Jtc Share Discussion Threads

[craigo121] 21/5/2018 07:06

WEB(webis) Relaxed US gaming laws have opened up a trillion dollar market webis are perfectly POISED to take advantage 10 bagger or huge takeover target end quarter

[mount teide] 21/5/2018 01:01

serratia - the AsiaMet management's systematic approach to creating value will see the continued proving up of the future potential of the asset portfolio, while using the strong predicted cash flows generated from the proposed near term BKM 25,000t a year copper development, to drive the further resource evaluation and phased development of the much larger Beutong prospect.

On a two year view, the valuation has the potential to be multiples of the current share price. The material news that is likely to drive the valuation will be an updated Jorc and scoping study for Beutong in H1 2019. Logically, with at least 6 times the current resource of BKM, the NPV will be north of $1.2 billion - assuming the market values only 20% of the NPV, at $240 million/£200 million this provides for circa 22p/share.

Assuming BKM moves, post finance in H2/2018, toward a $200 million NPV, after deduction for some dilution, allow say £120 milllion or 14p/share. Add in the BKZ JORC and further drilling around KSK of say 4p/share and a sum of parts value of circa 40p is possible within the next 12-15 months.

Additionally, its possible that a successful finance and mine build at BKM will enable the market to value Beutong at a greater percentage of the scoping NPV; so 40p could be conservative.


The KSK Asset has the BKM Copper Deposit, a 25,000tpa cathode copper development at definitive feasibility stage (expected in Q2/2018) with significant resource upside potential nearby. Its a low capex, very low opex, likely readily financeable project that a report by mine development specialists Hackman & associates suggests could be brought into first production as early as H1/2020.

According to the management's 2018/19 operational plan, during the next 18 months, shareholders should know the full value of Beutong via a scoping study (with a better defined resource + metallurgy confirmation ), have BKM financed and under construction, a Jorc for BKZ, initial drill results for BKS/BKW, possible BK area porphyry confirmation and further resource evaluation of the outstanding Baroi prospect.

In terms of current JORC size, Beutong is the one most likely to take the company up the value curve as its currently 6 times larger than BKM but, a year of focussed drilling at BK could well reveal 800m of high grade copper resource continuation between BKZ and BKM and a BK porphyry of similar magnitude to Beutong together with first drill results from a number of other prospects of similar potential to BKM.

I would expect the real value to be seen here from mid 2019 onward when Beutong resource/scale and PEA is known, BKM is financed and is nearing production and we know more on the resources of the other KSK prospects.

As the CEO said recently said an investment in ARS is about systematically creating value - 'we're in it for the long term, as this is where the big money will be made.' The management have done this type of development before in the region, taking Oxiana metals from a $3m junior into a $6bn major during the last commodity cycle recovery/boom phase during 2000-2008.

The latest company presentation and last 2 years RNS's details the Management's participation in placings and prices paid, managements stake in the company and how the Board has taken incentivised share options in lieu of salary for nearly three years - it speaks highly about how well they have aligned shareholders interests with their own.

AIMHO/DYOR

[serratia] 20/5/2018 22:47

MT,

A question if I may ? How do you value ARS ? I've had a preliminary look at the management - seems fine so far. Looked at the future supply/demand and it's in copper's favour (probable future shortage). Shortage of new exploration/mines.
This points towards further research on ARS. My first approach is to look for measured and indicated resource levels. Next up what value to put on copper in the ground ? This link suggests $0.04/lb.




I need to run through the figures again but that would seem give a value around the present M.Cap/share price.
Is this all about proving up the future potential or do you suggest another route to valuations ?

[the stigologist] 20/5/2018 17:10

#AOR AorTech


share price : 44p
shares o/s : 5.6m
mkt cap : £2.4m
balance sheet cash : $0.5m? (Dec 2017 RNS : $328k as of Nov 2017)
annual cashflow : c.$0.2m? (H1 Interims : Net Cash from Op. $172k)

high quality cashflow from IPR licensing/royalty business model

optionality from potential licensing of breast implant/heart valve biocompatible materials

potential for use of company as a RTO/shell vehicle ?

"The tax losses within the accounts also makes AOR attractive to a prospective buyer, as with millions to play with this could well prove to tempting to a profit making organisation"

"£23M will attract deal makers.
@20% that's £4.6M
Discount that by 50%
TAX LOSS IS WORTH MORE THAN TODAYS MARKET CAP"

chart looks like it's breaking out (note last breakout above 50 day MA in November 2017 preceded big December 2017 150%+ move)

[mount teide] 20/5/2018 15:18

Interesting Telegraph article this weekend on Nick Clarke who started AIM miner CAML from scratch and said to prospective shareholders at the $60m 2010 IPO(market cap now circa $700m): "‘I’m going to build a mining company that makes money and shareholders returns’.” He kept his word despite the challenge of fierce headwinds post IPO: a brutal 6 year recession that saw industrial metal prices collapse and brought most of the sector to its knees.




Article sums up well Nick's approach to running a business in the mining sector.

First met him purely by chance at an Investment Seminar in London early in this decade - he gave the presentation immediately prior to the CEO of the company i had come to see present:(The infamous David Robson of subsequent investment disaster Tethys Petroleum)

Nick so impressed with his presentation, straight talking and 'we don’t overpromise and under-deliver' approach during a one on one discussion at the networking session afterwards, that it triggered a long period of research on CAML, culminating in an investment that with averaging up and profit is now the largest holding in my portfolio and, likely to remain so for the foreseeable future.

The quote in the article: “I always have in mind the shareholder: the guy in the street who supports you,” probably best sums up my experience and that of many others since taking a position in CAML. There are very few companies in the mining sector(or any other) with leadership which consistently operates like this and has a long track record of success creating value for shareholders to prove it.

[mroalan] 20/5/2018 06:08

JT, Re central banks, something you said a few days ago you might have seen the above i found it fascinating.

[jtcod] 19/5/2018 08:04

The Potential Increase in Corporate Debt Interest Rate Payments from Changes in the Federal Funds RatehTTps://www.federalreserve.gov/econres/notes/feds-notes/potential-increase-in-corporate-debt-interest-rate-payments-from-changes-in-the-federal-funds-rate-20171115.htm

[mount teide] 18/5/2018 20:40

A well articulated and balanced view on the current state of the US equity markets and what likely lies ahead for investors.


Why Stocks Don’t Reflect Improving Economy and Earnings - Bloomberg/Mohamed A. El-Erian/Chief Economic Adviser at Allianz - this week.



Neither this year’s impressive corporate earnings results nor the synchronized pickup in global growth nor record levels of stock buybacks by companies has led to impressive gains in stocks. Despite a seven-day winning streak, the Dow Jones Industrial Average ended the May 11 trading session just 0.03 percent above where it started the year. It’s a similar story for the broader S&P 500 Index, which ended last week at about its Jan. 2 level.

The performances of the Dow and the S&P suggest the improvement in economic and corporate fundamentals has been accompanied by a derisking illustrated most vividly by the decline in market price-to-earnings ratios. Indeed, among the three most widely followed U.S. stock indices, only the year-to-date gain of 6.5 percent in the Nasdaq Composite Index seems consistent with the more generalized amelioration in the performance of the corporate sector, the overall economy and buybacks.

I can think of several hypotheses that could help explain this decoupling in 2018. Three notable ones have an important implication for what likely lies ahead for investors.

1 - Positive developments are already priced in, so there is no real decoupling: Viewed over a two-year period, the contrast between fundamentals and valuations is less striking. Having already outpaced the actual improvements in the economic and corporate landscape in 2017, this market is simply a reversion to the mean. The lag can easily be explained by the telegraphing last year of two of the important drivers of 2018: The tax cut approved in January that enabled the repatriation of corporate cash and increased share buyback potential, and favorable surprises in leading economic indicators that were reflected in realized data after a short lag. This interpretation is reassuring for investors for another reason. Less elevated, and therefore more durable valuations are being accompanied by a return to more sustainable volatility, from overly repressed to more normal levels. As I have argued, this is one of three important ongoing transitions that could place the global economy and markets on a more secure footing. And judging from the generally sound functioning of markets as they have operated with greater volatility, this shift has been handled well so far. According to this explanation, the recent action in stock markets could be a healthy pause, involving a better realignment of valuations and fundamentals, coupled with declining technical vulnerabilities and a general resetting of positions that is consistent with more normal conditions.

2 - Concerns about sustainability: Less reassuring for investors is the view that the pause in market prices this year goes beyond mean reversion and reflects mounting concerns about the durability of improved economic and corporate conditions. Parts of the global economy are already showing signs of losing momentum. This isn't surprising: Too much of the recent pickup in growth in some systemically important economies other than the U.S. was driven by one-off effects. Sustaining the synchronized pick-up in growth, especially in Europe, requires policy progress that remains politically elusive. According to this interpretation, stocks are likely to languish as they continue to converge to the now-weakening fundamentals. This concern is amplified for those who worry about major disruptions to trade deals, including the North American Free Trade Agreement. For stronger stock investment performance to return, markets need a major, policy-driven improvement in the transition to more powerful and durable growth models.

3 - Losing artificial support: Those most concerned about sustainability also worry about the policy transition in central banking. It has become increasingly obvious to traders and investors that central banks have been stepping back from the practice of repressing financial volatility at the first sign of market instability.

This accentuates a risk factor that requires some rerating of financial assets, especially stocks. It started with the Federal Reserve, which, after a prolonged period of reliance on unconventional policies, stopped its asset purchase program, raised interest rates several times and has started to reduce its large balance sheet under a gradual announced timetable. Also unlike previous years, this process has been accentuated by central bankers who have refrained from verbal intervention to counter sudden bouts of volatility (such as the one in February). And it will likely build further momentum late this year and early next year as the European Central Bank, then the Bank of Japan, step back from their large-scale asset purchase programs. This withdrawal of artificial support makes it even more important for markets to handle well the other two transitions. If not, the downward pressure on stocks could be more severe as insufficient support from fundamentals is significantly amplified by the unwinding of risk positions that resulted from excessive reliance on central banks.

I strongly suspect that all three hypotheses are in play today, with their relative contributions declining as you work down the list. Although this might not provide a sufficiently unique answer for many investors, it contains an important insight.

In a marked departure from recent years, investment values have grown increasingly dependent on a successful shift from liquidity-supported markets to those driven by durable improvements in economic and corporate fundamentals. Progress has been mixed so far on the policy front, with the required upgrades in pro-growth measures essentially limited to the U.S. And even there, recent steps need to be built on, including through bipartisan support for a multiyear upgrade of existing and new infrastructure. Without that, markets may find it hard to overcome the dual headwinds of adverse rerating and technical unwinds.

[jtcod] 18/5/2018 17:06

Wow. There's a research note come out (that I haven't seen yet) which i am told identifies approx. 15% of the S&P 1500 as companies whose interest expense is greater than their 3-year average EBIT.I should imagine that shorters are crawling all over that piece of work.

[blusteradjuster] 18/5/2018 14:04

Not sure if these forecasts are still considered valid but they suggest the China boom (well, urbanisation of working age people at least), will slow down in the next 5 years or so.




By the end of 2016, 57.4% of the total population lived in urban areas, a dramatic increase from 26% in 1990.

From 2010 to 2025, it is estimated by the Ministry of Housing and Urban-Rural Development that 300 million Chinese now living in rural areas will move into cities.

The fast pace of urbanization will create at least one trillion yuan in annual investment opportunities in building water supply, waste treatment, heating and other public utilities in the cities.

The Chinese government is also demolishing rural villages and building new cities and towns to relocate villagers to. It ultimately aims to integrate about 70% of China's population, about 900 million people, into cities by 2025.





The number of working age people in China is set to fall to 700 million by 2050 – a decline of nearly a quarter, according to a government spokesman.

The working-age population has been in decline since 2012, with the number of people aged 16-59 predicted to be 830 million in 2030. The demographic is expected to decline sharply after this, by 7.6 million on average each year from 2030 to 2050, said Li Zhong, from the Ministry of Human Resources and Social Security.

[mount teide] 18/5/2018 13:51

bluster - 'I’d have a good look at the public/private/corporate finances in the UK and the US before making those kind of claims.'

That's very true but the taxpayers of the 6 accession Nations, unlike the UK, did not have to worry about funding the effects of issuing 825,000 NI numbers to non UK Nationals last year; the overwhelming majority of whom moved to the UK to take up minimum wage jobs and the access they brought to wealthy Nation in-work welfare and benefits; mostly between 10 and 20 times the NI and Tax paid in, despite what our disingenuous, self serving civil service may claim!

As Michael Portillo recently stated, free movement within the EU will eventually reach a tipping point in the next decade because, many of the low GDP former communist states(combined population circa 100million) in the east are being depopulated at an accelerating rate, as a result of the mass movement of people into the wealthy west of Europe - which is putting a rapidly increasing and unsustainable strain on housing, public services, public transport, roads, wages and jobs in these Nations that will inevitably reach a political tipping point.

[mount teide] 18/5/2018 13:22

JT - i use 50 year global commodity data - as that is when the global population growth graph turned upward exponentially and the pace of global industrialisation, transport infrastructure, commercial and residential housing development started to rapidly accelerate in the high population low GDP Nations, triggering an unprecedented increase in demand for industrial metals and oil which shows no sign of abating never mind stabilising.

Going back any further proved of little value because of the huge step change in demand for commodities in China and SE Asia that i witnessed first hand running shipping companies and ports.

Today, the overwhelming majority of commodities and finished goods are now shipped on intra Asian routes and it continues to accelerate at an exponential rate compared to the West. Most westerners have little or no understanding of the incredible pace of economic development in China and SE Asia compared to the West over the last 30 years. These high population Nations started from a much lower development point and will continue to strongly drive commodity consumption for at least another 30-50 years.

My portfolio is up close to 70% over the last 18 months following a re-positioning to a near 70% commodity sector weighting(industrial metals and oil). Considering, that these sectors are now in deficit and forecast to remain so for at least the next 18 months, it would not surprise me if the remainder of this decade produced a similar further return.

AIMHO/DYOR

[jtcod] 18/5/2018 12:24

That California Pension story is quite big potatoes when you consider that California has a GDP equal to the 6th biggest country in the world.

[jtcod] 18/5/2018 12:21

I remember those top of the market 5yr interval investment arguments being used to sell Equity investment products in the past MT. It didn't end well for the takers or issuers as I recall. Also, as I have mentioned before 25yr performance in commodity cycles is not really very long at all and certainly not sufficient to bank a commodity investment strategy on imo.

[blusteradjuster] 18/5/2018 12:13

I’d have a good look at the public/private/corporate finances in the UK and the US before making those kind of claims.

Nationalism and politics always cloud the mind where dispassionate statistical analysis is required.

[jtcod] 18/5/2018 11:56

You know I can’t quite believe there are still pension related funds out there hanging their hat on a 7% growth assumption. I thought that died out in the last decade. It’s absolute desperation imo

[hottingup] 18/5/2018 11:06

Amerisur (AMER)

Fully funder 14 well onshore drilling program starting next month.
Zero debt.
Already producing oil and cash flow positive.

[blusteradjuster] 18/5/2018 10:14

Thanks JTC - will post that first link elsewhere.

[jtcod] 18/5/2018 09:50

Nice article of explanation on the Schiller PE10 chart


Interestingly the peak before Black Monday in 1987 registered at just 17 on the PE10 chart. Little wonder it turned out to be a buying op.

[jtcod] 18/5/2018 08:04

Hi Kiwi good to hear from you. Perhaps we are just watching a suckers-rally because as MT points out this is highly unusual for May even without the earnings multiples and debt levels that are so concerning.

[jtcod] 17/5/2018 22:31

It seems the US is running out of friends under this administration CFC. Pre-Trump most complied as a matter of course but not anymore.

[mount teide] 17/5/2018 19:01

Sell in May crowd look to be buying this year.

FTSE has climbed 13.1% over the last 7 weeks to set another all time high today following a further oil price surge.

Brent rallied over 1.5pc to $80.50 per barrel, the highest level since 2014 and up 124% from the 2016 lows.