|African Consolidated Resources
||EPS - Basic
||Market Cap (m)
African Consolidated News
|xscream179: I made my first post on this board a few days ago. I don’t post a lot but sometimes I have something to contribute. I tend to hold for long periods. By way of introduction I first invested in AFCR about 9 years ago. I have long been interested in the potential of Zimbabwe and have spoken to a number of people who travel there. I invest in a small number of stocks and know a lot about those that I invest in. I have met Roy Tucker, Mike Kellow, Andrew Cranswick and recently Roy Pitchford. I believe this is a good time to be in AFCR with much of the available information looking positive.
Expected cash generation from Zimbabwe:
“The Company remains of the opinion as previously announced that the finance introduced into the Joint Venture will be sufficient to commence production at Pickstone-Peerless within eight months at a provisionally targeted run-rate of ore production of 10,000 tonnes per month.” 10k tpm at 5g per tonne /32 g per oz = 1562oz
per month x margin of $450 = $703k/month = $8.4m pa. 50% share to AFCR is $4.22m pa = £2.7m pa. Cost of production at PP has previously been quoted as $600-$700. It will take 2-3 months to build up to 10,000tpm. The necessary machinery has already been ordered. Note that Grayfox the new Zimbabwean investors own 50% of Pickstone, Peerless and Giant the rest of the Zimbabwean assets are 100% owned by AFCR.
The known orebody at Pickstone Peerless has higher grades at greater depths. There are several avenues open to the company to increase production once capital is generated from early operations. It would be fair to include at this point that there are significant political risks in Zim however I think this is clearly reflected in the in the modest market cap.
Shares being traded in the market:
Brimfell sold their 29% holding. The buyers of this stock over just 4 days paid 1p to 1.3p. I think it would be unlikely for them to become significant sellers with the addition of the Romanian project.
There were very high volumes traded around the time of Zak Mir’s potential 25 bagger article however current holders will include people buying in on his recommendation with the hope of the share price multiplying to an assortment of levels above the current price.
The shares from the placing are non tradable yet. I don’t think those who bought in on the placing will be planning to sell for a modest profit at around current levels. Why be tied in for a period for .01 or 0.2 of a penny?
As per the last RNS there are some legalities to be confirmed. Once the legalities are sorted out, estimated Jan, it will take three months to restart the mine and possibly a further three months to increase throughput to 10tpm. By this time annualised free cashflow (after tax) is described as $14m-$15m. Noting cashflow is not profit I think the profit to AFCR would be £4m- £4.5m pa from mid 2015 from Baita Bihor. This is my rough estimate not a company figure. “Resources and production facilities (post refurbishment) are sufficient to double production for further $4m investment”. This additional investment is expected to come out of cash flows generated from the first phase production output. Known resources indicate an 11 year mine life. The various metals being mined are equivalent to 6% copper or 10g/t gold. The plant to extract the main minerals is in place and comes with the deal.
I know someone who asked an analyst to scrutinise the Romanian figures. The outcome was that it was difficult to come up with an IRR of less than 50. My rule of thumb is that anything higher than the mid twenties is exceptional.
The way Biata Bihor will be run will include some improvements in working practices that will bring further benefits. For example simply putting the viable ore through the plant rather than all of it will increase the already high grade (6% Cu equivalent) even further. This isn’t just creaming off the good ore. Under state control all the ore was out through because no one in charge asked the people working in the mine for their advice. I understand Andrew Prelea (Romanian CEO) is both a Romanian citizen and an Australian citizen. His in country contacts give AFCR a unique position which has resulted in the current arrangements and the prospects of additional developments through Remin the state mining body.
The sovereign risk in Romania is substantially less than in Zimbabwe which derisks AFCR’s operations. This will be to the benefit of shareholders. With the price around 0.6p absolutely nothing is priced in. By the time both mines are working later in 2015 my figures above indicate an annualised profit of c£7m to AFCR for the following 12 months. This excludes further improvements enabled by using cashflow to improve operations. The new number of shares in issue will be approx 1182m. If the share price is 0.6p this is a P/E of one (1182x x 0.6p = £7m). If you chose a P/E that is more realistic that is the multiplier from the current share price. I would be surprised not to see a share price of above 2p in 2015. This could be viewed as a cautious estimate. Note that the Romanian element has a lower risk and will contribute more profit to AFCR than Zimbabwean assets. The very fact that there are two independent projects reduces the risk to the company. If it was Zak Mir making these points the share price would be over a penny in 24 hours.
|themattbarnes: can someone just clarify something for a newcomer.
There is a plan to issue a load of shares at 0.5p but this hasnt been agreed yet, so are people buying the current shares not the new shares?
why is this good news as it has brought the price down massively, and if the company is issuing shares at 0.5p why is there any indication the company thinks the share price should be higher than that?|
|tomboyb: That is one of the points I certainly was trying to make -
Cash rich vs Share price i.e GBP / TRAP / OSU etc - Its a bear market for comms -
Favoured commodities at the moment are REMs + Uranium + Copper + Lithium etc
Quite a lot of others at lows - Is this the bottom?|
|yorgi: Although 1p looks some way away at this moment that could quickly change if enough people recognise how undervalued we are buy in for the journey to production next year and with it then a share price several multiples of the present share price in my opinion.|
|jumbone: Off out now chaps..
Back in an hour or two
More on my return
Keep the Share price up|
|jumbone: Let add some more about the bollinger band trading.
MMs are not idiots
They are here to make MONEY
Not just make money, but to make AS MUCH OF MONEY AS POSSIBLE
In addition they make money on every trade as commission and on the spread
They have systems which analyse buys and sells and compare with various tech indicators.
That's why as soon as their systems indicate either buy trades / sell trades going through at the upper / lower bollinger bands their asks & bids are automatically adjusted.
Don't be fooled
This applies to RSI levels, Pivot points, Fibonacci levels and anything else that you may think of.
That's why it is better to let any Share price to rise significantly and take profits on the way up, if you are going long.
Most penny shares cannot be shorted.
Even if you want to through a spreadbetting account only some are permitted to be shorted.
Even then there are tiered margins, which would not allow you spread bet on huge quantities without paying upfront a huge margin even up to 90% in some shares.
No I am not bluffing
Want to know more about tired margins, and which shares can and cannot be shorted..
download and critically look at www.marketdatasystems.com/content/files/Tiered%20Margin.xls|
|loverat: Agree - the current share price bears no relation to the recent news. When the market wakes up to that and there are no overhangs or hoards of traders, this will fly up.|
|jenny tulwought: You're disappointinly quiet today Jumbone - not as disappointing as the share price however.|
|moreforus: i think AFCR has been an object lesson as to how a seller can utterly destroy a share price on aim in the face of good news etc....also at how if you read the signs you can make a fantastic return in a very short space of time.|
|ryan83: ~~ADVFN*MODERATEDCertainly lots of interest on LSE. Market caps of £200m and share prices of 150p being bandied around lol. Personally think it's worth at least 1p as this is the exercise price in the Friday RNS. But certainly don't think a market cap of £10-15m is too much to ask for AFCR. Question is why the mutes share price action Friday on that volume? Will we find out Monday?|
African Consolidated share price data is direct from the London Stock Exchange