional $3.7mill), so lets round up 850mill shares if all options get exercised
BOE have
1.59 BILLION shares or twice as much as LOT
BOE need $63mill capex to re-start the mine. lets assume 30% will come from capital raising, or approx $20mill capital raise.
If BOE raise $20mill from existing shareholders at say a modest 10% discount to current price (i.e. raise $20mill at $0.065/share, thats approx 307million shares that are added to the registry). Obviously the lower the discount price the higher the # of shares to be added. but 10% is modest for this calc purpose.
So BOE shares will be at a large 1.89 Billion shares on issue just to raise 30% of the CAPEX required to restart the mine.
based on shares and market cap, LOT can double and triple in price (200% share gain) and still have their market cap under $200mill even if they also have a capital raise of same $20mill -
NOTE LOT has more cash on hand and wont need to raise same amount.BOE on the other hand to achieve the same 200% gain in share price will need to see their market cap go from $114mill to $343mill without any share dilution. but will have to increase further to $410mill to get 200% gain on the current 7.2cent share price if extra 307mill shares added to registry -
this does not take into account the sell off that will bring the price down close to the capital raising price (say 6.9cents). That is all extra ground the share price has to recover before us current investors can see the gains that make it worth investing in.The silver lining is what Duncan Craig previously stated that "Boss will avoid dilutive capital raisings while engaging with utilities for off-take and continuing commercial discussions." Hopefully they are able to find alternatives to share dilution as overall that is one of the biggest factors that will affect seeing the positive growth the shareprice deserves.
In saying all that, there are many factors involved here and as you said - a rising tide lifts all boats. I just want to be in the boat(s) that rise the most.
Will be interesting to see what the potential capital raise announcements will be
(20min delay)