From the RNS
"At the time of the acquisition of the assets of the Ironveld Project from the Sylvania Group in July 2012, the Company entered into a loan facility of R15 million with Sylvania Metals Pty Limited ("Sylvania"). Under the terms of the Loan Facility the Company undertook to grant Sylvania warrants as a guarantee. The Loan Facility, which now bears interest at 4% above the South African prime rate."
"Bank Lending Rate in South Africa remained unchanged at 10.50 percent"
Think I'm going to put 15% in to my model for interest on debt and 4.5p as the fund raising price. That replaces a previous assumption of 10% and 5p.|
|Bit annoying that they're still a way off finalising. No use listening to their words they have no concept of normal peoples' time. They wouldn't have needed this mini raise if they were that close. The good thing is Clarke and Harrison are partaking so buying now seems safer than it has for ages.|
|So, there's the placing. At a discount, inevitably. At least GC and NH have bought some. Great to the dreaded word "imminent" included in the RNS...|
|Must be my PC, I get "onedrive.live.com unexpectedly closed the connection."
Got it on my phone and the numbers are substantially different to the ones in the DFS. Titanium & Vandium are down as 50% of what I had (tonnage mined).
I'd discounted the price of Vanadium because the purity was less than the purity of what I'd seen quoted on the spot price, they have assumed full price (they know far more than I do about such things).
They have a price for Titanium that is not much more than half of what I had, but their Iron price is 20% higher.
The overall result is that revenue on byproducts is only 75% of what I had forecast and the reliance on HPI is far higher. On the plus side revenue gained from selling the HPI (assuming they achieved the price in the presentation) is also far higher.
I've played around with debt equity mix and it does make a difference, but by far the biggest risk here is going to be the price achieved for their HPI. So I guess the best way to look at this is going to be to take your required return and then work out what price our HPI would have to achieve in order to get that required return. The return obviously has to include the risk premium on funding the project while that is still outstanding along with the execution risk on the project.
Thanks for the link!|
|here is the link;
|Got the number for ebitda from the DFS RNS. I knew there was a presentation out there, but the link on the website won't work for me, anyone got a good link? To be honest I've probably run these numbers before, but this has been ongoing for so long I've forgotten my investment case ;-) Thanks for the revised numbers, they will certainly make a difference. I'd assumed revenue in Rand, but converted to sterling for ease of reading.|
|Yep - profit before tax forecast as 22-23 million dollars each year for the first 6 years of the project which is also the profit after tax due to tax allowances. In year 3 onwards profits are forecast to ONLY be $16m dollars per annum due to tax starting to be paid. These figures are AFTER interest payments. Of course much can go wrong in execution and obviously we are already running months behind schedule but remember that these figures may be on the low side now due to the exchange rate translation into sterling. Don't know where you get your figures for PBT from Al, but they are a huge underestimate (at least, based on forecasts).
Just a guess but lets assume they raise £15m by the issue of 300m shares at 5p, being equivalent to a 1 for 1 rights and total shares of 628m. The remaining £20m being debt. Then $22m dollars profit would equal approx. £18m divided by the shares in issue comes out around 3p EPS annually. Even a derisory P/E of 5 gives a share price of 15p and don't forget that this is only the preliminary project with a much bigger scale project to come! Lots of assumptions made by me here but it does give an indication of the potential value for equity holders of the project once up and running.|
|Lifted from another thread without authors permission. Sure he/she wont mind !
Al: This may have some bearing on your calculations ?
"I have been advised all material revenues for Ironveld will be in $. Ironveld forecast $24.6 million profit in it's first full year of production (see investor doc Nov 2015 on ironveld.com). That profit would have produced £15.77 million profit based on the then exchange of $1.55 /£. However if you apply the current exchange rate $1.21/£ it will increase profit to £20.33 million which is a 28% increase."|
|Interested in anyone else's efforts to value this company assuming we get up and running and produce according to whatever you have as latest numbers?
The reason I ask is because I can't make the numbers make sense as a shareholder proposition and I'm trying to work out what I'm missing.
Does anyone have an EBITDA number that is in excess of the DFS from 2 years ago (Just over £8 million)?
If not then what discount would you apply to get to net profit (numbers for Interest, Tax, Depreciation and Amortisation)?
I've assumed 10% interest rate, which seems generous.
Assuming all funding is through debt (which it won't be), I make it:
Project Funding: £49.6 million
BBBEE: £12.4 million
Ironveld: £37.2 million
The 'I' in EBITDA then would be £3.7 million, bringing the 8.1 million (from memory) down to £4.4 million
I suspect tax and royalties will be in excess of 30%, but lets assume 30% and say £3 million after Tax. Amortisation and depreciation we'll set at £0.
328 million shares in issue, giving EPS of 0.9p.
These are VERY broad brush numbers, but no matter how I play with them I can't make a case for buying back unless I increase the prospective EBITDA from the DFS.
If I start using equity the numbers look worse and 0.9p is very much a base case, I'm using what I would consider best case numbers.
What am I missing?
Or are people taking a longer term view?
Maybe a forward PE of 5 given the risk suits people?
Honest question as contractors have taken payment in shares as have the board, so there must be something I'm not seeing.|
|Annie - 38You need to be very patient here. There could be a rights issue at some stage to be part of the fund raising. The big question is at what price.News is very very slow here which is the norm as with Amerisur.2018 could be the year we see real gains here.This share is not without risks. As they say you have to speculate to accumulate. I'm certainly not adding to my ho!ding until we see news that all the finance is in place|
|Having offloaded some at over 6p recently, hoping to get the opportunity to buy back at nearer 5p. Wont have to wait long by the looks of things !|
|Thanks al, I hadn't seen the mineweb piece.
I hold a bunch of ex specie shares plus a few I added, I'm keeping but not adding until the equity raise.|
|EBITDA according to DFS is projected to be £8.1 million
The info posted in the last few posts, plus this should give you what you need to take a stab at a valuation of this company which is pretty critical if you expect to be in at the time of the placing.
As a double check I also reverse engineered the revenue from the DFS to see if I could see anything materially different that would change that valuation, but I got my numbers at a level I wasn't unhappy with and wasn't too far out.
For me, it was enough to send me packing, I'm out at a 15% trade weighted gain since 2014... disappointed, but I'll jump back in at the right price.
edit - My margin of error is massive as we don't know the true cost of debt, nor the debt/equity ratio we will end up with, nor the actual price achieved for our products. Adjusting, just the HPI price to the upper end of my range would result in 50% upside to my price projection and completely change the economics.|
"So, really, what do we need to develop it? We need money, and clearly we are working with debt providers to get the debt in place. We’re looking at doing around about a 50:50 debt:equity project,"
I looked at the 2015 presentation earlier, the numbers in particular, and it showed debt as being about 2/3 of the total I thought they needed (about $60m) so perhaps that's an indicator, not a precise one.
We'll know shortly:) or worse still as Ladeside says...|
|It could be worse, it could be "imminent".............|
|Thanks for your reply.
Time will tell I guess. Let's just hope that Giles definition of 'shortly' is the same as the average person for when he updates the market on the rest of the finance deal.|
|Typically debt is funded in the same currency as the project, so debt in rand to fund a project in South Africa. This would fit with funding from the IDC and a comment I'm sure I read about other South African institutional investment potential.
May hurt shareholders in the short term though, as any placing is certain to be in sterling. In the longer term shareholders benefit by a stronger Rand as South Africa also happens to be our target market and so the currency our revenue is earned in.
Swings and roundabouts... but a weaker £ should be advantageous in my view.
That doesn't mean our debt raising is issue free, but I had assumed that the lack of an offtake agreement for our HPI was the reason for the hold up.|
|Does anyone have any thoughts on whether sterlings continued devaluation is impacting on getting the rest of the funding together for the project? Giles stated earlier this year it will the UK's biggest investment in SA this year. In May £1 sterling got 23 Zar. Now down to 17.|
Yes, the targetted debt to equity ratio is unknown, but if you check the IDC website it appears that part of their criteria for funding is at least 50% equity and that equity holders are used to partially fund the project.
I wrote a long post on it, but it appears to have gone missing :-/
Anyway here's the link:
I'll try to put together the rest of my research and conclusions at some point and repost them. Obviously they have changed materially today, assuming we hold at this level... and can raise equity funding at at least this level.|
|Isn't there an equity raise to come too, apart from the rest of the debt finance? I hope he doesn't lowball it like he did KENV, which peed me off, hopefully the share price should be a bit higher by then.|
|My first buy in my ISA was 11/12/14 at 7p, traded my average down to about 4.25p since then and I've traded in and out for a profit in my regular trading account before the initial ISA purchase.
I think I was one of the first posters here, so it's been a while.
Buy the dips, sell the spikes works really well in a GC company that drips out news and spikes due to lack of liquidity on each RNS.
Risky at the moment of course, another funding RNS could arrive any day and my sell could end up looking very silly.
edit. - first post here was 2012... wow!|
|Can't be bothered trading this one. This was always a long term investment and only just back to the price I paid 2 years ago and has turned out to be even longer term than I planned with the various delays. We are months behind the original schedule but if I recollect they believe they can get the construction done in 6 months as soon as the funding is completed, and the plant is significantly EBIDTA positive from day one.|
|That was my 40K sell, just taking a bit of profit... we have a long way to go yet and Ironveld aren't known for their haste so I've taken some profit in order to take advantage of the bored and the weary in a few days/weeks time.
Still hold a chunk (just playing it for a couple of hundred quid), so if I'm wrong... it's all good.
edit - the 40,837 is mine, not the other 40k that just popped up... I didn't effect the price ;-)|
|From the daily telegraph yesterday.....
Finally, Ironveld, one of ex-England Cricket Board chairman Giles Clarke’s mining companies, leapt 16.7pc to 5.3p after the South African government approved a £13.9m funding package for its High Purity Iron, Vanadium and Titanium project.|