Just checking in again – sorry Teddy been off grid for a while - continue to be very happy indeed with my AUZ investment, continuing to buy on dips and closing in on 15million shares have not sold one yet and do not intend to do so – the best is yet to come. While others may disagree and nothing is totally without risk, I view AUZ from reading between the lines of recent company communication as increasingly de-risked and still significantly undervalued.
I don’t know what the future value of the shares should or will be at any specific point in the future however I am very confident that it will over the next 2-3 year still be a 5-8 bagger from here. All I know and care about is that the AUZ story continues to get better and more de-risked as Ben Bell CEO and the Management team continue to jump over every barrier and de-ramper in our way. AUZ is absolutely in the right place at the right time – in the sweet spot is getting sweeter.
Bell Bell CEO, the AUZ Directors and Management is a team that has over the last 2 years completely transformed and refocused a largely insignificant small gold explorer into potentially a global leader in Cobalt and nickel sulfate production with a series of what will probably be proven to be the best mining deals of the decade if not the century. See Nov 2015 presentation if you have not read it, you should do, to see how far we have come in a mere 24 months I have not seen many companies if any which have so successfully completed this type of transformation)
This is a team that continues to under promise and over deliver their recent rewards are exactly as they should be and totally aligned with the success of the share price and all shareholders and in my view not excessive and very much predicated on them delivering on company market capital/share price appreciation. It is good that they are aiming to go all the way through to production and future company growth with both Sconi and Flemington and potentially more.
We will get better ideas on true value from information as it becomes available->
- The DFS/BFS for Sconi due April 2018 will give us a much better view on the long term revenue and profitability projection of the Sconi project – This will include whether they do indeed plan to triple Sconi production capabilities as they are reviewing at present (and I expect them to do).
- Finalization of the Sconi mine build cost and finance package.
- Further drill results and proving up of the Flemington resources PFS.
What I like
- Great capital raise offered up to A$20 million to global long term funds 2 -3 times oversubscribed. These entities are NOT trading houses or short-term capital raise entities that are in for a quick trading buck , these are investing client funds for the medium –long term they will have done considerably more due diligence than anyone on HC (and certainly more than any of our de-rampers).
This is exactly the type of capital raise that makes sense – I would rather pay fees of A$750,000 for the underwriters of the raise than more discount or worse still options that complicate valuations and create share price “shelves” around the option price as the share price appreciates.
- The new website is wonderful and confirms what our key investors want to see “FOCUS” on core assets Sconi and Flemington
(Remember all the de-rampers after the previous website was taken down and we were left without a proper website for month – ‘how can I invest in a company without a proper website blah blah blah” – now answered in spades.)
- The Cash on Hand will per replies from Ben Bell (see HC discussion at AGM) should see the company through to end 2018 without another CR capital raise. This cash is being used for salaries as the company particularly the Tim Maclean COO hires and expands for Sconi DFS / FEED plans and further progressing Flemington drilling & PFS and further progressing Tackaringa project. The actual Sconi mine will be treated as a separate “standalone” financial project and cost.
- The financing arrangement to build Sconi and bring it into production (that I expect will be fully financed by finance partners based on secured lending based on guaranteed off take agreements from off take customers. Note AGM presentation. Q & A
“But the key is to secure off take agreements as quickly as possible ?
" No – securing an off take agreement in the current environment is rather easy. The key is who you sign an agreement with.
AUZ is negotiating with potential partners (not customers). These are companies with strong balance sheets and an ability to assist Australia Mines finance the construction."
I am glad AUZ management is not planning to sell a stake to a specific customer, though Chinese and Korean entities seem to have in their DNA the wish to take a stake in suppliers/ vertically integrate. I always view such stakes as CLQ have signed with Pengix and potentially Earspring, as not in long term shareholder interests due to dilution, potential undue influence, and the potential concern of other customers that they are secondary.
The like of Tesla, Daimler, Mercedes, VW etc have already produced many of their EV prototypes, and are currently building factories and tooling up for when mass EV production really starts in late 2019 – they need to lock in growing non DRC cobalt sulfate production from late 2019. I know of only 2 non DRC companies, namely AUZ and CLQ, that are in a position to provide that level of cobalt sulfate production and quality by end 2019 early 2020. (for example if VW is spending Euro's 70B on EV vehicles they probably can help spend a faction of financing the Sconi plant)
- There is a slight delay in the implementation of the scalable demonstration plant and therefore samples to potential 9 off take customers. AUZ management have been very upfront and proactive on advising us ordinary shareholders on these delays and these like the earlier slight delay on the Flemington drill results are well explained by management and largely caused by 3rd parties beyond their control plus have no significant impact on the strategic plan and overall timeframes. i.e DFS/BFS still on track by April 2018. The scalable demonstration plant was a master stroke.
> each specific customers need to see that we can produce the finished product (their quality requirements a very high and strict 99.9% purity). The AUZ sample product needs to go through the potential customer quality control departments and probably into their trial / actual batteries.
> as flippa and co have stated there is so much to learn and optimize in the many processes for specific Sconi Ore treatment to obtain the various Cobalt Sulphate, Nickle Sulphate and Scandium Oxide products, even if has or you have done it before. (look at HAS AX as an example in rare earths – they have a lab process and are learning and optimizing the process all the time before they build their plant). AUZ will save significant time and money getting right in the demonstration plant prior to building the Sconi plant. (great posts Flippa thanks for posting all your great experience)
> The scalable demonstration plant is also critical plant for the finance partners to feel comfortable on the price of the plant and the economics, while they may have the customer off-take guarantees they will still want to make sure the process product and economics are “watertight” from an AUZ and customer perspective. The off-take guarantees are only good if the quality and quality of the off-take product is as specified in the guarantee. However the 9 possibly more now potential off take partners would not be talking and making site visits etc. without total confidence that AUZ
Demand and Pricing of AUZ’s products Cobalt & Nickel Sulfate and Scandium Oxide continue to increase and all future demand forecasts show Cobalt and Nickel to demand to be rapidly accelerated in line with rapidly gathering pace of the Battery and EV revolution. Hardly a day goes by without new announcements on new EV and Battery new products and investments. Its not just cars its all vehicles Tesla, Daimler trucks and vans - maybe we will see trains (easier and cheaper than electrifying train lines)
While we maybe in lull in company announcements – we have plenty to look forward to over the next 1-6 months there are a lot of off take partner and finance discussions ongoing at present (as noted above based on my opinion of management comments) and are well advanced. Off take agreements (with suitable clauses i.e subject to receipt sample and actual production product quality could in my opinion be made at any time. This IMHO is not a share you want to be out of, as others have found exit and take a profit but maybe regret and difficult to get a lower entry point.
While some questions / and concerns do appear well intentioned, if you have a question I simply ask the company I am invested in and get the answer direct from the “horses mouth” – most companies on the ASX from my experience including AUZ are very good at replying. Other questions seem plain dumb as some have clearly not read recent company announcements (you would think a key of DYOR before you invest in any company would apply) – however perhaps it’s a simple matter that the “wheel is spinning but the hamster is dead”. Other questions and concerns on the other hand seem simple sour grapes or down right down ramping to try to get back in at a lower price - simply best to ignore which I have been doing.
My personal read is we are in a simple period of consolidation that is drawing to an end before another increase in share price from the first offt ake agreements. We can increasingly see the lower and lower trading volumes at these prices and a strong support level at A$0.10 This suggests at least to me that shares with the help of BOTS and down-rampers are slowly being transferred from the inpatient / nervous nellies to the patient long term investors and institutions and the pool of shares they can shake lose at these prices are drying up. Those institutions that wanted in at the oversubscribed A$0.085 capital raise will have been buying to fill their original investment requirements.
There are others that want your shares – hang on to them they are IMHO worth A LOT more than you think –The AUZ strategy and plan is laid out real and achievable .Timing, patience and news flows will be key to the timing of any share price rises that are coming – I am not sure due to the delay in production of sample product that it will be 25 by 25, however I am sure it will be Magnums all round by April if not before and the best is yet to come.
All IMHO DYOR GLTA
- VW board talks €70B spending plan
- 17, 2017 4:20 AM ET|By: Yoel Minkoff, SA News Editor
- More investment? Volkswagen's (OTCPK:VLKAY) supervisory board is discussinga five-year spending plan totaling more than €70B to further transform the group into an electric car leader, Reuters reports.
- It's expected to sign off on the capital and development spending targets today, with the investments being made in 2018-2022.
- Tesla unveils next-gen semi and the Roadster 2
- 17, 2017 12:02 AM ET|By: Clark Schultz, SA News Editor
- Tesla (NASDAQ:TSLA) unveiled its electric semi truck at a highly-anticipated event in Los Angeles.
- The Tesla Semi will accelerate to 60 mph in five seconds and with 80K lbs load will hit the 60 mph mark in twenty seconds.
- The Tesla Semi boasts 500 mile driving range at maximum load, a mark the company notes exceeds 80% of commercial trips. The vehicle will charge up to 400 miles of range in 30 minutes as the driver is loading or unloading the cargo. There's also hints of a "megacharger" network.
- The Tesla Semi will feature four Model 3 electric motors and touchscreen panels in the cab on either side of the driver.
- Musk highlighted that the Tesla Semi stands to be a gamechanger due to its cost-savings potential and driver comfort features. He takes some shots at diesel trucks and claims that the Tesla Semi won't break down for a million miles. There's also some solid points on the benefits of regenerative braking.
- In regard to cost, Musk says the Tesla Semi will cost $1.26/mile to operate vs. $1.51/mile for a diesel truck.
- Production is scheduled to begin in 2019.
- A surprise reveal at the end of the event is the relaunch of the Tesla Roadster. "The fastest production car ever made," Musk said. The next-gen Roadster will go from zero to 60 mph in under two seconds and max out at over 250 mph. 620 miles of driving range is promised. Dizzy yet?
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