Great overview, Nod. Thanks for that. I'm not a fan of IGV for...

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Anton Chigurh

13,097 Posts.

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19/03/19

12:03

Post #: 37808701
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Originally posted by Nodferatu ↑

Don't get me wrong, I am happy to see these guys moving forward and coming clear with the market that Redmoor was not a key focus on the future. New project/s were always mentioned, but never as the main focus moving forward. This sale will allow them to follow through with why they are here, and start to give a clear story to the market which is positive.

The first 50% earn in for the JV was for a total consideration of $2.1m. Which I believe was a good deal on NAE's behalf at the time. The sale of this 50% is effectively $3m with a NSR capped at $2m, which will be a nice bonus in 4-5yrs - but as you know there is a lot of water water to pass under the bridge before you can bank on seeing any of this. There is already a 3% NSR on the contained minerals, so I can see why SML would want to cap our share. In years 17/18 there has been a total investment by NAE into CRL of a touch over $3.8m. This figure does not include any of our own corporate costs in managing Redmoor affairs.

Since the JV inception, there has been 2 rounds of drilling (circa 17,000m), a preliminary scoping study, met work testing, community consultation and an increased inferred JORC resource (tripled) of 137kt of contained Sn Eq, with a further defined exploration target of between 4-8mt. Due to the ASX regulatory changes, the preliminary scoping study was not released in it's entirety so NPV's/CAPEX etc are unknown to us mere retailers. The preliminary scoping study is currently being updated to include the recently completed drilling and resource upgrade. I'm sure they have this information already but they are not obliged to share. Using a tin price of $21k there is currently a contained in-ground value of circa $2.8billion.

All money spent on exploration etc has been shared 50/50, however, obviously a fair portion of our share was funded via the initial 50% sale. For the money spent in the last 2 years on drilling and defining the resource, imo, a guaranteed sale price of $3m doesn't really take the growth, expenditure and confidence of the project into consideration imo. I think it's safe to say there's a fair bit of good faith thrown on our behalf in the hunt for a quick sale imo.

But, I guess it's better than nothing and certainly better than the usual rinse and repeat of on-selling projects for 50-100k with a bit of script thrown in. Lets see where the project hunt takes us next, it's what many of us are waiting for.

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Great overview, Nod. Thanks for that.

I'm not a fan of IGV for obvious reasons, so it's hard to say what's good or bad if only mgmt have seen the finer details of the project. You'd imagine they saw the costs and risks in getting it to production as less favourable than a cut and run but comes down to what can be acquired now, doesn't it; and how the cash is put to work. It's still not what I'd call a great shell market but good to see the market reward the likes of BMT's recent gold acquisition, despite being a failed IPO last year. POG on the rise, so punters have a thirst for more advanced gold projects. Easier said than done finding these projects but I think that's what most asx shell holders would be rooting for right now.

NAE Price at posting: 0.7¢ Sentiment: None Disclosure: Held
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0 Great analysis

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