Ironveld Share Discussion Threads

[al101uk] 12/10/2016 13:05

EBITDA according to DFS is projected to be £8.1 million

hxxp://www.ironveld.com/docs/doc_IronveldDFSannouncement220414.pdf

The info posted in the last few posts, plus this should give you what you need to take a stab at a valuation of this company which is pretty critical if you expect to be in at the time of the placing.

As a double check I also reverse engineered the revenue from the DFS to see if I could see anything materially different that would change that valuation, but I got my numbers at a level I wasn't unhappy with and wasn't too far out.

For me, it was enough to send me packing, I'm out at a 15% trade weighted gain since 2014... disappointed, but I'll jump back in at the right price.

edit - My margin of error is massive as we don't know the true cost of debt, nor the debt/equity ratio we will end up with, nor the actual price achieved for our products. Adjusting, just the HPI price to the upper end of my range would result in 50% upside to my price projection and completely change the economics.

[al101uk] 12/10/2016 10:23

The answer:

"So, really, what do we need to develop it? We need money, and clearly we are working with debt providers to get the debt in place. We’re looking at doing around about a 50:50 debt:equity project,"

[paleje] 10/10/2016 11:58

al101uk, thanks.

I looked at the 2015 presentation earlier, the numbers in particular, and it showed debt as being about 2/3 of the total I thought they needed (about $60m) so perhaps that's an indicator, not a precise one.

We'll know shortly:) or worse still as Ladeside says...

[ladeside] 10/10/2016 10:28

It could be worse, it could be "imminent".............

[mouse20] 10/10/2016 08:59

Thanks for your reply.
Time will tell I guess. Let's just hope that Giles definition of 'shortly' is the same as the average person for when he updates the market on the rest of the finance deal.

[al101uk] 09/10/2016 23:05

Typically debt is funded in the same currency as the project, so debt in rand to fund a project in South Africa. This would fit with funding from the IDC and a comment I'm sure I read about other South African institutional investment potential.

May hurt shareholders in the short term though, as any placing is certain to be in sterling. In the longer term shareholders benefit by a stronger Rand as South Africa also happens to be our target market and so the currency our revenue is earned in.

Swings and roundabouts... but a weaker £ should be advantageous in my view.

That doesn't mean our debt raising is issue free, but I had assumed that the lack of an offtake agreement for our HPI was the reason for the hold up.

[mouse20] 09/10/2016 17:56

Does anyone have any thoughts on whether sterlings continued devaluation is impacting on getting the rest of the funding together for the project? Giles stated earlier this year it will the UK's biggest investment in SA this year. In May £1 sterling got 23 Zar. Now down to 17.

[al101uk] 07/10/2016 20:15

paleje,

Yes, the targetted debt to equity ratio is unknown, but if you check the IDC website it appears that part of their criteria for funding is at least 50% equity and that equity holders are used to partially fund the project.

I wrote a long post on it, but it appears to have gone missing :-/

Anyway here's the link:

hxxp://www.idc.co.za/sbu-overview/metals-and-mining.html

I'll try to put together the rest of my research and conclusions at some point and repost them. Obviously they have changed materially today, assuming we hold at this level... and can raise equity funding at at least this level.

[paleje] 07/10/2016 18:43

Isn't there an equity raise to come too, apart from the rest of the debt finance? I hope he doesn't lowball it like he did KENV, which peed me off, hopefully the share price should be a bit higher by then.

[al101uk] 07/10/2016 15:38

My first buy in my ISA was 11/12/14 at 7p, traded my average down to about 4.25p since then and I've traded in and out for a profit in my regular trading account before the initial ISA purchase.

I think I was one of the first posters here, so it's been a while.

Buy the dips, sell the spikes works really well in a GC company that drips out news and spikes due to lack of liquidity on each RNS.

Risky at the moment of course, another funding RNS could arrive any day and my sell could end up looking very silly.

edit. - first post here was 2012... wow!

[callumross] 07/10/2016 15:02

Can't be bothered trading this one. This was always a long term investment and only just back to the price I paid 2 years ago and has turned out to be even longer term than I planned with the various delays. We are months behind the original schedule but if I recollect they believe they can get the construction done in 6 months as soon as the funding is completed, and the plant is significantly EBIDTA positive from day one.

[al101uk] 07/10/2016 14:06

That was my 40K sell, just taking a bit of profit... we have a long way to go yet and Ironveld aren't known for their haste so I've taken some profit in order to take advantage of the bored and the weary in a few days/weeks time.

Still hold a chunk (just playing it for a couple of hundred quid), so if I'm wrong... it's all good.

edit - the 40,837 is mine, not the other 40k that just popped up... I didn't effect the price ;-)

[mouse20] 07/10/2016 13:27

From the daily telegraph yesterday.....

Finally, Ironveld, one of ex-England Cricket Board chairman Giles Clarke’s mining companies, leapt 16.7pc to 5.3p after the South African government approved a £13.9m funding package for its High Purity Iron, Vanadium and Titanium project.

[broncowarrior] 07/10/2016 13:02

Striking while the IRON is hot...

[al101uk] 07/10/2016 12:48

In case anyone wants to see the hoops jumped through to get the loan:

hxxp://www.idc.co.za/sbu-overview/metals-and-mining.html

[al101uk] 07/10/2016 12:46

IDC make loans with interest rates of between 5% and 20%, with an average rate of around 10% based on 2016 results. In case anyone like me, is trying to put numbers on the company.

Looks like the maximum debt to equity ratio is 50% as that appears to be in the terms of the loan from the IDC.

[orange1] 07/10/2016 12:41

The 6p mark is important. Back in December 2014 Giles Clarke and his wife acquired 175000 shares at a price of 6.18p. I guess Giles Clarke can now turn to his wife and say: Ï told you they were a good investment."

[bigwavedave] 07/10/2016 12:23

Looking good. Would like to see it get past 6p.

[callumross] 07/10/2016 10:30

Noticed that Dave, and in quantity too - MM's only keeping the published bid price low to keep spread wide and discourage buyers.

[bigwavedave] 07/10/2016 10:26

Online bid is 5.7p. Not 5p as advertised.

[cyberbub] 06/10/2016 14:06

What is the expectation for the remaining funding required - how much is likely to be through equity dilution?

[al101uk] 06/10/2016 10:51

There is a remaining chunk (and some potential funders to fill the gap)... RNS from October 2015

Ironveld plc, the High Purity Iron (“HPI”), Vanadium and Titanium project located on the Northern Limb of the Bushveld Complex in Limpopo Province, South Africa is pleased to announce that its BBBEE partners have received an indicative term sheet from the Industrial Development Corporation (“IDC”) for the Broad-Based Black Economic Empowerment’s (“BBBEE”) full capital contribution to the project. As per the BBBEE’s Code of Good Practice and the Mining Charter, its shareholding amounts to 26% in the smelting project. The Company continues to progress due diligence with funders considering providing the remaining elements of the project’s overall funding.

So there is additional funding in place from the IDC that was not money already deisgnated for the BBBEE. Why coudln't they mention that explicitly. My first read of the RNS assumed the same as was posted above, this was rubber stamping the BBBEE's funding.

[al101uk] 06/10/2016 10:04

RNS dates 3rd August 2015

Due diligence is proceeding steadily with both the debt funders who could provide a significant portion of the project’s funding and potential Broad-Based Black Economic Empowerment ("BBBEE") partner funders who have indicated that they may provide funding to the project in addition to the BBBEE funding

More than one funder for the BBBEE? Which would mean that Ironveld have finally secured money in addition to the BBBEE cash announced all that time ago... now that would be good news.

[al101uk] 06/10/2016 10:03

BBBEE are on the hook for 25% of costs, so should still need R100 million, but according to previous RNSs have been dotting the i's and crossing the t's on being fully funded for 6 months now.

So what's changed? Why has the funding suddenly been reallocated and split between the two parties?

It could be a technical measure to help Ironveld find the rest of the cash, but it's annoying when companies use the distraction of the funding which is good news to hide away what is actually going on.

Obviously BBBEE providing a further R100 million is great news if that's the case, but it really should be made clearer.

[callumross] 06/10/2016 09:34

Is it not just a mixture of funding between equity and debt? - at the end of the day it is still funding!