Asiamet Resources Share Discussion Threads

[minder5] 19/2/2018 21:14

Cyberbub, Andrew Bloodworth gave a lecture at the Geological Society last week, 14th Feb. The issue of deep sea mining for cobalt was part of the lecture and Andrew described how the political issue of ownership of the resources remains unsolved after decades. Also of issue is the diversity of sea life that lives in the zones where these minerals are found. Interesting lecture...

[arf dysg] 19/2/2018 09:50

I've seen journalists drop factors of a thousand or a million all over the place, especially in space science stories, where a million light years looks like "a mind-bogglingly awesome number" to a journalist, but "a trillion light years" looks like an EQUALLY mind-bogglingly awesome number, and they can't tell the difference.

Other examples appeared in many stories about comet 67P (The European Space Agency's Rosetta probe was there a couple of years ago returning some absolutely fascinating pictures). I saw mistakes like a billion kilogrammes (10^9) being equated to ten million tonnes, as if one tonne contained only 100 kilogrammes.

I've seen it in money (currency conversion implying two different exchange rates in two adjacent sentences). I've also seen it in area (using the length conversion when trying to convert an area, in connection with how many square miles or square km were burned by a forest fire).

I wouldn't be at all surprised if similar mistakes happen in mining stories. They always go for the dramatic angle ("SOOO MUCH DIGGING for only A MINISCULE AMOUNT of copper!!!!!") and have no idea about powers of ten.

[mount teide] 19/2/2018 09:30

Cyber - aside from the environmental issues as eloquently laid out by David Attenborough the other claim that caught my eye was:

'On the sea floor the ores are massively richer than those on land. Every tonne of material dug up in a typical copper mine on land only yields less than a gram of actual metal.' ???


Most large mature mines in production today have copper ores containing between 0.6% and 1% copper. Consequently one tonne of ore generates circa 6,000 to 10,000 grams of copper. I suspect whoever wrote that article is confusing Copper with Gold!

[cyberbub] 19/2/2018 08:16

Does anyone have a view whether deep sea mining might start to affect the economic viability of land-based mining sooner than we think?hTTp://www.bbc.co.uk/news/science-environment-42994812

[cyberbub] 18/2/2018 22:09

I agree MT about sticking to your area of knowledge - or at least if it's not your area of knowledge, with something that you can understand. As Buffett said, if he doesn't understand a company, he will never invest. The dangers are doubled on AIM, and doubled again when dealing with companies based overseas (or at least outside Western Europe, Canada, Australia and the US).

Outside stocks, I have some friends who bet on the political/election markets. They are/were politicians themselves and have a detailed understanding of how campaigns and polling data work, and a willingness to take action even where that goes against the mainstream view (eg. your MPL investment funds). More often than not, they clean up!

I have no professional experience in mining, but have invested in a number of miners over the last few years, as I feel comfortable enough (due in no small part to positive and helpful boards like this one!) that I understand the process, the drill data and the financial side to be willing to make investments in mining. And as always, the management quality is paramount!

GLA NAI

[mount teide] 18/2/2018 19:53

HG - thanks for your generous words - despite the claims of the FCA, FSA, AIM Regulation, Brokers, Auditors and Company PR Agencies; for PI's the equity markets are still far from a level playing field and its only by pooling our knowledge on sites like Advfn, that we can offset some of that disadvantage and even up the playing field a little.

I've learnt from hard experience that when you don't have the level of research data and information to work with that II's and hedge funds have access to(some of it inside), it's wise to largely keep to sectors of the market that you know and understand - ie become a specialist in the area of the stockmarket you're familiar with.

As a result of following a more focused and high conviction investment strategy specialising mainly in the global shipping and ports industry sectors and the sectors of the cargoes they carry and handle - commodities and finished goods - i experienced an immediate step change improvement in investment returns.

What opened my eyes still further and hammered home the importance of stockmarket specialisation was a shareholding in MPL, an AIM company which raised £73m at IPO in 2010 to build a much needed new modern port in Mumbai, India.

Along with two industry colleagues, after selling out of MPL in 2016 on establishing the management were operating an industrial scale fraud, we alerted the Fund Managers of the two largest MPL II's to the fraud. Gave them all the information on a silver platter, and even spent hours on the telephone explaining the numbers and all the data, telling them exactly how they did it, and how we know that - after all that they still refused to accept the evidence which had the management bang to rights - never mind our advice to call in the Regulator and SFO - they foolishly elected to proceed with supporting a £37m placing at a staggering 97% discount to the IPO price. Such was the brazen nature of the fraud even we were surprised that our predication made at the time of the placing to the II's and Nomad that, the placing document was one of AIM's greatest works of fiction, would prove entirely correct less than three months later.

It was a salutary lesson, as it hugely reinforced the importance to us of stockmarket specialisation - since the experience confirmed a long held suspicion, that most fund managers are generalists and have analysts who while very good at analysing financial information have, almost without exception, no specific industry experience and are largely clueless as to how the results were achieved at the operating level.

The COLLECTIVE shipping and ports industry knowledge of those two II Fund Managers, the Executive Board of MPL, Nomad representatives, Auditors, PR Company, all of whom I spoke to at considerable length after taking a position and then selling out after failing to be satisfied with the Governance, would have been at the most Junior Management level within the industry - since astonishingly not one held any Shipping or Ports Industry professional qualifications whatsoever or had any direct experience of either industry.

Holding the highest professional qualifications both the Shipping and Ports Industry currently examine for, with over 30 years experience in over 100 countries running ships, shipping companies and ports, most of it at senior management/Board level we realised that, this gave us a huge advantage over most if not all the institutional investment industry if we chose to focus primarily on investments in the shipping, ports and associated commodity sectors.

Moral of the story - PI's should largely stick to their area of expertise and industries with a strong tailwind to minimise downside risk - AND pool information resources.


ps:
For those interested in researching the Shipping & Ports Industry for investment purposes the following quoted companies/ETF's would offer a good starting point at the current early recovery stage of the shipping cycle:

Shipping:
Clarkson(CKN)
Maersk
SEA (ETF)

Ports:
Dubai Ports World (DPW)

The annual accounts of Clarkson and Dubai Ports World are incredibly detailed and offer a huge amount of information on the shipping and ports industries and its various sectors: container, dry bulk, oil tanker, LNG, offshore, cruise , ro-ro, product tanker etc.

No investment advice offered, intended or inferred.

AIMHO/DYOR

[highly geared] 18/2/2018 13:31

Mount Teide; thankyou for posting yet more insightful stuff.You bring great knowledge and insight to the board in an objective and pragmatic way. You’re a credit to the board and our Asiamet investment community. This is one of the best boards on Advfn; yes we’re all long and here to invest rather than a 10 minute trading punt with agendas.
All the best.

[mattjwhity] 17/2/2018 20:17

Agree with all comments below. It's an excellent and accurate assessment of where we are. Copper fought back well from $3.03 without any big news.I'd love a strike or two to liven things up.These shares are firmly in the bottom drawer.

[highly geared] 17/2/2018 12:54

Good article Matt; this and the Optiva broker note provide ample coverage and publicity to the market about what a good medium/long term investment we have here.I think the consolidation of the share price over the last 3 months provides a solid base from which to move forward as newsflow from Beutong starts and as we move forward to the BKZ Jorc in May and the BKM BFS by June.

Interesting comparisons on zinc/lead prices and grades for BKZ v the BKM copper resource in recent posts. Perhaps too early to say but it may be the case that we’re looking at at least a similar NPV? If there is a porphyry copper feed beneath then it becomes all part of a big structure.... however it develops,I can readily see a likely $500 million NPV from BKM/BKZ as things stand with more upside from BKW/BKS and the broader District as we progress.

Our BOD know what they’re doing and our objectives are completely aligned.

[mount teide] 17/2/2018 11:33

“The single most important decision in evaluating a business is pricing power. If you’ve got the power to raise prices without losing business to a competitor, you’ve got a very good business.” - Warren Buffet

The pricing power of cyclical markets:

The commodity cycle saw the mining industry's pricing power tap turned fully off and locked shut at the market top in 2008-2010, and this is where it stayed until the 6-8 year waterfall drop off in industrial metal pricing hit the H1/2016 capitulation bottom - a level well below the C1 cash cost of much of the mining industry and massively below the cost of developing new production(estimated at nearly double the market bottom pricing for Copper and Zinc).

In H2/2016 - as a consequence of an estimated 75% drop off in production development during the previous half decade to preserve cash, the almost complete cessation of exploration, years of widespread industrial action at the major mines in Chile, Peru and South Africa together with a material drop off in ore grades/increase in operating costs at the principal global scale mines, the 'pricing power tap' was dusted off, given a squirt of WD40 and gently cranked open.

Since, with Chinese demand remaining strong while the synchronized nature of growth in the rest of the world gathered pace, the metals industry business cycle has fallen behind the growth in demand and, seen Zinc and Copper move into deficit and warehouse stocks at/close to decade lows, the cumulative effect of which has been to turn the 'pricing power tap' close to fully open.

Any objective assessment of the current market fundamentals (now supported by the consensus view of market analysts after 18 months of most forecasting further armageddon for the sector), would suggest that despite industrial metal pricing surging off the lows in 2016/17, as a result of an unprecedented set of circumstances(demand-supply deficit/decade low stock levels) this early in the new commodity cycle, the pricing power tap is likely to remain at/close to fully open for the rest of the decade before slowly getting shut-in during the following decade as the next commodity cycle market peak is approached perhaps in circa 2023-2026.

However, to this observer with the scars of three shipping/commodity cycle scars deeply etched on his back, a number of factors suggest this commodity cycle recovery/boom phase may have a longer life expectation and greater trough/peak price range than in previous cycles - why?

The last industrial metals/shipping recession phase was longer and deeper than any previous cycle in living memory.

After a decade of low investment following the financial crisis many high population Nations are now actively involved in implementing huge capital expenditure programs to rebuild their crumbling infrastructure - India, USA - while most of the fast growing African and the emerging Nation economies are carrying out and accelerating infrastructure and industrialisation development programmes similar to China in 2000-2008.

Global GDP forecasts have seen repeated uplifts by the IMF to nearly 4% for 2018 and 2019, together with the US announcing a record programme of tax cuts, greater even than the Reagan era which produced an enormous decade long economic boost.

The rapidly growing demand for industrial metals from the materially important global electric vehicle and renewable energy sectors over the decade ahead.

The last cyclical market peak pricing in 2007(Zinc and Lead) and 2010(Copper), after inflation adjustment is 54%(Zinc), 87%(lead) and 65%(Copper) above CURRENT pricing!

As a result of low barriers to entry(anyone can buy a ship or a mine), the shipping/commodity markets have charted a remarkably reliable 15-20 year boom and bust life cycle over the last 70 years - as a consequence, in an average human lifetime investors may get 2-3 small windows of opportunity to time an investment in the sector perfectly. Once every 3 or so shipping/commodity cycles, circumstances(industry and global economics fundamentals conspire) to produce a super recovery/boom phase - with shipping, zinc, copper and the oil markets coming off near decade long falls of 98%, 66%, 56% and 76% respectively, I strongly suspect this latest cycle recovery phase may turn out to be such an event.

Ignore the enormous pricing power (up and down) of long term cyclical markets at your investment peril!

AIMHO/DYOR

[mr roper] 17/2/2018 09:59

Top find, matty. Enjoyed that read.

[adorling] 17/2/2018 08:47

Matt - great post so thanks. Particularly like this reminder...

“Another string to Asiamet’s bow is the wealth of experience possessed by its senior management team. Executive chairman Tony Manini is a geologist with 25 years of global resource industry experience in over 20 countries. This includes 14 years with Rio Tinto and eight years at successful resources firm Oxiana Limited. Manini took Oxiana from a market cap of $3m to $6bn using a similar strategy to the one he is currently pursuing at Asiamet.

So that will be a X 2000 in mkt cap then and TM is following the same strategy at ARS!

[mount teide] 17/2/2018 08:31

A good article Matt - should give the sector, the company and its world class assets and excellent prospects some good exposure to the wider retail investment community.

[hjsmc1] 17/2/2018 08:28

Thanks Mattjwhity. Good write up.

[mount teide] 16/2/2018 21:47

AD - many thanks - the Zinc 2016 commodity cycle low price was a typo(as you correctly pointed out i duplicated the lead cycle low price in error) - it should have read $1,454/t - $0.66/lb for Zinc - will edit post accordingly.

[arf dysg] 16/2/2018 21:20

Mount Teide (11613):

Industrial Metal Pricing post the H1/2016 Commodity Cycle recession low compared to pricing at the peak of the recovery/boom phase of the last commodity cycle 2000-2010:
[...]
Lead
$1,586/t - $0.72/lb - 2016 Commodity Cycle low
[...]
Zinc
$1,586/t - $0.72/lb - 2016 Commodity Cycle Low



MT, I notice identical prices for Lead and Zinc for that line. Are they genuinely the same or is that a typo? Just thought I'd check.

[mount teide] 16/2/2018 12:03

Zinc forecast to peak at $4,300/t($1.95/lb) in 2019 - American Metal Market - 14 Feb

Subscription website so just a few snippets:


'The global zinc market is riding a wave of solid demand and historically low stock levels, leading to a cyclical uptick that will peak at $4,300 per tonne in 2019, according to Jonathan Leng of Wood Mackenzie.

Speaking at the International Zinc Association meeting, Leng noted that a mine production and consumption gap that has appeared over the past few years is expected to grow through 2022.

In total, 2.3 million tonnes of lost production occurred in 2016 and 2017 after miners decided to close and reduce production. These cutbacks disrupted trade flows in the concentrate market, with miners reducing exports to China and instead sending material to smelters in Europe, Japan and South Korea.

Exchange stocks tumbled to a total of six days of global consumption in January 2018 from 14 days in January 2017. This led Leng to predict increased tightness in the refined market, which will provide fundamental support for higher prices.

"We expect stocks to be drawn down even further in the first half of next year and we expect this to bring the zinc price to a cyclical peak of $4,300 per tonne," Leng said.

This year a series of mine openings will increase supply, but the long-term deficits still exist. For now, the market is expected to be roughly balanced as global zinc consumption increases 2.2% from 2018-22.

But the investment appetite for the zinc market remains muted, Leng said, adding that large, multi-decade mines take a considerable amount of capital and that isn't available right now.

"The big problem is that banks are not willing to finance big mining projects," Leng said. '

[mr roper] 16/2/2018 08:44

Hb, without a doubt. If they find large continuation below 600m and link the deposits I'm pretty sure this will aid the so significantly

[horneblower] 16/2/2018 00:20

Mr. R. Do you think so?
Frankly, I doubt Beutong will have much effect for a year or two, being 5 years from production.
No worries. KSK will amply do it on its own.
Roll on 19p.

[dorset64] 15/2/2018 22:42

HB apologies but fat fingers there, I meant to say UOG, ARS & HZM

[mr roper] 15/2/2018 19:18

As soon as that drill breaks dirt at beutong, the share price will get a shift on.

[charles clore] 15/2/2018 18:34

I think a little rise is well overdue but Im not holding my breath! It will all happen in good time.

[littlemadam] 15/2/2018 18:23

We could well be looking at the next leg up but when is difficult to say. I too think April, but the markets always think and look ahead. So it would be no surprise for the price to rise pretty soon.
Did the bid price settle at 10.5?