Ironveld Share Discussion Threads

[luckyabbeygale] 19/7/2022 09:36

Spread bet positions have been the safest way of dealing with Ironveld.
Fear of falling further means that my position was reduced before every drop starting from 0.95p, and then on every 0.05 fall, and all the down to my last ones being closed at 0.70p.

My new hope is AYM after buying in at 3.2p after todays RNS. AYM hold 20 percent of Grangesberg and have options to increase their stake up to 70 percent.
Anglesey Mining PLC Grängesberg PFS Highlights Post-tax NPV8 of US$688m.

[aceuk] 19/7/2022 09:29

To me this tweet says they've accepted they've lost



Interesting to see any response

[al101uk] 19/7/2022 09:28

Lets put ourselves in ME and GC's shoes and lets assume they haven't raised enough money, lets also assume that they are doing what is best for the business and it's shareholders.

Why?

Look around you, Ironveld is in absolute chaos right now. They have had to approach people to do a fund raising while telling them:

1) The major shareholder has rejected us.
2) Not just that, they are actively plotting against us.
3) And they were our last funding partners :-/
4) We've just lost a funding deal that was a year in the making.
5) The Shareprice has cratered.

If I were in their shoes I'd be asking, how do we minimise the amount of money we need. Where can we cut smelter rerfurb costs even if that means reducing production capacity?

And I'd raise the bear minimum because I would expect that in a years time the price would be higher and any final placing would be done at a premium to todays price.

Looking at things from where you are now, "another placing on the way!" is all you hear.

Looking at things from a pre-funding decision making point of view, I'd say minumum at 0.3 and the rest if we need it at a higher price would be best for the business and it's shareholders.

BUT I also suspect this entire thing may be a proof of concept to facilitate a sale of the company. The bear minimum might be enough and profitability might not be the game here.

[al101uk] 19/7/2022 09:08

I agree with a lot of what you've said, but, your comments on the landowners are just assumptions and are inferred from little more than posts you've seen, primarily from one individual.

You quote "first product sales and cashflows are expected within 12 months" but then state that "Cash generative production is 18 months to 2 years away, maybe more." to supoport your argument that another placing is inevitable.

"I also think he knew Grosvenor did not have the money when he released the Oct 21 RNS, he just hoped they would be able to get it quickly."

I think the company definitely knew Grosvenor didn't have the money at the time of the announcement. I think they believed at that point there was a very good chance the fuunds would be made available quickly. The initial delay supports that they believed it was just a hiccup. As the months rolled on I would say they allocated a lower and lower chance of success, but believed it was in the best interests of the business and shareholders not to let the deal die until there was an alternative plan.

[rec0very stock] 19/7/2022 08:46

I have now voted my massive 27k in 1 Aug meeting: For the placing (Ordinary) against disapplication of premption right for exercise of Broker Warrats (Special).

I have also requested a letter of representation to attend the meeting on 12 Aug in person.

[rec0very stock] 18/7/2022 21:22

al,

Hopefully you agree there is money to be spent getting the smelter in an operational condition - this is covered by the placing. The smelter will have running costs - staff, maintenance and electricity (gone up a lot and SA does not have a particularly reliable grid). With an insurance value of £30m there will be an insurance premium to pay. So that is just the smelter.

Getting the ore from where it is in the ground to the smelter in a smelter ready condition will also have costs - they will most likely go for a turn key operation as the start up costs and CAPEX for doing anything else will be more than the initial turn key phase, but a turn key contract is likely to deliver ore to the smelter at about twice what it would cost if they were doing it all themselves, ie over time the start up costs repay themselves. There will be a time lag between having to pay for smelter ready ore and selling product - working capital "Once the acquisition and refurbishment of the smelter have been completed, first product sales and cashflows are expected within 12 months". Before any mining can start they will need to sort out enough of the landowners. Maybe they can start somewhere where there is not that much of a problem, maybe they can't we don't know. However they will have to pay to relocate those living on the land they want to mine and quite a distance around it due to the noise and vibration of the blasting, that is another cost.

Admin expenses ran to about £800k per year whilst the company was kicking its heels and will increase to maybe £1m.

Make your own guesses at what all those costs might be and add them up and see if they come to more or less than what is being raised in the placing and Broker Option, less the costs of doing the placing and Broker Option.

The Broker Warrants could bring in an extra £1m but the share price would need to be well above 3p for them to be exercised.

Surely the real conversation needs to be around whether or not the the company will be fully funded (with cash) through to cash generative production (what I term the end to end costs ie the point at which the company can support itself without issuing more shares - Warren Buffett defines a good company as one which would carry on even if the stock market shut for 5 years). Cash generative production is 18 months to 2 years away, maybe more. Does anyone seriously beleive there won't be at least 1 if not more than 1 placing in that time?

Cash is king in the mining game and every other game too.

For what it is worth I don't think ME is incompetent. His £8m was based on knowing most of the costs apart from what they might have to pay the landowners - he and GC have so far refused to meet them (not all that much point if you don't have the money to get started anyway and don't know when you will have the money). I also think he knew Grosvenor did not have the money when he released the Oct 21 RNS, he just hoped they would be able to get it quickly. I can't prove he knew so he could have been incompetent and failed to due the right DD on Grosvenor.

[al101uk] 18/7/2022 21:00

And to put my posts in to context, I guess I am an Ironveld bear, because I don't hold a single share and it doesn't look like I'll be buying any in the near future.

The number of unknowns here are far too large, the company has to prove itself and a lot of the questions RS's narative is based on need to be answered.

[al101uk] 18/7/2022 20:49

"Arguements over OPEX and CAPEX really don't matter"

Yes they do as that's the basis of your entire argument.

Company #1 uses capex to buy an asset, it does a placing at a 30% discount (plus expenses and maybe some warrants) and the life of the asset is 10 years. It is depreciated over that time. It's a capital cost so each year the same amount leaves the balance sheet as a non-cash item. The company owns the asset on day 1 and has paid in full and up front.

Company #2 uses Opex, it pays the money each month for use of the equipment, but over 10 years will have paid a 30% premium vs the cost of the equipment. There is no upfront cash requirement and cash is taken as part of the costs associated with producing the product. ie the cost will come out of the revenue generated with the asset, no placing requried.

You can mess with the percentages, but in really simple terms this might be a situation where it is more cost effective to contract out the work from a shareholder value perspective. Particularly looking at the current share price and placing price.

So, they are using debt for the smelter, secured on the smelter itself and they are using contractors to complete the mining/cleaning/crushing work as an opex cost.

And the local issues could be moving an entire settled area, or one person with a grudge.

I would estimate that my completely made up version of events has at least the same chance of being right as yours.

And that's the real negative, we don't really know the truth and the company seems incapable of telling us. There is a very real neagative narative, part of which you allude to with your allegations against ME, but you're drowning out real conversations that you were once so integral to.

[rec0very stock] 18/7/2022 19:34

Are you sure LADESIDE? How could they purchase a smelter up front for £5.75M, refurbish it for £2-3.2M and fund all the other costs that we don't know about how much they are but do know they are there, and all those lovely PLC costs for £8M?

The placing and Broker Option covers the CAPEX and maybe the OPEX for the smelter, not all the rest. There will be another placing down the line, but it is your investing decision so you go with what your experience tells you.

[rec0very stock] 18/7/2022 18:10

I wonder what RJ and supporters will do with their shares when the find they have lost all the resolutions?

I also wonder why Glencore only want the V slag - I agree with al that the bulk ore sample probably went to Glencore.

I also wonder why having provided a bulk sample in 2018, IRON did not set up a DOS operation with the offtaker to provide cashflow until the smelter issue could be solved - the resource is supposedly massive and a few years of DOS would not put much of a dent in it.

I also wonder if "The Company, having finalised community access and rental/lease agreements" these are the landowners who are so up in arms about the whole thing. It would certainly make a lot of sense to start full commercial production where the bulk sample left off.

[rec0very stock] 18/7/2022 17:32

al,

It is my view that the project definately is not fully funded to cash generative production. It was my view back in Oct / Nov that £8m probably would not be enough when unforeseen obstacles were encountered. That is based on my experience with a lot of different mining companies over many years. Could I be wrong? of course I could. But given all the things that have not been published by the company, the way it keeps changing its story and ME's track record for omitting key information in breach of AIM rules, I think the chances of me being proved wrong are very slim indeed.

Arguements over OPEX and CAPEX really don't matter as it is all money. The company will have to go the cheapest route in the short term, which is the more expensive route in the longer term. I have done a number of comparative DCFs to look at such options on various subject matters.

Ultimately the only investment case here remains blind faith in GC to get there in the end. I would not bet against him doing so, but there will be further dilution and will the juice be worth the squeeze from here? I do not rule out buying when I am sure the company is fully funded; I am sure it is 6-9 months from cash generative production and I am sure the juice will be worth the squeeze from that point - that is what my experience has taught me over many triumphs and failures is the most sensible way to invest in mining companies. Until then I wish everyone the best of luck with their own investing decisions and I will continue to hold my 27k and comment on any aspects of the company development where I believe I have something to contribute.

[al101uk] 18/7/2022 17:15

"The end to end project" isn't a thing, as I've tried to explain.

I can't be wrong, because I'm making no assertions. I'm offering alternative naratives to the one you appear to be fixed on.

If I was 100% convinced this project was now fully funded through to profitable mining, I'd be buying shares. I'm not.

"when the next discounted placing happens before there is any positive cash flow into the company"

You haven't even acknowleged that anything I've said could possibly hold any merit whatsoever, which does your argument no favours and insinuates that you have just entrenched yourself in the same way as you acuse others, like Ladeside, of doing.

I agree the company does not supply enough information on what's going on to make any serious attempt at properly informing their shareholders and that is what prevents me from buying.

[al101uk] 18/7/2022 16:59

BBBEE was sorted ages ago, the locals don't like the BBBEE partner.

[rec0very stock] 18/7/2022 16:53

al,

I am saying the original £8m probably correctly costed the end to end project. We can see who is right further down the line when the next discounted placing happens before there is any positive cash flow into the company.

We would not be having much of this debate if there was a published DFS for this project, as we would know most of the answers and understand the risk / reward balance. Probably, if we has a DFS, the biggest unknown would be the stroppy landowners. It looks like GC treats them with as much if not more contempt than he does PIs.

[purchaseatthetop] 18/7/2022 16:44

I just wondered if the reason for Grosvenor 30% stake was to fulfill the BBBEE criteria of 26% black ownership to actually get a mineral licence?

[al101uk] 18/7/2022 16:40

RS,

I'm not agreeing with anything, I don't know the additional spending requirement, if there is one.

I'm saying that it's more likely that the project is correctly costed (as far as one can) than them forgetting that there will be an electricity bill to pay or heavy machinery to buy after the fact.

I'm accepting your premise that they needed £8 million to fully fund the project and giving examples on how that capex spend could be restructured for a near identical result.

Contracting out equipment is a high fixed cost business and it's important that your equipment is out with customers at close to 100% of the time. If you find yourself with a surplus of hardware it would normally be better to rent it out at nominal cost than have it sat there. I'm saying it COULD be cheaper to contract out crushing and cleaning or it could be more expensive.

Even if it's more expensive you have to weigh the cost of capital. I'm guessing the cost of equity is quite high when placings are being done at 0.3p, we know the cost of debt is unacceptable, so maybe the "premium" you percieve the company paying isn't a premium at all or is only a premium on a nominal basis.

[rec0very stock] 18/7/2022 16:33

LADESIDE

IRON RTOed into an investment I all ready had. I knew very little about mining at that time. I put a lot of money in at 2p and top sliced it around the time you bought in 2013 (thanks mate). I had over 1.2m shares in the bottom drawer, which I have since sold all but 27k of, because ME misled the market in Oct 21 and in his PR/IR fluff piece which followed. Over the years I have held IRON I have learned a lot more about mining and AIM listed microcap mining companies. In a way I am grateful to ME for misleading the market and making me get my shares out of the bottom drawer, so I could reinvest what I got back into 3 much better mining companies.

[rec0very stock] 18/7/2022 16:22

Al,

I think we are agreed that there is quite a bit of money outside of Smelter CAPEX which is needed to achieve cash generative production. The previous overall figure of £8m feels about right. If you contract something out then the contractor wants return on capital as well as profit and something for risk and all sorts of other things. If you can do it yourself there is more upfront cost in CAPEX but the cashflow thereafter is greater.

I agree with you that for a 10K sample, there was not much they could do about it. To go into full scale commercial production is a different matter. The landowners have to be moved and compensated. At least some of the landowners are really angry, possibly about how they were treated when the bulk sample was done and definately about how they have been treated since. As nothing at all can happen without at least some of the landowners taking their pay off, I would see it as the biggest immediate risk and potentially quite a large cost.

[bigwavedave] 18/7/2022 16:14

I'll be voting with the company for reasons highlighted by tima, al101 & Ladeside.
Also, although I initially admired Jennings for making a stand, I am not a fan of his histrionic style of communication.
He went public too soon and must take some (or all) of the blame for halving the share price.

[ladeside] 18/7/2022 16:13

For someone who does so much research, knows so much about the industry and the players involved and has come to the definite conclusion of there being little to no value in the project, it beggars one question and one question only,

WHY DID YOU INVEST ???

[al101uk] 18/7/2022 15:18

The issue with residents seems to be a constant. It was the case with Amerisur, it is the case here and has been since the beginning.

I'd factor it as a risk, but I woulnd't consider it even in the top 5.

I'm not sure I go with the idea that the residents were fine with a 10K tonne sample if they weren't ready for comercial production. In my view it's more likely that there just wasn't much they could do about it.

[al101uk] 18/7/2022 15:12

I'd argue that the more refined the product, the bigger the value add. You seem to be suggesting the opposite?

[al101uk] 18/7/2022 15:10

Classifying costs as opex improves cashflow.

The difference is in the ability to capitalise the spend on the balance sheet. So if Ironveld buy all of their equipment and use that to produce the ore, then that equipment cost would hit the balance sheet and be depreciated over it's lifetime. The cost is all upfront and converts the cash to a non-cash item (equipment).

If the cost goes to opex, then there will be a contract with a partner where a far smaller payment is made as work is completed. That money would be money that equates to the depreciation of the asset they would otherwise have bought. You're right, there may be a premium involved in that (over 10/20/50 years), but equally it could be cheaper depending on the market. It removes the need for an upfront cost and if, as the company has said, they will cover operational costs, that would include contracted equipment for mining.

Given that they have already completed a 10K commercial sample, I'd argue that they likely used contracted out resource and were covered operationally for that sample from payments recieved.