I've been absorbing the recent news, and wanted to put down some notes / a summary of where we're at (for those who are perhaps new to the stock, to make it clear in my own mind, and to stimulate discussion).
First though, here are some numbers to salivate over:
Current SP - $0.13.
On securing Finance, target SP - $0.73 - that's
6 times current SP - likely to happen this year.
Fair value at production - $4.63 - 35 TIMES current SP - 2018 / 2019.
It appears to me, that either a) the investing community doesn't understand the true size of this project and the massive re-rate which will occur, or b) they don't believe that TNG will pull this project of, or c) the company / project, needs more promotion.
I believe it's all coming together nicely. The news that SMS Siemag are on board, is absolutely brilliant, despite what nervous nellies and downrampers might write.
SMS Group - the best in the business, like the look of this project, and want to project manage / fund / build the refinery. They have recently completed the funding and management of a US$800m refinery. We need A$650m, which, due to our Micky Mouse currency, is under US$470m. It is no wonder. The project economics are incredibly robust. They will be
the go-to company, for future TIVAN refineries which may be built.
That takes care of 2/3 of the CAPEX requirement right there.
Northern Territory Government, have awarded Mount Peake “major project” status. There's a very good chance in my mind, they will provide the $, for the infrastructure, and perhaps part of the mine financing too. Their $5bn development fund, is meant for projects exactly like this. It's very good PR for the Govt too, backing a "smart mining" project, whose end products (one at least) will be used for environmentally friendly purposes (the VRB's).
Caterpillar Equipment Financing - TNG signed an MoU with Caterpillar Financial Australia to consider the provision of project and/or equipment finance. Should TNG convert this to a binding agreement it is anticipated that Caterpillar could form part of the project financing consortium for Mount Peake.
Broker reports:
VSA Capital - "While securing financing is the major milestone that will drive a rerating of the stock, our DCF valuation indicates that development of the Mount Peake project will enable the realisation of strong upside potential. We are initiating coverage with a BUY recommendation and target price of A$0.73/sh."
http://www.tngltd.com.au/images/tngltd---waigaughic.pdf
Hardman & Co. - "Valuation: Using mining parameters from the company’s feasibility study and Hardman & Co commodities price estimates, once financed and permitted, the project supports a Fair Market Value for 100% of the project, not including tax or interest, of A$4.63/sh on a fully diluted issue of 723m shares."
http://www.tngltd.com.au/images/tngltd---uoceethiav.pdf
We may see some dilution along the way, but from all the latest positive discussions, it may be around the 25% mark, in my humble opinion. That would give a SP of around $3.50.
Vanadium - Vanadium Products Binding Offtake Agreement; Woojin Industries in September 2015 signed a binding Life of Mine offtake agreement to purchase a minimum of 60% of all vanadium products produced from Mount Peake.
The other 40% has been kept back, primarily for use with VRB's I believe. I have a hunch it's already been earmarked / pre-sold.
Titanium Dioxide Pigment - Global Pacific Partners Letter of Intent (LoI); In August 2014 TNG furthered their progress towards binding agreements for the management of TNG’s logistical services, pre-production funding and offtake of titanium products.
I'm unsure about this LOI. GPP do not currently sell Titanium Dioxide Pigment, to my knowledge (they were looking into it I believe).
This is
the major income earner for the whole project, so securing a binding offtake for this, is critical for the whole financing of the project.
Pig Iron - Gunvor MoU; In November 2014 TNG signed a Memorandum of Understanding (MoU) with Gunvor, one of the largest global commodity trading houses, for the sale and marketing of the iron product from Mount Peake.
We could do with a binding agreement signed for this right about now...
TIVAN - "It is important to note that the TIVAN® Refinery is expected to be designed for an operational life of approximately 40 years and will therefore be expected to run longer than the current life-of-mine for the Mount Peake project.
The TIVAN® process being developed represents a world’s first for the processing of vanadiferous-titaniferous-magnetitic ore bodies by a hydro-metallurgical route , and successful completion
may result in the process becoming the future standard process adopted for the commercially viable, environmentally friendly treatment and utilization of ores from such and similar deposits."
I don't think many people realise the full significance of the TIVAN process and refinery.
We can basically hire out the refinery, for us by other companies who have similar deposits.
It can be licenced for use anywhere around the world, which will generate passive income for us.
As with any spec stocks, it pays to do your research. This is one of the most advanced projects I know about, with enormous upside potential. I now put their chances of success, over the 70% mark.
2016 is going to be the making of TNG. I'm sitting back and enjoying the ride. I have close to a million shares sitting in my bottom drawer, and am eagerly awaiting the re-rate.
What do others think of our chances of success at this stage? Anything to add to the above?
Enjoy the weekend folks!
(20min delay)