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Mr NST.ax/Bill Beament's Other Baby, page-11

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lrothschild

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21/10/20

11:33

Post #: 48262706
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Originally posted by bullparc: ↑

Great analysis GB. lots of time and effort.

without going to the effort you have, further considerations.....

the forward challenge for VRX is the offtake finance and whether it has a drop dead date. the terms for the offtake will not be good as the finance terms were reasonable. Doing a LOM offtake is very unusual and looks a last resort finance and its only half the funding required without a contingency. as an example the benchmark TC's and RC's are currently falling - is the offtake linked to this as a % or a fixed number... can make a lot of difference especially in a cost falling market, what the hedging conditions required. for sure the offtake will benefit Trafigura massively. Trafigura only participate in the small to midcap space if it is worth their while. if this can be cancelled and a new one negotiated... Share Price should improve on that.

its hard to finance a company with a market cap of $40M needing $200M, equity is dilutive and banks hate it for security over the project, and there will be no security on their production unless Trafigura are prepared to give that up.... how likely is that?.

producing 2 concentrates is a big risk and hard to do... complicated production and metallurgy (especially with Sulphur content) ... what is the grade of the concentrate? also need to know any other impurities in the con... a clean con gets a big premium for blending. these are very important, for payability and cost.

a good project will have an NSR of about 80% of revenue

there will be an equity raise to finance..... = dilution

the NPV is $440M, the project needs to return $200M (construction) + $100m already spent. lot of upfront costs for a 30% return.

VXR needs a short term SP rise... where will this come from? Additionally a lot of the management team have never taken a project into production, including the acting / interim CEO. (come on down Billy and Co.)

Broker reports are a hoax for target pricing .... they just want the next corporate action in the small to mid cap space. they can have some decent info in them though

Trafigura is not a miner (unlike Glencore) so isn't a loan to own arrangement, supply in Copper is very getting smaller, higher cost to extract and the major producers are getting employee strikes etc. every year. new supply of Copper also has a lot of impurities e.g arsenic and in Chile development costs are bigger than the markets caps of some big companies.

the Copper price will solve all problems and VXR looks the best placed of only a few... especially on the ASX.

Expand

'Additionally a lot of the management team have never taken a project into production, including the acting / interim CEO.'

VXR Chairman led BCI ($3 glory days) into production, was also involved in getting PLS ($1 glory days) financed into production. Who is also SAR Chairman and will join NST Board post merger. Been involved in VXR for 10 years and if past performance is any indication, SS will go into production. Wth Copper tipped to be metal to watch in 2021, if all goes according to plan, SP going anywhere between $1 to $2 is not a dream.

VXR Price at posting: 12.5¢ Sentiment: Buy Disclosure: Held
14 Upvote

0 Great analysis

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Last $2.39		Change 0.020(0.84%)		Mkt cap ! $579.9M

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