Pizzabox - can i have a go at answering rexhunt - not trying to hi-jack the thread! Will try and relate this to aspects of the scoping study - all though might stray somewhat from the NAP part at this point.
rexhunt - thanks for the different viewpoint - some healthy debate is always a good reality check!
There is no doubting that this is a longer term hold if one wants to wait around with NMR till the coal is ever dug out of the ground, so very fair call that short term no rail is not helping.
But its seems that you have high-lighted some matters in a fairly negative light?
1) Electrical Power Prospects.
The AFR Helmsec report actually seems to also talk quite positively about power needs across the borders, and the future ability to sell into them - infrastructure required of course. Quote as follows...
"Botswana, Namibia and Zambia, the principal target markets for power generated at Sese, are interconnected in a grid that includes South Africa, Zimbabwe, Mozambique and DRC. Subject to the limits and congestion on the relevant transmission lines, power is freely traded between the respective national utilities. An IPP at Sese might compete for supply contracts with any other project in Southern Africa. The potential new sources can be categorised as the major hydro projects to the north and the South African coal fired stations to the south. In all cases investment in new capacity is being held in check by capital constraints, environmental concerns and low, sticky tariffs. Unless mining investment is suspended en masse, the region is likely to remain in power deficit until 2014, and possibly for much longer. AFR sees an opportunity for an IPP at Sese to enter with 300 MW in the 2014-2018 period."
There is no doubting that rail is lacking for NMR and AFR. However things are progressing and the hopefuls here at NMR no doubt look forward to the infrastructure related African government announcements anticipated in 2012. Quote in this regard as follows.
This is not just Botswana looking to expand and gain. Not just the coal industry - but all industries/markets in southern African nations that will potentially benefit. And it benefits overseas nations looking to benefit from the resource wealth locked in the African nations at present. Any positive news will give this whole story a push.
"The governments of Botswana, Namibia, Mozambique and Zimbabwe, with the involvement of the World Bank and other interested parties, have advanced two separate proposals, the Trans Kalahari Railway (TKR) line from Mmamabula to Walvis Bay in Namibia, and a rail line to Techobanine in Mozambique. A TKR pre-feasibility study was completed by the World Bank in December 2010. The cost of the 1,500 kilometre rail line and port upgrade was estimated at US$8-11 billion. A Namibia-Botswana Joint Technical Committee on the Trans Kalahari Railway line is considering submissions from potential construction contractors (or development partners). The most recently stated intention was to commence a five year construction period in mid 2012. Finance for the project is expected to come from a mix of government, development bank and private sectors. The proposal to build a railway line from Botswana to a new deep water port at Techobanine has recently been given impetus by Asia’s ascension over Europe as the most important export destination. In April 2011 a Memorandum of Understanding was signed by Botswana, Zimbabwe and Mozambique, committing to seek finance for the rail and port project in 2011 and commence construction in 2012. While coal from Botswana is expected to dominate freight volumes, a key objective of the rail project is to cut transport times for all of Botswana’s imports and exports from current 22 day average through South African ports to an average of six days. The TKR and Techobanine proposals are not necessarily in competition, and they may both eventuate, although bulk tonnage coal exporters in Botswana are expected to substantially underwrite each proposal. From AFR’s perspective the rail to Techobanine would pass within 10 kilometres of Sese and accommodate shorter freight distances to Asian markets (1,100 kilometres over land to an Indian Ocean port). AFR has commenced discussions with the proponents and consortiums associated with each infrastructure project. In March 2011 the Government of Botswana engaged a consultant to formulate a national coal development strategy. The review includes infrastructure development and is expected to be completed by early 2012."
NMR are very near road transport - to begin the project - and quite close to the capital, "Gabs". We have a start at least.
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3) Rexhunt - you have also stated "This point suggests to me NMR is light years from generating any revenue from this deposit"
This may not be our concern. As mentioned by others in the NMR threads - why not just try and sell the NMR resource at a suitable JORC compliant/contracted stage and leave it to others to finish. As Grogman said - RIV have sold their resource as have many others.
No doubt this possibility is spurring the urgency and speed in proving up the resource and getting the scoping study complete.
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4) Rexhunt - you have also said "And it appears without a viable mode of exportation the value of the resource drops significantly..."
No one is denying that. That is probably one reason why AFR is trading at a substantial discount to the market peers listed in its own Helsec report, against which AFR tonnage appears to be cheap.
Yes the whole market stinks, coal stinks, and AFR share price stinks - dropping from circa $1.00 since early in the year (I am not sure on their dilution etc).
Yet the very same Helsec report you refer to, holds a speculative buy target on AFR with a long/mid term target price of $1.00. Where does that put NMR? Helsec quote as follows.
"Sese is valued here at $1.00 per African Energy share, based on early indications of future cash flows, after discounts for extensive market, estimation and finance risks."
The point that Grogman, pizza, myself and others here are making - is that if AFR thermal coal is cheap - then NMR is very very very cheap. Other factors must be weighed in of course.
if of any comfort at all, even the punters on the AFR threads some are saying NMR is undervalued!
It is worthy to note the the AFR peer comparision left NMR off the list - perhaps they are scared that people might find out what NMR has - and the huge gap in price per tonne!!!
Yet we see on the last NMR presentation that NMR is cheap as chips per tonne when related to its peers.
See link below - and thumb thru to PEER COMPARISON.
It will be interesting to see the reaction from investors after the Botswana/London presentations.
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4) Rex - you also said "meaning more CR's etc"
Fair call again - NMR may struggle to raise cash in this market - but perhaps no different to other explorers. There is still appears to be quite a price/value gap to its relative peers.
And it will be interesting to see how much cash they will actually require to complete the intended drilling programs. It requires some further research.
Minimal cash is required to pay the TRIPROP tenement holder if required - share issues making up the remainder of the payment.
Also we are told that Chris Mason is a money man - and we trust he will do his best to sell the story. We can only hope - after all - this is just a tiny little spec company. But downside may be limited - with upside looking quite promising.
The directors have some incentive now - lets see if they don't sell their shares - and lets see if they can keep the value in them!
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5) Back to pizza's scoping study.
NAP may be looking at other alternatives than just burning the stuff for power. The last presentation reminds us of other options - value added products.
Could they be thinking SYNGAS, LCT, diesel....? Who knows what is the most economical, and what the coal contains of benefit. Bring on the scoping study.
Even with high sulphur content - we may not see a huge discount in value per tonne. If they want to just burn the stuff - they may well end up burning it in developing countries (including the south African nations). Developing countries may well have newer technology power stations - with the ability to emit less sulphur based emissions, despite burning high sulphur content coal.
Have started reading more on this front - and while low sulphur coal is more sort after - it does not appear to be the end of everything. The green push is making the power generating people adapt. There is a market for NMR coal if it can be dug out of the ground it would seem. Price - well that's another story
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6) All the best and thanks for the point of view rexhunt. It makes me a little surer of my long term hopes!
Noticed that your sentiment has changed of late rexhunt. Your last posts on the 16th read as follows...... (I only quote because I think you made some nice points rexhunt - am not trying to be rude!!!)
Rexhunt
1) "Largest coal resource in Botswana!! Look for big close and leg up tomorrow."
2) "agreed val. No carbon tax, no mineral resources rent tax, no OHS, aboriginal land rights claims etc etc etc"
3) "cappers in the low 5's imo.. will be tested shortly"
4) "Be careful not to hand over your shares too easily kids..Seems there are some massive forces playing some pretty convincing games here.. Timbo's valuation roughly matches mine - 9.3c"
If you have any other reasons for the change of heart can you please post - as we would all like to be aware of the dangers!!!
I think your early NMR posts/thouhts were very good, and a little closer to the thinking of posters here now. You highlighted some very significant and relative benefits of NMR coal over its peers. Not entirely sure why you have had such a dramatic change of heart.
However - please do not take this the wrong way - no rudeness intended rexhunt - just some friendly banter/comparison of facts/figures/opinion ok?!!
And we will happily take your best wishes! Thanks mate - we will need them in this crazy market for sure!!!
Hope to see you back here soon, if and when you feel it is safer to jump in again!
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Of course this is my own crazy ramblings - so as always punters - DYOR - do it thoroughly and carefully. Look at the facts. Ask yourself - would you put your friends money in NMR? If not, then why would you put your own money on NMR?!!!
Make up your mind - and is you want to hold, then hold - it can only help the share price. I'm in for one... will see how it all goes.
Once again - rex hunt and others - please give your feedback/bash me on this lot - I need to learn more.
Over and out... bsh
NMR Price at posting:
3.7¢ Sentiment: LT Buy Disclosure: Held
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