I have just responded to a question placed by a new investor in London, who asked what I expect Fair Value to be in 12 mo time. As there seem to be a lot of new comers to this page this week I am re-posting my answer for their benefit.
Hi Czar, I have been following Pensana since the new management team took over. As soon as the first Geology and initial drilling results were released, I recognized that Longonjo was going to be a World Class deposit, and as all of the Major/expensive infrastructure is already in place, it is not going to require a lot of CAPEX so it can be Debt funded, thus avoiding a great dilution of the Registry..
When I say World Class, I mean the Longonjo deposit is certainly in the top three, and following the latest discovery of Ore extending below 80 metres, I would not be surprised that it comes in at Number one. The Longonjo 'Resource' was estimated to be at around One Million tonnes NdPr a while back, I would think that now with the deep drilling it is well over 2.5Mt; @ US$60/kg that is closing in on US$150B. So even if Pensana only realizes 1% of the true value ? ~ with a registry of 250M shares, it still going to work out at ~ US$60 per share !! You can make your own conclusions about that.
And just in case that is not enough, Pensana has recently taken up the Exploration licence immediately to the North of Longonjo, upon which first indications suggest that there are potentially two or more new deposits !
As to Fair Value, At least twelve months ago a number of Analysts had Pensana at 80c. So considering all of the progress that has been made since then, it has to be worth least 90c today. Once the BFS is finalized I am predicting $1.20, after which we should see a steady climb to $2.00 once they are ready to start mining. Then as soon as the first revenues confirm the economics, we will see a Re-rate to an SP of EPSxPE, with the PE being somewhere between 10 and 20.
PM8 Price at posting:
54.5¢ Sentiment: Buy Disclosure: Held
