Andrada Mining acquisition elevates the miner to emerging mid-tier status. Watch the video here.
London South East prides itself on its community spirit, and in order to keep the chat section problem free, we ask all members to follow these simple rules. In these rules, we refer to ourselves as "we", "us", "our". The user of the website is referred to as "you" and "your".
By posting on our share chat boards you are agreeing to the following:
The IP address of all posts is recorded to aid in enforcing these conditions. As a user you agree to any information you have entered being stored in a database. You agree that we have the right to remove, edit, move or close any topic or board at any time should we see fit. You agree that we have the right to remove any post without notice. You agree that we have the right to suspend your account without notice.
Please note some users may not behave properly and may post content that is misleading, untrue or offensive.
It is not possible for us to fully monitor all content all of the time but where we have actually received notice of any content that is potentially misleading, untrue, offensive, unlawful, infringes third party rights or is potentially in breach of these terms and conditions, then we will review such content, decide whether to remove it from this website and act accordingly.
Premium Members are members that have a premium subscription with London South East. You can subscribe here.
London South East does not endorse such members, and posts should not be construed as advice and represent the opinions of the authors, not those of London South East Ltd, or its affiliates.
Good morning everyone,
My take on it for what it is worth:
16k from Sable but might take up to 6 months to achieve this target so 8k for second half. I will estimate 4k for the first half. 12k for the year. I like the estimated gross margin of 5k.
Roan output to be part of Sable production assume Mikie's 4k is right. Leaving 5k to be sold into the market. Total of 17k for next year from these two assuming everything goes to plan and no more delays and nothing from IRH.
17k at 4k/5k ton gross margin is $68/$85 million for copper next year. Interesting to see what the copper forecast will be from JLP next year (would be nice if they actually hit one). Good they are putting a video out of Roan in action social media is a valuable tool they can use when RNS not needed.
Throw in a similar amount from chrome and pgms and we could be looking at $130/$150 million gross margin for next year. Looks very tasty.
Leon said in the H1 investor presentation that Roan was expected to have 60% of output going to Sable to produce cathode... then later corrected himself and said 60% would be sulphide concentrate. In a way it's largely irrelevant how much is oxide and how much is sulphide because they are talking about 25,000 tonnes of CONTAINED copper. If they were talking about tonnes of concentrate it would be a different story.
Obviously as we know capacity does not necessarily equate to production, Inyoni has a capacity of 10,500 PGM ounces / quarter but last quarter it only produced 8,339 PGM ounces. This highlights that when you are processing feed of different grades and chemical compositions, it's not possible to put an exact number on the production.
Part of the smoke and mirrors game! Roast guys say a number to Leon, he never answers!
Leon said the priority short term is to secure copper feed in Zambia (presumably before some other chancers muscle in) - if that's the priority then they must be making plans for where all of this material is going to be processed and there will be a cost - if it involves IRH then they obviously can't say anything. If it's in the planning stage then it's market sensitive and needs to be tied down so, again they can't say anything.
Keeping things simple - as things stand chrome/pgms profit pay company overheads only (pessimistic view).
Sable brings in $80m per annum starting in a few months. Roan sell into market and pile low grade product on the floor, brings in say $20m per annum (pessimistic view).
Profit in about 4 months time is $100m per annum, at a p/e of 8, gives us $800m valuation. 3.8x current market cap giving a share price of 27p.
Allowing for dilution (warrants, options, further resource purchases in chrome and copper) and timeline slippages denting share price rises then we should be at 15p to 20p by January IMO. Going to do my final top up and look the other way for a while - going on holiday next week and thereafter it's time for my wife's cancer treatment which we have just found out may be more intensive than we thought - this time going to let the shares sit in our accounts as the sp is not elevated but depressed. Enjoy the sun whilst it shines everyone, all will be revealed in the fullness of time.
Jonah/Mikie
Thanks for your response, where did you manage to read the broker note as I can't get it. If possible can you put a link onto the board. I agree with everything you are saying, but why could they not state that at Roan it will be Sulphide because if you listen to the podcast and the roast boys talking figures they are assuming its going to make a fortune and they alluded to Oxide
Edzi, my understanding of the situation is 12kt of cathode at Sable and they are extending capacity to include 4kt of copper solution. I am assuming the majority if not all of Roans solution will go to Sable initially to upgrade. That is until the modules are in place at M&G. Then their output will fill Sable, leaving Roans production to go direct to market. At that point production will be circa 25kt, but until then Roan and Sable will be pretty much doubling up. So M&G to feature in 6-12 months. From the RNS , broker note and interview hints its looking very likely they plan to add a refinery at Roan. If they go down this route, i just wonder how big a facility they would build?
I think it is virtually impossible at this stage to come up with a reasonable figure for attributable copper production in the next year, be it sulphide concentrate, oxide concentrate or cathode, Edzi. I thought project M was Munkoyo and it was deemed 'new' as we had decided to exercise our option to buy the license. We are buying only 51% of project G so there will obviously be some split in profits here. The investment in expanding the sulphide circuit at Sable (which eventually will not be taking Roan's sulphide material) suggests to me that there is plenty of sulphide in M and G but that is only a guess.
I agree there is something brewing and I suspect this is related to refining capacity. All our original attention was on Chambishi but the recent RNS and interview point to a refinery at Roan. If this comes about in a couple of years we might be in a position to finance this but for anything sooner I am pretty sure we would need a wealthy partner!
Mornin Kalan
I listened to the podcast last Sunday, as I said even after that podcast no one knows about the split of Sulphide or Oxide which makes a huge difference. I think the boys at roast were pushing the amounts up and obviously Leon can't answer but this has been done before by them. There is no doubt that down the line the Company will be hugely profitable and we know this is just the start. But with all Leon's talk about Roan and Monkoyo and the two new aquisitons which now make a total of three and more to come, as we all know the elephant in the room is how on earth are they going to process it if Sable is full. If it's just Sulphide it doesn't matter as it can be sold to market, and that is my worry, as it changes the figures enormously. So why don't they answer the question?
Listened in this morning.
Leon saying fully operational at target output for Roan by end of July (precisely 3 months late as he invited them to come and see it fully operational at the end of April).
Updated video promised to shareholders at end of July showing it running.
Sable to take Roan produce in the short term but the two newly purchased projects will fill Sable on their own 16.000 tonnes @$5000 /tonne profit (minimum) = $80 million profit per annum at Sable starting in the next 6 months.
Roan 9,000 tonnes per annum after upgrade in next few weeks - twin feed - low grade and higher grade. Lower grade must go to Sable for further upgrading, higher grade can go to Sable or be sold directly into the market.
QUESTION - what do we do with Roan output if Sable is already at full capacity???
ANSWER - further benificiation plant to be built at Roan but not planned to be soon - do we need to be careful in saying that we produce 25,000 tonnes, are we double counting Sable capacity for the lower value concentrate and new purchases.??? I don't know the answer - I think Edzi was asking something similar about Roan output figures being confusing.
The future - presenter was talking about 50,000 tonnes and said he knew Leon couldn't talk about this/ mention this??
After Roan, Sable and Thutse upgrades and expansions (all in the next 6 to 8 months) the top priority will be securing waste rock assets which should be financed by IRH - Roan beneficiation and further chrome opportunities will come after that.
For the next two years re-investing profits into copper as it's return on capital far outweighs return on cash (stated by Leon). In a couple of years time will discuss whether to return cash to shareholders.
Throughout the interview I got the opinion Leon was trying to address specific investor concerns voiced on this board and elsewhere and that, as edzi has repeatedly said, there are other things going on in the background. My take is that project Roan is vital to us small shareholders in terms of the short term value of our shares but the importance of Roan in the overall company size and strategy when we look back in time two years from now will be small and dwarfed by what has happened in the meantime. GLA.
Amazes me that even though Jubilee is about to become largest producer of Chrome by way of cleaning up the industry they getting zero (or very little) recognition?
Chrome Margins have been increasing monthly and we about to break 1000 tons of copper a month.
Is this just bad PR?? Or are they still trying to go under the radar well they pick up new deals... probably the latter..
Weekly chrome concentrate update... edging up again this week, reported at US$320-325/ tonne. A new high in recent years.
I’m hoping the next financial update shows a definitive move on the Chrome margin which might finally break the SP link to PGMS.
Following the latest update TW and Steve Moore on Sh areP rop hets have reiterated their buy stance "As such, we continue to consider the current valuation much too harsh and that a recovery back to around a 16p+ share price is quite realistic. Ahead of year to end-June results and updated outlook detail, our stance remains Buy."
"The increased margins from the new partnership agreements are expected to reflect stronger through the current quarter"
This impact was felt in Q2 when the margin went from $5 to $23. Majority is toll margin. The real effect of own processed material won't really be felt until next financial year and beyond. I am hoping the margin will be closer to $30/ton for the second half of this year.
Sumo, lets hope the toll processing charge had a pretty good increase.
Mikie, if you work out the earn from PGMs against Chrome volume it’s pretty naff and a bit of a gamble on the future. I would hope they’ve gone for more Chrome margin and given a little up on the pgms! More here and now!
Just to add to my last post own sourced was only 293k tons for the half year when we are producing 2 million tons then 1.2 mill will be own sourced and 800k fixed margin so we should be producing double own sourced we produce now.
We will produce around 800k fixed margin this year so that won't increase as opposed to a significant increase in own sourced material.
Had another look at it Northern and the only thing I can see which gives an indication of potential margin is the comparison between half year 2023 and half year 2024.
First half FY2023 was $5 gross margin but the split was 31% own sourced/69% fixed margin.
First half FY2024 was $17 gross margin split 41% own sourced/59% fixed margin.
Chrome prices have improved from 2023 to 2024 and the fixed margin should drop to 40% so there is more uplift in the margin to be had but difficult to see predict what that will be without actual figures each quarter. Only thing it shows is fixed margin is very small.
Dont forget the free carry on PGM’s Sumo. Maybe not mind blowing now, but all add up and are predicted to rise in value.
I saw the presentation at the time so don't remember that much about it now don't recall them putting any numbers to it but I am a bit old school Northern. I like to see actual numbers.
I would like to know whether the recent contract renewals for toll processing are at a much wider margin? If not, can’t see the point of wearing equipment out for pretty much nothing?
Gray, the results presentation where Leon and Neal presented gave some good indications on toll processing vs own feed percentages and what to expect going forward so maybe a good reference point.
ATB
Northern
They will also benefit from economies of scale. I was so disappointed we didn't get any financials with the 3rd quarter output would have given us a much better idea where the margin was. It was $23/ton in the second quarter and I agree would expect it to increase in the third and fourth quarters.
You would think so Northern, but Roan has the land. More importantly, i believe has the power and water in place. Also transport from Roan would be neglible. Maybe makes more sense than you would ghink?
Mikie, intuitively my preference would be to update an existing refinery if possible as would shorten the timescales and potentially be lower risk and lower capex. However, a new facility would probably be state of the art and tailored for the required feed sources. Good job we have some good process engineers in the company.
Thanks for posting Seisnav, much appreciated.
ATB
Northern