Independent is not equal to Intelligent Even the big 4 employ a...

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vmp

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21/08/19

14:57

Post #: 40078051
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Originally posted by JB1975 ↑

Is there any interest left on this forum for a thread like this?

I've done quite a bit of analysis on the so called 'independent valuations' by the 'experts' and have found some things that are interesting to me. Frankly I reckon the independent valuation is a croc. A case of garbage (assumptions) in - producing garbage (conclusions/valuations) out. By proceeding from dodgy assumptions I think the independent valuer has produced (through a series of drafts passed back to the board for comment potentially) a document that was biased in the direction that was what the the board wanted.

For instance AMC who do most of the fine detailed analysis that is used in producing the valuation make a number of assumptions and decisions about what to look at and what not to look at what to include and what not to include that radically frames their valuation. Much of their valuation is around their three production case scenarios.

Here's some quotes. Bolding mine.

p182 "AMC has assumed that access to the Mineral Resources not included in the Production Cases will be restricted because of limited room on the mining lease and will not be available for possible development until the Project is completed in 2069".

p 121 "AMC has not included any expansion of production in any of the Production Cases. At this stage of development of the Project, AMC does not have a reasonable basis for assuming an increase in capacity beyond design capacity of the existing proposed infrastructure.

(But higher up on the same page ...)
"Likely changes to project infrastructure have been identified that may result in changes to the IPFS include .... inclusion of design optionality for possible increases in throughput...."

p8 "based on work done to date, Kidman expects that capital expenditure described in the Final IDFS may be up to 25% higher than the capital expenditure described in the integrated pre-feasibility study for the Mt Holland Lithium Project announced by Kidman on 18 December 2018" - John Pizzey (Chairman of Kidman).

But one of the reasons the capital expenditure is higher is precisely because they (p36) "optimised layout for future flexibility". "Optimising layout and flowsheet design to allow for future flexibility to expand production volumes which is expect to increase capital"

--- Now to me its a bit rich to include a capital cost increase aimed at expanding production capital on the one hand in the scheme booklet (so a negative on valuation because its more costly than the IPFS had planned for) and on the other hand have an expert report that there can be no reasonable basis for assuming an increase in capacity (the very reason for the increased cost in the first place) .... etc.

Talk about double entry book keeping.

There is a lot of stuff that can be said about the 'independent valuation' (most of the substance of the scheme booklet is towards the back) but who is left on the list that is lnterested?

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Independent is not equal to Intelligent

Even the big 4 employ a lot of junior staff for field work, fresh from uni with little insight

KDR Price at posting: $1.90 Sentiment: None Disclosure: Not Held
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Independent is not equal to Intelligent Even the big 4 employ a...

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