Hi All
Today’svery encouraging BRR release has brought about some reflection and analysis on thecredentials of the TNG project.
1. BoardroomRadio 6 March 2019
Myview is that BRR today provided a comprehensive update on progress andapproaching key milestones. The detail in the BRR was responsive to ongoingshareholder concerns, provided depth in the answers and addressed most, if notall, of the queries that I had in relation each of the milestone fronts.
Thedepth and responsiveness of today’s BRR is possibly a bi-product of the recentappointment of the Chairman identifying and responding to shareholdercommunication requests.
2. SharePrice
Historically,shareholder frustration is brought about by non increase in share price despiteachieving key milestones particularly those milestones achieved in the last 6months.
Ihave undertaken a peer Comparison of various other ASX listed mines for theperiod September 2018 to date. Theresults indicate that in the last 6 months:
a. TNGhas suffered a SP decrease of approximately 28.57% during that period; and
b. Thebelow mentioned ASX peers have suffered a SP decrease on average of 42.82% during that period, as follows:
i. AJM(Altura Mining) – 36.36% reduction in SP
ii. PLS(Pilbara Minerals) - 27.27% reduction in SP
iii. AGY(Argosy Minerals) – 50.00% reduction in SP
iv. LKE(Lake Resources) - 33.33% reduction in SP
v. KRR(formerly KRC, King River Resources) – 50.00% reduction in SP
vi. AVL(Australian Vanadium Limited) – 60.00% reduction in SP
The inference from the aboveis that the reduction in the SP is a consequence of economy based factors (at least as a major contributor) and in my view, the shortage of borrowingpower and investor confidence following the Royal Commission into the financesector.
3. Valueof Company
Iam of the view that the Intrinsic value of company has not reduced despite whatSP reflects (perhaps I’m an optimist). In fact, development in last 6 months inmy view has increased intrinsic value. Key points I have considered are:
a. MajorPlayers Involved (KFF, SMS, DKSH, Vimson, Woojin, Browns) – I don’t believe anyof these parties would be wasting their time if the commerce of the projectdidn’t ‘stack up’;
b. RegulatorDe-Risk and Approvals:
- Native Title Agreement Finalised (essentialas we can’t move the mine)
- Mineral Leases – Secured Tenure in November2018
- Imminent submission of Mining ManagementPlan – to be finalised and filed early 2019 (which subsequently should followwith the Mining Permit),
- Imminent submission EIS RefineryApplication (provides an indication as to refinery uncertainties and timelines i.e.end of 2019 for EIS approval)
- Refinery Land Parcel Acquisition alreadyunderway as announced in BRR today;
- Major Project Status by NT Gov – since2012.
c. Ata Project Level or Commercial Level – the de-risking considerations I havenoted are:
- Product Guarantee by SMS underway;
- KFW Finance Mandate Underway,
- 4.7 billon NPV and 4.9 billion NPV asvalued in 2015 and 2017 respectively.
4. LookingForward Milestones for 2019/2020 – High Level Summary
a. Mine Site
- expects to submit the MMP to theNT Government for approval in early 2019
- Completion of final mine design and FEED for allprocess plants, leading to EPC tender process
- Mining Permit
b. RefinerySite
- Lodge EIS for Refinery
- Obtain tenure of Refinery Land Parcel from NT Gov
- Full permitting for TIVAN® processing site
c. General
- DKSH signing a binding offtake agreementfor TiO2
- TNG Board FID and Project financialstructure and facilities package completed
- Equipment tender process & SMS “Turn Key” Pricefor Construction
- Establish full Project Development team, includingappointment of experienced Project Director
- Commencement of development
5. SharePrice Dilution
Iform the view that we have enough cash in bank to see us through a number ofmilestones and goals in point 4 above. I am enthusiasticabout a consequential SP increase which ought make the investment moreresilient to dilution.
6. Summary
Iam of the view that the shares represent good value at the current SP, so Iwill continue to top up.
Happyto hear thoughts, comments and criticisms of the summary above.
GLTAH!
Extract for Peer Comparison
