Finnaust Min Share Discussion Threads

[aventador] 29/3/2017 14:48

What's the ticker for this now?

[nohead] 06/3/2017 18:34

Thanks Richie, appreciated

[richie666] 06/3/2017 10:47

Nohead - I take my hat off to you sir. You are a well versed investor.

[squiresquire] 06/3/2017 08:00

Hi Richie666



Just to re-iterate here that the samples taken so far only represent a small part of the beaches of Ilmenite, that is to say there will be far more beach to test after this initial batch, both above and below water so far as i can make out.

[rampair] 06/3/2017 00:19

Yes, your comments on GRIT are well presented. Even signed up to receive your notes!

That can be the best part of these BB's where information can be presented of all types so investors can have a balanced view.

Personally, I have done as much reading of available information on Greenland, the country policy on Mining and the attitude of the small population ( less than 60,000
people live on the Worlds largest island!)

Clearly there are some much larger holders of this stock, and, although I held during the injection of the BlueJay asset, I have added as I believed more strongly in the project as time has gone on.

I would prefer to see us develop Pituffik and then Disco & let's not forget the well
tested Kangerluarsuk, which, when,
"Previously drilled by Cominco then RTZ
• Historical results include 41% Zn, 9.3% Pb and 596 g/t Ag (20oz’s of silver/tonne)
• 2 large scale drill ready SedEx targets located in favourable topography. •
• Drilling expected 2017"

Source: hxxp://www.titanium.gl/documents/investor-presentation/Investor-presentation-Q4-2016.pdf

Q4 presentation FinnAust website.

So, whilst respecting all reasonably expressed views,
still a " buy" here,

R.

[nohead] 05/3/2017 20:26

Hi Richie,

the primary purpose of the maiden resource will be to support the Exploitation Licence application. It needs to demonstrate that the project is commercially viable. Because the capex is so low, and much of the equipment can be leased, the Measured and Indicated resources would, at a guess, have to equate to at least five years of production, so perhaps 3-5m tons. Whether the resource is already priced in to the share price or not is difficult to say because a) nobody knows what the resource is yet and b) I am not sure "the market" has a clear expectation of what they are waiting for.

In my book, of more relevance actually will be inferred/exploration target, which ought to be a much bigger number. This will be a mish-mash of recent drilling and historic sampling. How SRK will knit all that data together is highly unpredictable, but it will start to give the first clues towards the total tonnage on that beach.

This stock will be increasingly valued on its potential exit price (regardless of whether the management actually intend to sell it or not). Any large trade buyer would certainly expand the operational plans, possibly even to include working on the submerged beach through spring and fall. So a buyer would value the asset to a large degree on tons in (or rather on) the ground, as opposed to an earnings multiple from the business plan (which will emerge from the Feasibility Study). The company will use calculations from the maiden exploration resource to plan this season's drilling campaign to try and maximise the large inferred resource. Investors who have looked at this asset much more closely than I have, think the eventual tonnage could be very large indeed. Given the high grade, that could potentially make this a world class resource. The company will also be processing a bulk sample this season to test the metallurgy. So everyone is hopeful that this summer could see a big value uplift, which I think explains why there has been so much up-take in the stock recently.

The SIA should not be an issue because no one lives anywhere near the resource. Likewise the EIA does not face any major hurdles. Apparently the only wildlife on the beach are two walruses. The Minister of Mines has gone public saying he would like to see the Exploitation Licence approved in a timely manner.

I like your GRIT idea. Generally these funds/trusts tend to trade at a discount to NAV. Part of the problem is that it is difficult to analyse all the component parts, and you never know if there are some bad apples in there (eg Araken). There can also be issues in realising value of component assets. But I think we are now in a bull market for junior miners. As you point out the managers are taking advantage of this, and have been well-incentivised. Is there a time-limit on their 14-18p option?


n

[richie666] 05/3/2017 06:55

Nohead - 2 tings:

1. I haven't said that I expect the JORC resource release to be poor, I have said I believe it is in the price, and some

2. Remember the SIA & EIA have not even be signed off and, as the article I posted last week made clear, FAM do not even have a production licence.

[nohead] 04/3/2017 21:38

Hi Richie,

If everyone was on the same side of the market there wouldn't be a market, so no worries. I am quite certain there are many junior mining stocks out there that are cheaper than FAM. If you come across any of them be sure to less us know!

One thing we all learnt from the mining crash is that none of these junior mining stocks have any value at all unless the assets get into production or, even better, get bought out by a larger producer who can then build the mine. As I am sure you know, the percentage of these junior assets that actually end up becoming a mine is minuscule. Project financing usually ends up being the road block to high valuation, but high capex, junior mining projects.

We know in the ilmenite space there are large buyers out there for good quality assets. Majors/producing mid-caps look for high grade and long mine life (so they can ride out the commodity cycles). They also look for stable mining jurisdictions, and Greenland seems to be pulling our the stops to prove itself in this respect. The positive comments of the mining minister the other day reduced permitting risk for this project in our view.

The low capex on this project therefore makes it particularly attractive. It could be reduced further if they decide to out-source major production functions such as dredging, the processing vessel and transshipment/storage. Because their opex is so low, they can afford to increase some opex costs to further reduce capex in the first few years. This means less dilution, and a much easier project to finance. I know that we, and other larger investors who came into the placement, have started to value the project on its trade sale value. The management are tight-lipped on whether they would consider a bid or not, but this starts to underpin value. The drilling and metallurgical results from 2106 looked really good. I would be amazed if the maiden resource was poor (and hats off to you if you are proven correct), and the 2017 season should go a long way to extending the exploration target/inferred resource this year.

The Feasibility Study and exploitation application are time-lined for around six months after the maiden resource, so the Minister was correct when he described this as a "mature" project. We are also hoping to get more information on developing the other assets in the company, which also ought to add value (as far as we can tell, the market is not ascribing any value to them at present).

The release of the resource followed by the economic model will firm up the valuations, that are probably more in the 18-23p range at this stage of the project in our estimation. While that doesn't necessarily mean the share price will get up there immediately, I would say downside risk is negligible at this point and the prospects for the shares this year is great, backed by fundamental valuations. What one of the other posters says is correct, in that the company is planning to bring more institutions onto the share register after the resources are out.

Souvalki sounds great. Very jealous of you on a particularly cold night here in the UK!

n

NB squiresquire, thank you for your kind words.

[squiresquire] 04/3/2017 19:23

nohead

Many thanks indeed for sharing your views and research, clearly you have put in a lot of time and energy. Also thank you, (and please i am not meaning this in a patronising way)thank you for not descending to the bicker bicker and ruin the thread.

A really good lot of information.

maccam

Many thanks to you too for your restraint and information, very good stuff, i am really looking forward to the JORC

[richie666] 04/3/2017 17:41

Nohead - takes 2 to make a market.

To give u an idea why I think the valuation nonsensical, we are just completing a Pre IPO note for a gold and iron ore play out East and the NPV at a 10% discount rate with extremely conservative inputs pops out at $337m. The expected float valuation is circa $60m. FAM just does not stack up I am sorry to say given there are no models out there ref the resource.

You can see why I see much, much more attractive opportunities out there.

Reet, date with 2 albanians and a souvlaki special! Laters!

[maccamcd] 04/3/2017 17:08

It will most probably go up to 12, then down a bit to 10p... Then the next wave of institutions and knowledgeable mining investors will soak it and lift the S/P to 15p...20-25p for Xmas. I've heard the names Blackrock/JP Morgan/Henderson /legal & General /fidelity etc being lined up for PRE/POST JORC meetings. We just need the JORC to be amazing to make all this huff and puff a reality... A very real reality! GLA! only found out it meant GOOD LUCK ALL yday!

[nohead] 04/3/2017 16:39

Ritchie,

1) I actually spoke to Western Areas about this personally. The placement was heavily over-subscribed, and they were asked if they would make room. My understanding is that their entire £3m block was taken up by one institution. Even after this, the placement was still over-scribed. The original Finnish exploration project in FinnAust had not worked out and my sense is that it had become a bit of an embarrassment to some on the WA board. Blue Jay had been brought in to try and turn things around at FinnAust, which had gone well. Western Areas is a conservatively run nickel company, and ilmenite is far outside of its core focus. For this reason they were happy to make room as the stock had moved back up through its IPO price. Though they did say they are very interested in the Disko nickel exploration play which FinnAust acquired recently. We have no issue with Western Areas selling down.

2) I am not sure how your note was silenced. I certainly read it. It is always good to read an alternative view, although I can't see at all how you have arrived at your valuation.

3) I was not referring specifically to S P Angel's note. There are a number of other valuation models that people have run internally. I was talking about risk discounting, ie reducing assumptions and valuations by a subjective amount due to the stage of the project, rather than "discount rates" in a DCF model. I agree, it was also difficult to understand the assumptions in the S P Angel note, on future production ramp-up for example.

4) I looked into this also. The selling was very minimal compared to those people's overall positions. They have retained the great majority of their positions and so this is not a concern.

5) In my experience brokers often sell "incentive warrants" early. Brokers tend to convert and sell once the value becomes equivalent to what they consider their fee. They have their own cash bills and wages to pay. They are brokers and not fund managers. This is quite a common practice and is not a concern.

6) We have been impressed with how the project has been run up to date, with fast progression on minimal spend. The management seem to have a good reputation among other juniors we know.

Obviously respect your alternative point of view. However, there are a number of investors that don't want to (or can't) buy prior to a maiden resource. If the resource is reasonable, I sense there may be further buying on the back of that as the project de-risks.

[richie666] 04/3/2017 16:08

Nohead -

1. The 7p placing was the opportunity taken for Western Areas to cash out a signifcant proportion of their stake. Do you not see that as an alarm bell?
2. Mcillree silenced the note I wrote - do you not see that as an alarm bell?
3. You say that the 14p was heavily risk discounted - I emailed the analyst at SPangel to ask what discount rate was used and the inputs as there is none in the note. To date no answer - do you not see that as an alarm bell?
4. There was a great deal of selling by Bluejay's other shareholders between 2 & 5p - do you not see that as an alarm bell?
5. SPAngel - while being positive on the stock sold their entire holding - do you not see that as an alarm bell?
6. Google Greg Kuenzel and Rod Mcillree - Greenland Minerals and Energy - form your own conclusions.

We await the JORC...

[nohead] 04/3/2017 15:27

Ritchie,

I read through your short-seller note last week, and sent it to a couple of others. It is always good to get and alternative well-written view, and so thank you.

Two of your main concerns, expressed in your report, have since fallen away; namely the need to raise near-term working capital, and any issues that could complicate the acquisition of the remaining Blue Jay shares.

This leaves your principal concern, that the stock is over-valued relative to the stage of the project. We came into the placement and have seen a number of valuation models, sensitivity analyses, and also ran some numbers ourselves. All the valuations are much higher than the current share price, ie 14p+, which includes substantial risk discounting. Once the project is de-risked the valuations become much higher, in fact a multiple of this target. This is principally because the capex and opex are so low, and they are likely to achieve a high price for this product in the market. We will have to wait for the maiden resource, but all the indications are that this is one of (if not the) highest grade ilmenite projects in the world, and it could have a very long life of mine.

The 7p placement was significantly over-subscribed, and we were scaled back along with everyone else. We know some of the others that took part in the placement, who are experienced resource investors, both high net worths and institutions. I don't think any of us can see how you could have possibly arrived at your valuation of 3p?

[richie666] 04/3/2017 13:47

Snowy - Mcillree's "resource, resource, resource" is likely to be his undoing in the promote. He has forgotten that stocks move on what is NOT in the market (ie surprises) and not what IS in the market.

The bulls are in. I see only profit taking ahead.

And yes at 0.5p I was positive. Saw an easy 4-5 bagger. At 8p no way jose.

[snowyflake] 04/3/2017 09:03

One could, if one wanted, rewrite the narrative as depicted in your post 744 by saying that if it was thrown in your face that Optiva wrote an article cheaper, it can be inferred that was less expensive than you/Align were prepared to write an article. I venture therefore to state that if you were prepared to write an article for and on Finn Aust for a fee that article would have been positive.

It shines through now that there is no love lost between you and McIllree; probably, as I see it, more on your side.

You gradually and grudgingly acknowledge that Finn Aust do have a good ilmenite resource at Pituffik; the main plank in your negativity is over the MV with peripheral criticisms just noise.

Subject to the JORC coming up to scratch and putting flesh onto the bones that have been described by the company in RNSs as to what the company has including the quality of the ilmenite, and given the recent interview on Vox Waite/McIllree which conclude with Waite asking McIllree what are the three best aspects of Pituffik to which the reply was "resource resource resource", I believe you are wrong.

I have already stated on this bb that I was an investor in Sierra Rutile and I thought that inclusive of debt the 250 million sterling paid for the company by Iluka was too low. Another poster a few days ago reminded this bb that the purity of Pituffik ilmenite is higher than the rutile/ilmenite/zircon sands at Sierra Rutile,

I would rather side with Michael Walters that the price per share of Finn Aust could reach multiple of the current price.

Time will tell and not much time if the JORC is released by the end of March.

[intgeez] 04/3/2017 08:37

You are comparing Kurdistan to Greenland? Slightly flawed don't you think considering the situation in the Middle East and payment for oil. (Or lack of it)May I make a suggestion? If you like the FAM story stay long and if you don't, get short. I don't understand why we all need to tear strips off each other. Ultimately Rich you are valuing FAM here and now while others are looking to the future. Both make sense for different reasons.

[richie666] 04/3/2017 06:57

Nobody doubts the ilmenite being there. What I do doubt is the valuation re stage of development.

I can buy GENL on not much more of an EV, PVR adjusted for cash is worth less than FAM and supposedly has billions of pounds of NPV in their reserves. GRIT - 2 liquidity events in 2 of their main portfolio constituents (serious bauxite and gold plays) looming on the horizon that has them effectively in for free at the current price. List goes on... FAM just does not stack up re valuation comparisons to almost every other company in the small cap resource arena.

All I will say pre the JORC resource announcement that is now due is that "buy the rumour, sell the fact and 'tis better to travel than arrive" are serious triusms in the market. I strongly suspect that is what will happen here and then a realisation that cash flows are still a cple years away at best. That means further placings likely or debt take on (increasing EV). If the stock was valued correctly for the current stage of development price should be 2-3p.

Right, some early Greek spring sunshine awaits!

[maccamcd] 03/3/2017 21:30

Just take another look at the photos of the black sand in the gallery section of the site... One doesn't need to be a geologist to know its special! http://www.titanium.gl/gallery/The JORC has to be special.. Just look at the sands.. Best looking beach I've never walked onWe won't own this beautiful asset when its producing... It's obviously just too damn special. Bit like Rod.. He's a special type of mining entrepreneur. Richard finally acknowledges he's a proper operator! The ramp up production profile sales straight into the Titanium price rise increases I saw on a report last week. May as well instruct Rothchilds to control the bidding war that's about to come our way! God willing. Good night

[shutittrev] 03/3/2017 21:06

Only from certain angles!

The JORC statement is due within a few weeks and a lot of the smart money suggests the resource is there which could lead to a re rating. Of course I am banking on a fair bit of hope value but isn't that what this game is all about?
Quite soon, one of us will be proved correct. Any way, best wishes old man.

[richie666] 03/3/2017 20:13

Ref Mcillree - he sent me the paid for note (by Optiva) with a gloating remark ref how cheap he had it done for (Macca will confirm this) and essentially ignored a gentleman;s gesture to a large lead shareholder re involving us.
That also cost the large shareholder dear in monetary terms and our friendship also. U can work out who that is...

In short, Mcillree showed his character to the wrong guy.

I 100% stand by everything I have put out on FAM.

[shutittrev] 03/3/2017 19:19

I agree with everything above, apart from your age. No way you are 43 unless you're still doing a paper round.
What did Rod say to you that upset you so much (you allude to integrity in your narrative), which was the catalyst for your Fam note?

[richie666] 03/3/2017 18:59

Rev/Trevor (yeah right) - the answer is as follows - at 43 years of age and 20 odd years in the market I have learnt a lot. The most important thing I have learnt is that managements approach and integrity is EVERYTHING. I repeat EVERYTHING. Macca knows what Mcillree did that upset me. To be clear it wasnt because he chose not to do note with us. I WAS interested at 0.5p which is where they were when we spoke. I was later asked if I wanted to do a note when the price was @ 6p of which I politely said no thanks!!

Because of Mcillree's approach to a friendly hand in Feb 16 I then looked much more closely at him, the Pituffik deal, his company and the valuation. Net result is that I sincerely believe the limited freefloat has caused a wrong valuation - rather like Snapchat if u like.
There are strong hands in here and big money now at risk and in their shoes I'd defend at all costs too.

In the final analysis however I sincerely believe the valuation mad, Mark sadly deluded in this and that this puff will end in tears like Mcillrees other ventures.