Keras Resources Share Discussion Threads

[andylee3] 05/3/2018 13:45

Also remember Dunks, unlike LSE, you can self edit your posts and correct them on ADVFN.

[verulamium] 05/3/2018 12:17

Thanks dunkelmann. FYI, ADVFN edited the web addresses that you posted, inserting the xx between the h and p to prevent linking to other sites. There's an ultra high-tec way of defeating this: hTTp survives unscathed!

[dunkelmann] 05/3/2018 12:06

Typo in link, should be https

[dunkelmann] 05/3/2018 12:04

I usually post on LSE but I was inspired by the analysis posted here by Rec0very Stock and copied to LSE.  So I re-joined ADVFN after a long absence.

I have been keeping a valuation spreadsheet for Keras since last year and publish it occasionally.  The current version PDF can be found at:

hxxps://goo.gl/GpF1B6

I have valued non CAI assets at 0.  Note well, there is *no* guessing at future values, so unless Calidus drops in price significantly, this is a baseline around *current* prices and known share amounts.  I have built in a little dilution effect for the performance shares and warrants, but the last tranche of performance shares had negligible effect on Calidus price.  It may be different when they all come out of escrow. 

Disclosure to Rec0very Stock: my wife and I own more than 1% of Keras, so I hope we can combine our efforts to raise awareness.  I appreciate your analysis, thank you.  I could build in "what if" scenarios based on it, possibly, but I would need more information on Keras Group structure and future dilution.

Keras Resources Valuation Summary, based on current prices and resource estimates.

Date 5 Mar 2018
Keras Share Price AIM (Bid, GBP) 0.00325
Calidus Share Price (Bid, AUD) 0.0410

Keras CAI Shares Value (GBP) 10,524,290
Keras Non CAI Assets Estimated Value (GBP) 0
Keras Total Value (GBP) 10,524,290
Keras Market Cap. (Bid, GBP) 7,350,850
Discount 30.2%
Upside 43.2%

5 Mar 2018 Keras Total Share Value (GBP)
Based On Current CAI Market Cap. 0.0047
Based On Bell Potter (BP) CAI Valuation 0.0070
Based On BP with Actual Indicated Resource (BP+) 0.0062

5 Mar 2018 Calidus Value Per Keras Share (GBP)
Based On Current CAI Market Cap. 0.0047
Based On Bell Potter (BP) CAI Valuation 0.0070
Based On BP with Actual Indicated Resource (BP+) 0.0062
(It is the same as above since above has 0 value for non CAI assets.)

5 Mar 2018: Post Performance 2 + Options, Keras Total Share Value (GBP)
Based On Current CAI Market Cap. 0.0058
Based On Bell Potter (BP) CAI Valuation 0.0085
Based On BP with Actual Indicated Resource (BP+) 0.0076

[andylee3] 04/3/2018 23:22

RS, thank you for your valued input and sharing it with the BB.

If you don't mind I will post this on the LSE BB and, if there is any comments there, I'll post them back here.

Post recommended.

GLA

[rec0very stock] 04/3/2018 13:01

I have not heard back from DR yet, he is obviously busy, as he normally responds very promptly. I do not have time to do this next week, so here goes now and I will explain where the answer from DR comes in.

Risk / Reward - the key to successful investing in anything.

First start with the reward, if it is not big enough, there is no point continuing.

The reward needs to be assessed as a base case that has at least 90% probability of being achieved or better. It also needs to be in a reasonably well defined timescale, great if that is a firm date, but more often than not it is an event you expect to happen.

With KRS there is a clear date to go against and that is when CAI shares come out of escrow. The commitment has been made to distribute them. KRS may need to sell some in the market to provide funds for KRS and we get our fair share of the rest. That will happen in Jun 19.

What I expect to happen prior to Jun 19, as a base case, is: the resource to be upgraded to at least 1 MOz giving a 7 year plus mine life. The PFS should be produced by Jun 19 and KRS should have converted all CAI performance shares to ordinary shares. On this basis the ratio of KRS held to CAI received will be impacted by dilution of KRS (the number of CAI shares owned by KRS is fixed (more on that later), the number of KRS shares in issue at Jun 19 is not fixed. There are just over 200m warrants outstanding. All massively underwater at the moment at roughly 0.5p = £1m to KRS when exercised. Some time before Jun 19 the market will wake up and it should be assumed that all warrants will be exercised when profitable to do so / before distribution of CAI shares. The current ratio is about 3 KRS to 1 CAI. The price of CAI shares at Jun 19 is undetermined. If the resource and PFS is as expected in the base case, then they should be well ahead of where they are now, but further funding will be required to move from upgraded resource towards the end on 2018 to PFS by Jun 19 hence more CAI shares will be issued. It is possible, but fairly unlikely that KRS could take part in this placing. For the sake of the base case, I am assuming 3 to 1 and CAI share price of 5c (ie just above where it is now) as a more realistic price above 5c would counter balance a less favourable ratio. The reward per KRS share is therefore 1.7c or 1p at current exchange rate (there is always exchange rate risk and price of gold risk which we can all assess for ourselves and I will not cover further in this assessment).

In the base case I have assumed no Mn Licence and nothing on Co/Ni or any new projects. There is clearly potential large upside to this. Mn is currently at $6.8 dmtu FOB Port Elizabeth and we have been told KRS could produce, within about 9 months, at less than $2 dmtu FOB Lome. The upside from CAI price being significantly higher than 5c is obvious. KRS holders will have a choice in Jun 19, they can sell their KRS shares before distribution or they can take the distribution and sell CAI on ASX or they can hold CAI for further upside. If none of the other projects are moving, then I would suggest KRS does a solvent liquidation and ceases trading on AIM shortly after distribution, but that is very much TBD at the time. In the base case, I assume all reward comes from CAI and nothing from the remainder of KRS.

Having established the base case reward - 1p, and cognisant of the upsides, it is time to look at the risks.

We only need to look at the risks of base case not being achieved.

These are:

PFS not completed by Jun 19. Possible, but they would still have 1 year to complete before the performance shares lapse, so we are talking about a delay in the reward not a reduction. I would guess the distribution would be delayed until all performance shares have been converted to ordinary rather than do 2 distributions.

PFS shows project is not economically viable. From what we know from drilling so far this is possible but highly unlikely. This is the risk to consider as more drill results are released. There is nothing that we can do other than take a loss on selling KRS before Jun 19 to mitigate our exposure. The impact of this risk materialising could be total loss of all reward, though some of the other potential upside outside the base case could replace the full reward and more.

KRS Dilution. The warrants have already been mentioned. If they are all exercised in the right sort of timeframe, I do not see a need for dilution to keep the lights on at KRS, which is effectively in hibernation. Should the Mn licence be granted, funding will be required and there are a number of ways that can be achieved. I think it is fair to assume that any dilution at PLC level will be more than matched by the increased reward. The problem is whilst the market continues to ignore us, warrants won't be exercised as they are underwater and a long way from being time expired.

When I had a quick look at the results, the cash position was as dire as expected. It has had a small top up placing since, but will not last until Jun 19. I read the full annual report in more detail on Fri. The first thing I noticed was it kept talking about company rather than group, indeed group figures are not even there. The group figures would be consolidated, so money owed by subsidiaries balance out with money due into the company. The company figures have a current asset of about £1.4m against loans. These loans are zero interest, supposedly payable on demand by subsidiaries. One of those subsidiaries owes £1.2m. It has been disposed of for nil consideration, presumably to other shareholders of the subsidiary, but it is owed money from those shareholders in excess of the £1.2m owed to KRS. So the question I asked DR, which he has not responded to but I will let you know what he comes back with, is: If KRS demanded repayment, would the money actually arrive? If the answer is yes, then I see the KRS dilution risk as zero.

Please come back on any of this in a constructive manner - this is a discussion board. I am going to the AGM and will try to get as much detail as possible to further inform this. But for now this is how I see the risk / reward case. I have not fully decided whether I am going to take advantage of the market ignoring us and top up on my 19.5m shares, but I have liquidated a position in another stock so I could do so. Really I ought to keep all this to myself, but I value other opinions.

[andylee3] 03/3/2018 20:00

Thanks RS, please share.....

[rec0very stock] 03/3/2018 11:50

andylee,

I agree. The rainbow chasers have no real idea about risk reward balance. They overestimate the reward and underestimate how long it will take for the reward to be realised, whilst ignoring / underestimating the risks. I am waiting on an answer from DR on a minor point I picked up on in the annual report. Once I have the answer I will post what I see as being the risk reward case for this share. I have also had some thoughts on how to bring it to the attention of the wider market, but as I am also thinking about whether or not to add to my 19.5m shares so I don't want that to happen just yet.

[andylee3] 02/3/2018 23:51

Either way zhockey, it doesn't't matter to the likes of you or me does it?

At some point they WILL know and WILL care, by that time we will have accumulated more shares at low, low prices.

Keep faith in your own research whilst others chase rainbows.

[zhockey] 02/3/2018 20:48

Folks either don't know or don't care about this stock.

[rec0very stock] 02/3/2018 14:29

I have booked the day off on 29th Mar. Hope to see some of you at the AGM.

[rec0very stock] 01/3/2018 19:39

On a P/E of 2 and at 60% discount to NAV. Anyone looking at those headline figures would assume there must be something badly wrong.

Cash position is not great, but as expected. They will need to raise more cash by a placing at some point. But that should be no surprise, at least cash burn has been cut to the bare minimum.

They clearly decided not to book as much profit as they could have - all the comprehensive income could have been booked as profit. They will be able to book more profit at interim stage and this time next year because they did not book all they could have in one go (would have been very silly to book all of the profit as they would have had to pay tax, as it is they still have retained losses to use).

How much longer the opportunity to buy at bargain prices will remain is anyone's guess.

[4sta] 01/3/2018 10:13

And that was at 30/09/2017 - before we were awarded the 241 million extra Calidus shares on the resource upgrade in December 2017. When will the masses wake up to the opportunity we have here?

[bumpa33] 01/3/2018 08:43

NAV 0.97p. Nice to know, while the market continues to snooze here.

[dreamtwister] 20/2/2018 21:52

hi,scouting for manganese miners on the lse and came across krs but it seems manganese is on the back burner due to tensions & the focus is on the gold,may i ask if any posters know of any other manganese miners listed on the lse,

tia for any response,but ill read up on krs and i may become a investor....atb

thanks for posting

andylee3
10 Feb '18 - 09:19 - 1378 of 1386
0 0 0
Okay, so I did my usual 'what's happening in Togo' email to Mr Reeves.....

[andylee3] 20/2/2018 14:49

DR interview...

www.audioboom.com/posts/6683421-keras-resource-krs-african-battery-metals-abm-widecells-group-wdc-and-alan-green-on-imm-kaz-and-ura

Take a listen, it just gets better IMHO.

[bumpa33] 20/2/2018 07:14

excellent - heavyweight management appt. at CAI.


Mark was previously Managing Director of Papillion Resources and was instrumental in the US$570m takeover of Papillion by B2Gold Corp in October 2014. Prior to Papillon, Mark was Chief Operating Officer of Endeavour Mining Corporation, following its merger with Adamus Resources Limited where he was Managing Director and CEO. Mark was instrumental in not only the merger, but procurement of project finance and the development of the Nzema Mine in Ghana into a +100Koz pa mining operation.

[andylee3] 16/2/2018 07:26

Courtesy of Schoolboyknows on the LSE BB....
www.resourcesroadhouse.com.au/_blog/Resources_Roadhouse/post/calidus-resources-advancing-pilbara-gold-project/

Read it, it will remind you why we're still invested here!

[andylee3] 15/2/2018 22:53

Well, if you ever needed confidence that things were going well....

www.investi.com.au/api/announcements/cai/643143bd-47e.pdf

Mr Reeves is putting his money where his mouth is.

[zhockey] 11/2/2018 16:38

I don't really understand why the licences are dependent upon resolving the political conflict. Surely the government want business and investment to continue?

I understand some of the discontent is arround unemployment, surely opening a new mine would be a popular move?

[andylee3] 10/2/2018 23:42

Agree, but all the focus is on Oz gold and rightly so.

Then if the license drops, it's a bonus.

GLA

[zhockey] 10/2/2018 19:36

That's not great as the situation there could take years if ever to resolve. I think we should write the assets off in terms of valuation.

[andylee3] 10/2/2018 09:19

Okay, so I did my usual 'what's happening in Togo' email to Mr Reeves.....

"Trust you are keeping well Dave?

Congratulations on the continued successful Calidus drilling campaign and results so far....great work.

On another note, came across this 2018 economic study of Togo....

www.coface.com/Economic-Studies-and-Country-Risks/Togo#

Interesting read, though no mention of Manganese mining.

Notice this unrest over there seems to be coming to a head too.

Understand the two sides are getting together for talks on the 15th February, not sure how that will pan out.

Clearly all this unrest is not doing us any favours with regards the mining license.

I understand your priorities are with Calidus and gold at the moment, but has there been any recent developments in the background with regards Togo?"

Cheers,
Andy

Dave's response....

Andy

"Thanks for the email and the kind words.

There are some things happening in Togo that we will report to the market shortly. As you rightly point out though, I cannot imagine any resolution until the political situation is clearer."

Regards

Dave