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Kibo Mining Share Price - KIBO

Share Name Share Symbol Market Type Share ISIN Share Description
Kibo Mining LSE:KIBO London Ordinary Share IE00B97C0C31 ORD EUR0.015
  Price Change Price Change % Share Price Bid Price Offer Price High Price Low Price Open Price Shares Traded Last Trade
  -0.13 -2.27% 5.38 5.25 5.50 5.50 5.38 5.50 1,469,053 10:21:07
Industry Sector Turnover (m) Profit (m) EPS - Basic PE Ratio Market Cap (m) RN NRN
Mining 0.0 2.1 1.0 5.4 17.64

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gilbly: Morning. No internet for over a week, so out of touch with all posts. More thoughts for today on funding and selling etc. All early stage miners go through the process of exploring and delineating a resource followed by a series of consecutive studies such as Scoping, PEA, PFS and DFS and these culminate in a Bankable report which is instrumental in negotiating for finance. Invariably the Bankable study is a necessity as the banks call for this level of reporting and the financial decision will be highly dependent on this. So the financial aspects will be well and truly investigated but first and foremost the project has to be capable of paying off the debt by generating adequate funds over the loan period of the debt, which is likely to be over the life of the power plant. That is the reason, as we know, for all of the financial calculations on the NPV, IRR, ROI and payback period and a whole host of other financial metrics that are considered in the modelling and analysis. In progressing to this stage additional value must surely be attached to the project. On completion of the DFS the transfer of the MCPP assets to a project holding company or SPV will take place and the split will be 85% to 15% in Kibo favour. This separate special purpose vehicle probably ensures for one thing that Kibo and SEPCO are not liable for future debts of the project. Assuming we have a successful DFS/BFS conclusion, the debt funding will be successful if, the equity requirements are satisfied so we are all keen to ascertain the exact route of the equity funding level from here on in. LC indicated in the RNS that he negotiated hard for their share of the holding assets or SPV and it will reflect the original cost of the Rukwa acquisition and all expenditure to-date and would allow for asset disposal as and when required during the progress of the project. I suppose the disposal of assets can be concluded immediately at the outset or progressively as we proceed and need funding. In fact the whole situation re the Power, in particular, may already be done and dusted with an agreement between Kibo and SEPCO III. Who knows? So moving forward with this 85% share of the SPV and with the debt to equity gearing ratio now 75%/25% we are mindful that we have an obligation to raise this equity funding in proportion to the final percentage of assets held in the SPV. It is always an option of course to sell off the whole Mbeya project lock stock and barrel and that would create a substantial value. Any guesses? Perhaps we will own only the coal element or a high percentage of it and SEPCO the Power side or ultimately we may still retain a share in the MCPP. This being the case, to advance the project the equity funding is paramount and there is a high probability that we have to dispose of an asset share to realise this funding. The question is at what price and what percentage of the assets. Once the DFS is completed the project needs the debt and equity funding and the decision to proceed finalised and it is probable within this financial time frame, that SEPCO and/or other partners will come on board and a percentage share of the assets, will be released and we obtain a guarantee that the partnership has the equity raising capabilities. SEPCO is a subsidiary of the huge ChinaPower organisation and it would be no surprise if SEPCO III purchased the whole of MCPP particularly with the potential to increase from 109mt of coal to 400mt. The current resource is sufficient to double the power to 600MW and the potential resource of 400mt, has the capability of supplying 8 phases of 300MW stations. Kibo did not come all this way for nothing so regardless of what eventually transpires they are bound to create value for the shareholders. The question of course is how much. A solution to funding is imperative or the project won’t happen and given the power shortages they have, it is essential for the Tanzania Government that the Mbeya project succeeds. So there is pressure on everyone to finalise all aspects of the project towards financial closure and the likelihood is that the Tanzanian government will be a venture partner. But at what share? LC indicated in the last Mining Weekly interview that he was happy with shareholder role and confidence and some institutional investors were now in. In addition when prompted by the Interviewer about returning to the market he was confident that the shareholders would provide support. We had a handful of partners interested in the project prior to signing with SEPCO III and LC has indicated that parties remain interested in taking a direct investment, so we must still have their attention. If we were to dispose of all of the MCPP asset tomorrow and it was advantageous to ALL shareholders, then would most agree to this? Maybe we should all sort out our voting rights as nominee a/c holders need permission to vote. For the time being however the situation is such that we have a majority asset share, available for disposal at any time and we know we have to raise a proportional amount of equity funding on our asset share. It is clear that the SPV assets will be realised and reduced, but by what percent? Looking at the PFS figures for the coal and power elements we have: COAL PFS A 28 year mine life at 1.48mt of coal per year (42mt per year) Coal revenue $48.4m to $48.6m per year. Cost margins - 49% to 62% (with 25% considered healthy). Annual profit - £24m to $27m. CAPEX - $38m to $73m. (Preferred option is $38m). NPV - $211 to $244 at a 5.5% discount rated. IRR - 33.6% to 53%. ROI - 595% to 903%. Payback period - 2.6 to 3.65 years. Sensitivity - coal price and op. costs. POWER PFS 1,841GWh to 1,877GWh per annum based on an 80% baseload. (From Post 34194, this estimates 2628GWh Max X 80% = 2102.4GWh) Power revenue $7.8 to $8.4 billion over life of PS. NPV - $230m to $280m at a 15% discount rate. CAPEX - $640m to $760m. IRR – in excess of 23%. Payback period – 8 to 9 years. From above the current combined CAPEX is $678 to $833 million. The latest figures are now 75% / 25% debt to equity gearing ratio. So, the debt funding is now $508 to $625 million whilst the equity funding is $169 to $208 million. So with the current asset split of 85% to 15% in Kibo favour, the required equity funding for Kibo will be $144 to $177 million. Regarding the PFS completed on coal and power if we look at the current NPV, this is not a small NPV of some $99.6 million as per Beaufort, but with a coal NPV of ($211m to $244m) and a power NPV of ($230m to $280m) we have an accumulated NPV = $441 to $524 million. As mentioned in last post, I am not sure what sort of credence you can attach to the Beaufort's report. For me there were too many notes not in the same Hymnbook. As Company broker I thought it was appropriate because of the differences in the NPVs and also because of the new RNS on the coal PFS, that they should be releasing another update for clarity apart from anything else. Yes they can still update when new info is issued on Imweru and Haneti, meantime they could be helping to promote the Kibo cause. Note that I attempted to estimate rough worth in terms of price per share and a Target Buying price per share and this varied from 11p to 47p per share as I recall. Assuming of course that all SPV assets belong to Kibo, as no SPV currently exists. As we contemplate the venture, the reality is, we are sitting on top of an 85% share, (which will probably be diluted) of a twin track coal and power project with a coal turnover of $48.5m x 25 years which is $1,212 million or £1,358 million over 28 years. Having mined the coal, we sell it to the power station (our power station) and from the power plant we generate a turnover averaging $8 billion over the 25/28 years LOP. So that’s a combined turnover of approximately a $9.3 billion. In essence this translates to a combined profit of $55.5 million per year. ($24m coal + $31.5m power). However the power is an estimate from Post 34194. As we were only given the turnover of $7.8 to $8.4 billion the estimate assumes we have a profit of 1.5 cents on a 10 cent electricity tariff. i.e. 15%. So for mine production and power generation over 25 years the estimated profit is $1,387 million. In the studies I feel LC has been conservative and instrumental in ensuring that the modelled price of coal was less than the current value so he now has a possible 22% rise in hand and there is scope to increase the electrical tariff although it will be well below the 18 to 35 cents as he indicated in the last interview. Therefore I think the DFS may well throw up revised figures expressing further improvements, particularly if there are likely to be private off-take agreements on the electricity tariffs. The burning question is, how will this funding be realised. Any partner investing directly must have adequate funds so that the partnership can meet the equity funding requirements. A consortium of banks will no doubt supply the debt funding based on positive Bankable studies and on the proviso Kibo and SEPCO III cover the equity funding share, which is now currently at 25%. Under the debt financing arrangement it is possible that repayments will not start to be paid back until the power generation revenue comes on stream . To raise finance, there are ways of issuing bonds and royalty and streaming capital finance options where a share or price of the mineral is agreed upfront in exchange for Capital finance. However LC will be well advised on his finance options regarding the MCPP. Kibo SPV asset share of 85% will reflect the original purchase and costs to-date, of say $27 million. SEPCO will have a $3 million spend on the power DFS. However, regardless of this, Kibo need to raise a share of equity in proportion to their 85% asset share, which is presently $144 million and the easiest way is to sell off some assets, which also reduces the amount of equity funding to be raised. If we sell it all, of course we will have no project, and do not need to raise equity, and can you imagine the substantial revenue we would receive in return? We cannot use the assets to borrow money as these will be held as security for the debt funding over the loan period, which is likely to be the life of the station. Not too sure if there are possibilities of raising finances on the strength of the Imweru and Lubando projects, so we can offer these as security to a lender. The equity funding figures above are too high to raise through a full placing, so obviously we will release some, or if the price is right, all of the assets in the SPV, to any party interested in investing directly in the project. We all want to Kibo to create value and thinking about it logically, why should Kibo not sell off the Power and then concentrate on the Coal. It currently belongs to Kibo. The current coal resource will need $38 million of capital and will generate $24m - $27m as stated, so not a bad return. That way selling off the power element we will probably have working capital for all of the other projects and have a coal profit of $24m per year to anticipate. On a P/E of 6, this is about 28.6p and 25/28 years of profits ahead of us. In addition we do not have to consider selling off any projects. The resource of 109mt is enough to supply 2 x 300MW phases of plant and the remaining coal field has massive potential and it will eventually be defined. This will generate a large revenue when producing. (e.g. The potential - Using the £32.8/t from the PFS an extra 300mt of coal would be worth profits of $9.84 billion and using the 49% margin this is $4.82 billion. But only a potential at the moment). Assuming we remain in MCPP, how do we start to fund the equity? I think LC indicated the intention with Imweru was to use it as a self-funding mechanism for the Lake Victoria gold fields and Haneti. But he may change his mind if we need finances given the potential in profits to be made. However we are not party to the strategy they have and they must have a plan A and a backup plan B in mind. Currently work is progressing on the Imweru PFS and that study itself may be enough for an agreement to be made to sell Imweru. Assuming that we need to. It may also be the reason for running the Imweru PFS in parallel with Mbeya. Unless we have other sources of funding, we can consider selling Imweru or mining it, either independently or through a JV development. 1.SUPPOSE KIBO DECIDE TO SELL IMWERU Although Kibo have 4 other projects, suppose they decide to raise equity funding by selling Imweru at a reasonable price. What is a reasonable price? Selling Imweru may happen, but preferably after they have completed the PFS, which is ongoing, as it should create additional inherent project value. Approximate valuation ‘in the ground’ is about 5.2p per share and upgrading to P & P is possibly worth 19.6p per share, from a previous post. Acacia own a 10% free carry up to mining then have to contribute or be diluted to a 2% smelter royalty and also have first option to buy at the BFS stage, at an agreed market price. In short, I think that Acacia know the resource potential here and that Kibo plan to extend the resource by 40% to 80% as well as increase the confidence levels. Therefore they may well decide to agree on a middle of the road price between 9p to 12 p. In addition any deal done at PFS stage is likely to be cheaper for Acacia than at the Bankable stage. So room for Kibo to manoeuvre for a higher price. Is it worth considering taking Imweru to the BFS stage by spending additional funds which may encourage Acacia /Barrick to purchase the goldfields at a higher price? Acacia know precisely what we have got and will be well aware of the fact that KIBO will be keen to extract a worthwhile price for Imweru and possibly Lubando with MCPP taking centre stage. A Barrick mine is in the area, as you would guess and many of these well-established mining companies are running short of fully explored fields. Exploration is slowing down as the grade quality reduces in the remaining goldfields and now they let the junior miners do the work for them, then step in later. If Imweru is sold, Kibo gain a source of funding for the coal capital outlay and Acacia obtain a resource with great potential and importantly for them, at a price significantly less than if they proceed to BFS. If successful, Kibo have created and obtained value to fund the Coal project and perhaps a contribution to the equity portion, if we are lucky with the price. Selling - Imweru may attract an 'in the ground' valuation of 10p per share, which is worth £32.9 million ($50 million), but hopefully it would be more than this. From above if the equity funding required is ($169m - $208m), with Kibo share ($144m - $177m ) and we utilise the Imweru proceeds of $50m (29.5% of SPV, say 30%), the remaining equity to be found is $94m to $127m. (So $94m is $94/169 = 55% of SPV). Assuming the low figure, the remaining 55% of the SPV assets are available for disposal and any purchasing partner or partners are then responsible for raising the $94 million of equity. So we then proceed to the next phase on the basis of Kibo with 30% and SEPCO III with a 15% share with the remaining 55% of SPV assets to be acquired by partners / SEPCO III. Assumes of course that Kibo cannot raise further cash until any SPV asset is sold and any further retention of SPV assets is then reliant on the revenue realised from a part disposal. Selling Imweru effectively covers the CAPEX for the Coal element of $38m and we can then start to implement the coal mine design and development phase and advance it to production. It must be possible to bring it into production within a year. Then we have the options to sell coal to fund the ongoing power work and to stock coal for the PS as we go. Perhaps later we can export coal or generate revenue from the alternative energy technologies. (Investigation of coal to liquids operation is ongoing and due in Q1 2016). So worst case scenario by selling Imweru and raising $50m we have a 30% minimum share in the MCPP. The combined coal and power profit estimate is $55.5m and 30% is $16.65m or £10.88m. So on a P/E = 6, this is worth 19.8p per share. Just a guess, but a new partner may be the Tanzanian government on 25% share of the SPV and an increased holding by SEPCO to 30%, with Kibo on 30% and a possibly another new partner on 15%. Alternatively SEPCO may take 45% as three partners may be a better than four. Kibo may have potential to retain more but it depends on the returns on assets sold. Looking at the projects that SEPCO III and II and their parent company are involved with, I am sure they will want as large a share of the project as they can possibly acquire. So with Imweru sold off, cheaply, we have $50 million in the bag and we still have 55% of the SPV assets to sell off. Of course when sold it guarantees the equity funding from the purchaser, whether SEPCO or a new partner. I eagerly await to see how it all develops in the forthcoming months and it will be interesting to see what materialises on the SPV asset disposals front. 2. IMWERU WORTH Imweru however is worth far much more if it is advanced to mine production and we realise the 'out of ground' value. There is a 550K oz of gold resources at Imweru and 168K oz at Lubando and they are hoping to increase this by 40% to 80% along with the confidence mineral levels. So 550K oz of gold at $1.2K / oz is $660m and 168K oz at $1.2K / oz is $201 million, which totals $861 million for the current 718K oz resource level, with further potential as mentioned above. Assuming Op. costs of 50% this is $430 million profit between Imweru and Lubando. It is starting to get very interesting now and I can’t help wonder what sort of deal LC is dreaming up? There has to be a surprise package concocted somewhere in the script as the project progresses and the story unfolds. LC has been safe on the coal price, the electric tariff and then on the Debt to Equity funding ratio. So what is next? Perhaps an inexpensive dollar loan from Tanzanian government due to the importance of this project for the Tanzanian economy and people. 3. WHAT IF SEPCO BUY INTO A JOINT VENTURE WITH KIBO IMWERU & LUBANDO What about SEPCO III buying into the Imweru (and Lubando) projects. Rather than sell off Imweru, if SEPCO buy a share of Imweru, then we have additional mining proceeds to add to the equity funding pot. So perhaps this is the reason for the Imweru PFS being worked in parallel with Mbeya. The question here is also what price for a SEPCO share of Imweru? Maybe a price to reflect the acquisition costs of Imweru (and Lubando) and the work costs to date, but this is likely to be too low and has to reflect the project potential value. Assume for the present that we receive sufficient funds on the JV deal to start progressing the Mbeya coal to the production stage. Then they may consider doing two things on Imweru; i) They proceed to mine and simultaneously, ii) Explore and delineate a further extension of the resources in the region of the 40% to 80% they are predicting. Suppose we proceed to mine what would we produce a year? For a life of 6 years and with a gold resource of 550K on Imweru alone, assume the mine produces 92K oz of gold per year. (Probably less the first year). Added later – Checked and expected life is actually 7-10 years. The 92K oz of gold is worth 92K x $1.2K/oz = $110 million and say the profit margin is 50%. This generates $55 Million. So accounting for Acacia’s 10% share this produces a revenue of about $50 million. This is about the same as if we sold off Imweru for 10p per share. However we can still mine for another 5 or so years, at the current production / resource level. So in 6 years we generate 6 x $50m = $300 million, which make a considerable inroads into the equity and debt funding even within the three and half build period for Mbeya. A Mining JV with SEPCO on Imweru is beneficial to both parties and it may allow the coal production to get underway. So in conjunction with SEPCO III, we mine Imweru to create revenue, use this to set up coal production, which can be sold early on to generate funding (for the power) and then eventually supply coal to the PS to generate power. Acacia are involved to the tune of 10% and have to contribute to mining or reduce to 2% and they only have the option to buy at the BFS stage. Now the threat of possibly mining with a new JV partner such as SEPCO, may provide the impetus to pressurise Acacia into opting to purchase Imweru at a more advantageous price to Kibo. But given what is achievable with possible mining in a JV with SEPCO III is it worth selling Imweru for 10p a share? However with SEPCO on the project probably mining is a better option if it can be implemented rapidly as it will generate much more value than 5p or 10p per share by selling and contributes to Mbeya coal. So should we sell Imweru, or if it is possible, commit to a JV with SEPCO III, start the Mbeya coal mine, then proceed to mine Imweru and generate a higher level of profit from the gold resources? Which way will we go and have we the timescales, which may be a deciding factor? Intriguing question, what asset share of the SPV will be sold, what revenue will we have generated and what will our final share of the SPV be assuming it is not 30%. Perhaps as I already said the easy way is to sell off the Power to SEPCO and concentrate solely on the mine, it may be negotiable and easier to arrange before anyone else climbs on board to invest directly. In that way we are remunerated for the value we have been creating to date including financial closure, so we have the funding to return to shareholders, participate in acquisitions and further advance the existing projects down the road to value creation. Tadtech spoke to LC a few years back and LC stated that Kibo strategy was to demonstrate value and then realise that value. Just as MTR appear to be doing, same philosophy but just a different and a more ethical approach. The current values returned from the PFS are considered exceptional according to LC with potential to increase profits apparent, as they used conservative coal pricing and a higher value electricity tariffs looks to be possible, so revised and finalised upward figures should be forthcoming with the DFS reporting. So with the completion of the DFS / BFS and financial closure in Q1 next year, and things are done and dusted, we must surely add value to the Mbeya project. We have something that plenty miners would envy, we just need the acumen and wherewith all to be able to carry it off. The price may not be doing much at the moment but we have plenty to look forward to. Just a thought, LC has indicated that he will create value for the shareholder. Has anyone actually asked him what this value would be? Next news may be the Morogoro assay results, I think they were due in Q3. Possibly an update on the progress and discussions with the Tanzanian authorities on the Power Purchase Agreement the Implementation Agreement and the EIA. The permitting and licencing is expected later on. Also they might issue an update re Imweru PFS, possibly in the October quarterly review. Maybe sold, or a JV after the PFS! Plenty of work to do in the DFS, but with the information they have, they must be looking to classify the mineral resource as a Mineral Reserve and increase the confidence levels of the resource. Thus improving the Bankable study and financial expectations. Haneti – More analysis of the geophysical data may lead to confirmation of the drill targets and expected start dates. This was to be later in 2015 once they complete the geo technical drilling at MCPP as outlined in the 26May 2015 RNS. I think the drilling was to aid the mine design criteria work for later in the MCPP study etc, so we may have these results. Exciting times ahead. GL for this week. Off to Portugal tomorrow for 10 days.
tidy0ichat0shit: All the information people who like to research is on the kibo mining website, however the market has not recognised this and the importance of the clues, although kibo share price has declined in 2015 from the highs in Dec, astute investors have a chance to recognise kibo mining as a speculative play with significant chances of seeing through the mccp to its 1st power delivery scheduled in 2018,2019.The necessary information is being hidden in plain sight on their website. Kibo mining keep updating the reports, maps, timescales, and is one of the most informative and best structured websites of all junior miners. The quality of the the extra pfs, dfs reports are in some eyes delaying or stagnating the share price but again the astute are aware that these are the building blocks of a company that does not take chances and are actually 2 steps in front, the current mining sector as a whole is on a downtrend but doesn't currently effect the final out come for kibo, while exact changes in Tanzanian regulations cannot be predicted make no doubt further deregulation in Tanzania will only make it a better working environment for kibo. Many governments want to see genuine commitment from the mining companies and they will always be cautious about investing in infrastructure for projects. Kibo is set to make big changes in Tanzania and why would people want to miss out on an opportunity like this.
gilbly: Thoughts for today, a nice and steady rise every day would be good. Ah, I wish we could be like this every day, with just enough to keep your interest buds fully activated, knowing fully well that in reality it does not really matter at the end of the day what price we are at in the short term, as you know fully well that eventually Kibo will prevail going forward, based not on guesswork, but from the knowledge amassed and produced to-date on both the PFS reports for the Mine and Power twin track elements. This in turn leads us to the completion of the DFS and a Bankable FS report and then it’s down to the nitty and gritty phase of financial closure with disclosure of the funding sources for debt and equity. So if anybody has any doubts they should read up a little and then make their mind up and honestly appraise or criticise the Kibo investment situation then decide if this investment is beneficial. I’m sure most of us would prefer to hear the pro’s and cons about a particular investment situation and perhaps we might be more aware of a company’s position and shortcomings. Perhaps one of the problems is that there are not enough analysts out there that have the resources and honest enough opinions to look at the vast array of companies out there, review and analyse a company’s share and then inform us on exactly what they think and feel about a particular investment. This is despite the fact that we the PI are the first to go over the top and sink our well-earned dosh into many investments and pave the way for the institutions to eventually arrive and soak up easy shares from many early investors who had become demoralised, bored and frustrated with a company’s share price performance. Regarding a possible mining investment, invariably people will always advocate, yes it is speculative, but after all Kibo is only an early exploration (and development) company with only the potential to mine and so the resource remains in the ground until you start producing and making a profit. They will also inform you that there are umpteen companies on AIM in a similar sort of situation, with the same sort of aspirations and the same sort of investors with the usual and normal mind set, as far as we the investors go. We are only human and we do what we feel is best regarding a share with potential, as often there is no one to advise and show us the way. Institutions pay heavily for investment analysts to guide them through the maze of companies and investment opportunities and they appear not to care too much about the ethics of investing as long as they profit in it, long or short. In part some of the foregoing may be true but there are steps in the cycle of events that add value to a company and some of these steps especially for a miner/explorer entails the preparation of a requisite amount of studies which allows them to move forward a step at a time creating a small piece of value each time as they go. In theory this is paper value as it is not being produced, nevertheless it is ‘value added’ work, or effectively it should be, and once produced they know that they have completed a small chunk of worthwhile effort that has created value, albeit "on paper” which may never need to be revisited or re-vised again, if they are lucky. In looking at potential companies to invest in we can all, as best we can, research a company and look at the fundamentals in question and no doubt some will be able to do it better and more thorough than others, we are all different. However it gives me some sort of satisfaction, that having done the homework, duly invested and satisfied with progress of the investment so far, to hear a the Mining Maven broadcast where the CEO, LC indicates that: a) the CRITICAL PART of the work has been completed producing the PFS reports for both Mine and Power elements. b) he too is UNHAPPY with the share price and is FRUSTRATED at the level of the share price despite the fact that they have indeed created value to the project over the last few years. This just illustrates how far we have actually come in a fairly short space of time and it is not often you hear a CEO voicing these words, as invariably it is along the line of; we have no control over the share price in the market. It also interesting that we the investors are not the only ones frustrated with the performance of the share price following the positive news releases issued and that our expectations were in fact justified according to LC's commentary. So we are further de-risked and if I was new to this share, yes I am sure I would still do my own research, however on the strength of his comments, I think I would be prepared to invest purely on the basis of what LC thinks and feels about the present share price value given that he has much more working knowledge of the company and its projects than I do. The other four projects will continue to be worked in parallel albeit slower progress and we will hopefully get news on these between now and financial closure of MCPP. There will be some who invested here more recently who have done their research and concluded that they are satisfied with the fundamentals and it is well worth investing in Kibo and maintaining an investment that means something. On the other hand there will be some long term holders who also thought the same a while back and have been subjected to a long period of share placing's and a constant share price dilution, so perhaps Kibo have a lot to answer for in this regard. Hopefully in the coming months, as it appears, it will be payback time for Kibo and that they will develop and create shareholder value and all shareholders, including the long term holders of this share, will be rewarded in due course. (and notice I never said 'shortly'). I think that solid support from the BOD with news of a fairly substantial investment would go a long way in providing a much needed boost to the share price and would be a tremendous vote of confidence to all of the small investors here. The news may even be eagerly awaited by the institutions although they are more likely to be awaiting details of the Financial Closure outcome.
gilbly: Hey MAB, I just got back from Tenerife which was hot and also spent a couple of days in Edinburgh. Had a very frustrating time with the internet in Teno. Been catching up on the posts. Just my thoughts and comments on Mbeya and Imweru etc. I think it is highly unlikely that they will sell Mbeya as a whole unless they receive a massive offer and /or the resources at Haneti are worth multiples of the value of the combined Coal and Power project and additional coal resources. So the latter being the case a lot of exploratory work needs to be done in that respect to prove the multiple resources which appear to exist at Haneti. They certainly sound encouraging re the geochemical at Haneti, which indicates the nickel sulphide potential and the acquired geophysical scan which has already enhanced their understanding on the prospectivity of the project. However the timescales are such that they are likely to be homing in on the completion of the DFS on MCPP with financial closure rapidly approaching and therefore any proposed drilling may just possibly be starting on Haneti later this year, so I would assume that no massive resources would be explored and defined by Oct/Nov 2015 at Haneti. If there was then I would see a case for selling MCPP although I might not agree on selling. MCPP is the company flagship at this present moment in time and any selling price would have to be irresistible to LC. I'm sure all of the bidders in the JV process will have been made well aware of the potential coal resources that Kibo have. It is no secret that they currently have enough resources to double the MW of the output power. I always thought it was only a matter of time before Kibo bought EDL with their 171mt coal resource but they don't need to especially if they have 4 times the current 109mt which I think has been implied. Looking at the past RNSs, Kibo appear to have a resource pit with a strike length of 9,050m by 490m wide by 100m deep with a remaining field length of about 35km. (9 Sep 2014 RNS). So perhaps they are well aware of the potential they have. Remember they have enough current resources to operate twice the planned 300 MW for about 40 years and that’s a lot of coal and just think of the worth in coal and the worth from a power generation viewpoint. An early start to production can help contribute towards the Power element funding. Alternatively the additional coal resources may be utilised for alternative energy technologies such as coal to liquids, so more value to be created for Kibo if they go down this path. On the question of MCPP worth they have stated the following in their RNS news items. Mbeya COAL (DMFS Phase1 Stage1). - With a LOM of 27 years and annual production of 1.48mt of coal, the NPV at a discount of 5.7% is $116 to $141 million USD depending on the option. Mbeya POWER PFS. - With a LOM of 25 years and 4 CFB cases assessed, the NPV is $230 to $280 million USD at a discount rate of 15%. Note higher discount values are more conservative and they may include a higher risk factor in the calc. So the total NPV for Mbeya COAL and Mbeya POWER is between $346 to $421 million USD depending on the option they go for. Imweru Project. – Imweru’s 550K oz ‘out of ground’ gold resource is worth about $660 million or possibly only worth about 5p per share ‘in the ground’ value without any upgrading. So it shows us how undervalued we are. If we sold Imweru tomorrow at 5p/share this is worth more than the current share price and this can be used to capitalise the coal mine. The original purchase cost of the Coal asset alone was about 6p per share. Assuming we proceed to gold mine production, my own estimate of the Gold resource over a period 10 years yields an NPV of $73.6 million USD using a discount rate of 10%, and an NPV of $90 million USD at a discount rate of 8%. This excludes Lubando’s 168K gold resource which is also 90% owned. However these would need funding to bring to production. (See post 28081 & 28142 for figures for the NPV with a potential increase of resources by 40% and 80% which may be investigated with further exploration as per 10 Feb 2015 RNS). Therefore the total NPV for COAL, POWER and with IMWERU included is between $419 and about $500 million USD. Currently the market capital of £14.36 million, or $22 million USD is only between 5.25% and 4.4% of these NPV values. Worth considerably more than 25p a share I would think. We also have Haneti, Pinewood and Morogoro projects to be explored and with all of the projects alive and active on all 5 fronts there has to be news to arrive on all of these fronts shortly. No Kibo expenditure is required for Morogoro and Pinewood and we are well funded after the last placing, with still £524K to come via the Hume debacle. The MCPP I am sure will take care of itself through either a) the planned natural development process progressing to the JV conclusion with the manufacturing and operating of the PS or b) by a really transformational offer for Mbeya which cannot be refused, whether it is from SEPCO III or other parties. I would imagine the former will have first right of refusal if Kibo are to dispose of their Mbeya share. Either way there has to be great potential for the share price compared with the current level regardless of what road we go down.. The SEPCO III team who has impressed LC to-date are contributing $3 million to the DFS and will no doubt be competent and meet the October 2015 target date with ease which then points us to the financial closure stages, which should be really exciting. We also have to remember we paid $20 million for the original Coal acquisition and with successful completion of the DFS, the MCPP Power and Coal assets will be transferred to a Special Purpose Vehicle (SPV) to thus reflect the original Kibo acquisition cost and costs to-date. In other words Kibo have an 85% share and SEPCO III have the remaining 15%. This equity can be released to provide funding for project contribution such that, if desired, Kibo may self-finance the project to the extent deemed necessary. A great position to be in as they can realise equity for funding and still retain as large a stake as they can which may still provide a healthy return for shareholders. With this in mind I have a strong pull towards mining Imweru in order to keep the MCPP stake as high as possible, but we still require funding to do this. There are a few options open to LC and will they mine Imweru or sell? Remember as it stands for Imweru’s 550K oz gold resource, that the ‘in-groundR17; value per share is about 5p, (which is about 4% of the gold price) to which we should include Lubando’s 168K oz resource. I think they are going to extend and upgrade the Imweru resources and that way they are in a position to either sell at a reasonable price given the grade situation or mine as they deem necessary and use the proceeds to explore and develop Haneti and possibly contribute towards the Mbeya project and thus protect some of their equity stake. It may depend entirely on what they are offered if someone really wants to buy it and if they can raise funding. Either way we should create value selling or mining. I think they will prove up the resources first as it will be worth significantly more. They have already said they hope to increase the confidence levels and increase the resources by 40% to 80%. (RNS 10 Feb 2015). If Imweru is both upgraded and the resource extended, if they then decide to sell they will receive not only a higher price per oz for the quality of the gold but also a higher price for an increased quantity of gold resources. Increasing 550K oz of gold by 40% to 80% is not insignificant and say we double the resources then we double the ‘in-groundR17; value, without even considering any upgrading. I keep forgetting that Barrick / Acacia have a 10% carried interest in Imweru and Lubando and have to contribute once a decision has been made to mine and if they don’t they are subject to a dilution to a 2% smelter royalty. However they also have first option to purchase the Kibo 90% at an agreed market price when at the BFS stage. (So we have a potential buyer once we are at BFS, if the price is right). If they are going to sell the gold sites it is sensible to spend monies to extend and upgrade the resources to the BFS as they will be able to command a significantly higher price per oz for the gold if it is to be subsequently sold. A Proven and Probably resource (about 15% of the gold price) should command a resource value per share of about 19p, (excluding Lubando). If sold as per current grading, it is conceivable they may obtain 9p to 12p as Kibo and any buyer are sure to be aware of the potential resources. Currently we are sat with a share price just 4.5p. However we are of course another month closer to the DFS October end date and leading point towards financial closure. Anyway I am sure we will receive an abundance of exciting news shortly. GLA
tr4der1: Kibo share price is being manipulated at the moment. But this will stop at point and price re rated to reflect true value 100mil cap at least, thats just for the mbeya (rukwa) project only.
gilbly: Divmad - The share price is better than it was. However the frustration of the level of the share price is often hard to understand other than we are now entering the advanced studies stage and things have a tendency to go quiet, which is a known fact in the run up to the real big issue of completion of DFS/BFS and financial closure. LC in his last interview indicated we are past the critical part of the working studies, which in itself is so important and he also stated how frustrated and unhappy he was with level of the share price despite the progress and value created over the last year or so. In the normal cycle of events in the early days of exploration there is high risk and corresponding low value in the share price. As we start to undertake the various studies, such as scoping studies, PEA, PFS, FS and DFS/BFS, in theory we should not only continue to ascertain if the project is feasible but increase the confidence levels for this and the resulting good news should be accompanied by a reasonable rise in share price. This still has not been achieved regardless of the news issued on the PFS for both mine and power which has produced some exceptional figures according to LC. Successful completion of the studies and adding further to the knowledge base means we continue to de-risk the project such that, in theory the risk decreases and the share price increases, in theory that is. However even though we advance from stage to stage, one leading to the other in a logical fashion, there is no certainty that the projects will go ahead. It is only when ALL events are finalised, permits, licences, agreement, environmental issues and the necessary finance is approved that a decision can in reality be made. Probably only then when we have financial closure is the share price most likely to move upwards. However other events such as an institution climbing on board or directors buying is likely to propel the price upwards at any moment, not to mention the effect on the price if any new party or parties are interested in investing in the coal to power venture. However for those that have the patience to hang on and hold or accumulate and wait until news of the financial closure, (which indicates that we are moving towards a workable project and that we have the requisite funding arranged to do so), should be well rewarded with a most welcome break out in the share price.
gilbly: Afternoon Andrew or good evening rather - I used to wonder why Kibo did not buy EDL but as they appear to have about four times the current resource of 109mt it's not so surprising they never bought them. Good luck with them and you may do ok if they follow our landmark rise!!!! Note just a touch of sarcasms here as we should be a lot higher. They too should do well in the coming months. Perhaps Kibo should get the coalfield fully defined and then either export the coal or use for alternative energy technologies or sell part of the field off and re-invest in MCPP as required. This may reduce the funding requirement and allow us to retain a higher percentage of the SPV. On the one hand they could of course sell off Imweru. At 5p per share this would provide about £16.4 Million and at 10p they have £32.8 million which will cover their share of the $38 million CAPEX required for the Mine capital costs. It depends on how badly someone wants the gold field. Acacia / Barrack, own a 10% free carry up to the decision to mine and then have to contribute, or be diluted to 2% smelter royalty. They also have first option to buy at an agreed market price at the BFS stage. So between them, they may agree on a price for the mine at any time as both parties will know the potential re extending the resources. I can't believe I'm talking about 5p a share for an 'in the ground' value for Imweru, when the share price is not even at that level currently, despite the fact we have the MCPP coal with annual profits of $24 million and the MCPP Power revenue of about $8 billion over 25 years. In addition the combined coal and power NPV is between $441 and $524 million and we are sat with a MCAP of about $21 million. Maybe if we announce a Imweru sale we will double the share price!!! Anyway on the other hand they may mine at Imweru and help fund the coal and power projects. If it was possible and it fits the timelines, this would be my preference as they have the potential to increase the resource by 40% to 80% and it is worth so much more if mined. However it all takes time and funding is required. It may depend on the figures, prices and time scales and what is feasible and it may already be a done deal in terms of the decision making process. They must have a fair idea of how they going to fund the projects. When you look at the latest RNS coal figures they have exceeded Kibo's expectation with almost doubling the NPV and annual profit margins to $24 to $27 million, and now also with a reduced capital outlay of $38 million for the preferred option. They have to attract attention at some point with these sort of profits. If we use 30% of the combined NPV per share as a conservative target share price this equates to 26p to 31p. (post 33548). Hard to believe with $24 million projected for the coal we are sat at a price to earnings ratio less than 1. Completion of the DFS/BFS is not that far away at the end of October which leads to the financial closure in December and this is probably when we have the institutions buying up shares, when the debt and equity details are to be revealed, so that may be the precursor to our price starting to move higher. Kibo have also indicated there is certainly scope for further improvement in these figures in the RNS as the price of coal used in the report is significantly less than the current market price. This will reflect in more robust project economics, but to accommodate hidden charges, maybe they should just treat this as a built in contingency or a factor of safety on the margins and NPV. However looking at the coal sale figures this equates to about $32.8 per tonne which compares to the current price of around $40, so there is room for a possible increase of 22% on the margins available. The RNS figures are nice and conservative however if we allow for the higher coal price this not only increases the profit margins but must also increases the estimated NPV by a further amount. So also scope for a higher Coal NPV here. I would not be surprised if we receive figures above expectations for the next set of financials released for the Power generation project, as they do try to be conservative with the earlier reporting. However I think the price per kw hr is fairly sensitive at 9 to 11 cents and they need to find a balance for production suppliers and for the customer, so this may be a factor for consideration and the outcome may be interesting. I think this was mentioned in the Sheldon Modeland interview on 11 June. Not too sure re the broker's overhang theory but maybe it's just a standard response if it is hard to understand or explain it. Given some people were lucky enough to buy low, they can then sell and buy back I suppose, but the 1% stamp duty must be a problem for some. They should save us money and re reg. the company, every little helps. All will be revealed eventually. Muto - Next news may be the results of the assay testing on the existing (old) samples at Morogoro which is due in Q3. There will be a fair bit of work involved in DFS as I listed in the overview post no. 33207 however not too sure if we will get a progress report and how often. Possibly at least one between now and completion, who knows, maybe even two. Plenty of work to do in the DFS, but they must surely, with the information they have, be looking to classify the mineral resource as a Mineral Reserve and increase the confidence levels of the resource. This has to improve the bankable study and the financial expectations in the discussions. Haneti – More analysis of the geophysical data may lead to confirmation of the drill targets and expected start dates, (said to be later in 2015), which will be after the geo technical drilling at MCPP as outlined in the 26May 2015 RNS (10-18 days after). Think the drilling was to aid the mine design criteria work for later in the MCPP study etc. Imweru - Plenty of next steps work also listed in post no. 33207 but it may all depend on the resources available for the work they plan to do which will be dictated by the MCPP work through to completion / financial closure. However the big decision is, will Imweru be further explored and /or mined or sold and if mined will it be solely or through a joint venture. Also if it is sold, will we, the PI's get to vote on the deal? If so better get talking to my broker re my vote and apply for the right to be allowed to vote. ( seeing as my shares are held in a nominee account). Starting to think about voting rights now!!! No expenditure required from Morogoro and Pinewood with MTR committed to their $800k spend in 3 years. Hope they deliver. Lots to consider with Kibo atm which must stop you from getting depressed about the share price. We just need patience and see how we develop.
daddy warbucks: gilbly Thanks for reminding me about the price escalator under the Morogorro jv. I have pasted part of the RNS from the 19/1/15 below..... "As part of the JV, should it proceed, Kibo will issue Metal Tiger with warrants over 10,000,000 new ordinary shares in Kibo, exercisable within a three-year term at an exercise price of 9p each but subject to a mechanism to increase the warrant exercise price in the event Kibo's share price trades at a significant premium as follows: -- In the event that Kibo's listed closing mid-market share price on the AIM market of the London Stock Exchange ("AIM") exceeds 18 pence (GBP0.18) per share for a consecutive period of 15 days in which AIM is open, then the exercise price of any unexercised warrants shall increase from 9 pence (GBP0.09) to 14.5 pence (GBP0.145); -- In the event that Kibo's listed closing mid-market share price on AIM exceeds 27 pence (GBP0.27) per share for a consecutive period of 15 days in which AIM is open, then the exercise price of any unexercised warrants shall increase to 19 pence (GBP0.19)." Should our share price start to rise, I think MTR will find the cash from somewhere to pay for the warrants at 9p. They may then be forced to sell quickly to repay that amount.
gilbly: An article in support of what Tr4der has advised in the past. Re shorting and protecting against it, I came across this old one which I had saved. I think it was dated 2011. As a result of this jogging my memory, we have updated our selling limit orders today which had expired. Not too sure if a broker is still able to lend out your shares despite the limit order being place. Does anyone check they're working to procedures and how often? hxxp://racetoamillion.co.uk/blog/the-experiment-short-the-shorters Short the Shorters? Posted by MB40 August - 1 - 2011 2 Comments Post to Twitter Post to Facebook Just how much power can a group of Personal Investors actually have upon their investment? You can see the potential power but only in one direction – shorting. A concerted effort by a group of shorters can reduce a share price to it’s knees for the short term until they decide to swing and go long on the share. However….can the shorters be made….short? Here is an interesting read from www.contracts-for-difference.com ———;——̵2;——R12;——212;———————————;——̵2; How to Prevent your Shares Holdings from being Shorted Q.: Why does short selling reduce share prices? A: To short-sell a share speculators have to borrow the shares in the first place. Once they have done this they need to sell them in the market, and if this is done en-masse it can push the share price of a company down in the short term as there are more sellers than buyers in the market. Hedge funds specialising in short selling may also cause panic in the market by selling lots of shares in a company as other shareholders become worried about the share price plunge. Some companies will blame short sellers for dramatic declines in their stock price. The practice is so controversial that bans on short selling are not unknown and during the last credit crisis in 2008, traders were not allowed to short-sell certain banks and financial institutions. Most borrowers and lenders of shares are institutions, brokers, etc. Mere mortals can borrow indirectly by using Spread Bets or Contracts for Difference. If you go short, you are effectively borrowing shares to sell for money; if you go long, you are effectively borrowing money to buy shares. Depending on the balance between shorts and longs, the company offering these products may choose to cover the risk by borrowing real shares to sell or by investing money to buy real shares. Q.: What can you do to prevent your shares holdings from being shorted? A: Now what can the average personal investor do to stop their own shares being shorted, as believe me your own broker, if approached, WILL sell your own shares that they hold on your behalf as a nominee account. There are two things you can do, the first is to certificate them but this is not obviously to everyone’s advantage but the alternative solution is simple. All you do is to phone your broker and put an order in saying that you wish to place your shares for sale at, for arguments sake, double today’s price. As they are ‘on order’ they cannot be lent out by your broker and in turn you are reducing the amount of ‘free shares’ out there that can be used for shorting purposes. And don’t forget to move your limit order up when the price starts to recover, then, that way your shares can’t be shorted – not much but helps :D. Although an individual personal investor will not normally have enough shares to halt a concerted shorting attack, if a large number of holders did this it would reduce the overall amount of shares that they could get their hands on. In my opinion well worth doing if not only for the knowledge that your own shares cannot and will not be used in a short attack against the very share that you own. ———;——̵2;——R12;——212;———————————;——̵2; Interesting to see whether a concerted effort of placing limit orders on your investments could swing an share price trend?
pj787: hxxp://www.4-traders.com/KIBO-MINING-PLC-8158341/news/Kibo-Mining--Enters-Dynamic-Phase-As-Projects-Progress-In-Tanzania-20622114/ Kibo Mining : Enters "Dynamic Phase" As Projects Progress In Tanzania 07/01/2015 | 03:48am US/Eastern LONDON (Alliance News) - Kibo Mining PLC Wednesday said it "entered into a dynamic phase in its development" in the second quarter after making "material progress" across its asset portfolio in Tanzania. "We are very pleased to report to shareholders the tremendous progress the company has made on shareholders' behalf during recent months despite the continuing turbulence in the natural resources equity environment," said Chief Executive Louis Coetzee. Kibo is currently focused on the Mbeya coal-to-power project, formerly known as the Rukwa project, in Tanzania. Kibo said the project is "approaching financial close" after securing the joint development agreement with SEPCO III and completing the definitive mining studies during the quarter. Work has also begun on the pre-feasibility study for the Imweru gold project. The Haneti nickel and gold project will continued to be explored, and the drilling programme will commence once geotechnical drilling at Mbeya has been completed. Kibo has two separate joint ventures for its Pinewood uranium and gold and Morogo gold projects, both of which have started operations. A Morogoro soil sample batch that was in storage has been submitted for laboratory analysis, and a review and update of the current Pinewood technical reports is in progress for further field work, it said. The projects all are in Tanzania. Negotiations with third parties to participate in or acquire various assets held by Kibo also continue. "Whilst share price pressures are frustrating, shareholders should note that Kibo is progressing at some pace, and there will be news flow in the coming days, weeks and months that will further demonstrate the progress being made," said Coetzee. Kibo shares were up 3.3% to 4.13 pence per share on Wednesday morning.

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