Man.Assd.Csh Share Discussion Threads

[encarter] 26/5/2008 17:58

That looks like a fare price for NL i also like the look of Sonfon and of course Putu will be worth much more once production starts.

News is spreading lots more press

[chipperfrd] 26/5/2008 11:51

Perhaps for a more balanced valuation of the NL Mine I should also offer up the calculated NPV10 at $800/oz gold: it comes to $113m (16.2p/share)

and for $1000/oz gold it rises to $182m (26p/share)

Chip

[chipperfrd] 26/5/2008 11:45

Certainly worth having a debate about valuation as all views are useful!

We can basically divide the assets into 3 areas:

Diamonds (Stellar) - current estimate c £19m but future value unclear (to me)

Iron ore - we now have a clear valuation for AIOG based on the Sevestal buy-in, so we can start at £19m.

Gold - various JVs and large license areas but the most significant project is the NL gold mine

If we use the fully diluted no. shares (317.8m issued + 19.8m options + 20m warrants) it currently equates to 357.6m shares.

So the current value/share of Stellar is 5.3p
and the current value/share of AIOG is also 5.3p
ie 10.6p (which underscores the closing price on Friday)

Now what about the gold interests?
Let us just attempt a valuation of the NL mine which already has a BFS.
We could use a DCF, an earning model, or acquisition values for a first attempt.

The Mining Digest acquisition cost model might be a useful start. It apportions 2.4% of POG for resources at a property at the exploration level;
11.4% at the development stage;
20.8% at the production stage.

At $900/oz POG and 1.95 £/$ forex these equate to 4.3p/share (exploration), 20.6p (development) and 37.6p (production).

Consequently, I get a sum of parts valuation of 14.9p/share currently.
32.6p/share in 2009 (with assumptions of small increases in Stellar and AIOG)
51.6p/share in 2010

But clearly I am apportioning most of the upside to the NL mine and minimal upside from Stellar & AIOG - and nothing for the remainder of the gold prospects.

Using my DCF model (for the NL mine) at $900/oz POG and 10% discount I get 21.2p/share
At 8% discount I get 23p/share
But if a mine successfully moves forward to the production stage one would expect a x1.5 to x2 factor to be applied to the NPV value (ie c 42p/share) which accords to the earlier acquisition cost calculation.

In summary, I believe this iron ore deal is transformational for MANO and there does appear to be a real prospect of realisable upside in the near future.

AIMO of course, DYOR etc
Chip

[rapier686] 26/5/2008 10:19

Various people have come up with various figures in the recent posts. Me, like I said, haven't yet got a firm opinion. But I ought to reconsider and get one, as should you.

[27wilsford] 26/5/2008 09:54

What is a sensible valuation, then?

[rapier686] 26/5/2008 09:52

After holding disappointingly seemingly for ages, it's easy to be jaded and see a spike as something to sell into, without considering afresh what a sensible valuation might be.
Thanks guys for reminding me the thinking cap needs to come on.

[unionhall] 26/5/2008 09:49

For comparison - and where we might be going....





At the end of last year, Arcelor Mittal said the new agreement will bring the country investment of over $1 billion and is expected to generate about 3,500 direct jobs and about 15,000 to 20,000 indirect jobs in Liberia by the time full mining production is realized.

President Ellen Johnson Sirleaf: "With this agreement, which is consistent with the principles that attract and sustain foreign investment in Liberia, it is clear to the international private sector that Liberia is open for business". Lakshmi Mittal, President and CEO of Arcelor Mittal: "We will now focus on getting the job of reviving the mine accelerated." The agreement gives Mittal Steel access to about 1,000 Mt of rich iron ore reserves in Western Liberia. The project involves development of mines, related railway and port infrastructure and provides means for community development.

[encarter] 26/5/2008 07:43

and in the USA.

"Mr Roman Deniskin CEO of Severstal Resurs said "The purchase of this iron ore deposit in Western Africa is a significant step in the dynamic development of the Severstal mining business. From this new region we will supply production to the European and North American markets.""



[encarter] 26/5/2008 06:27

We may get a few Russians buying Mano now.. Mention in the Moscow Times.

"Severstal Buys Liberian Ore

Steelmaker Severstal said Friday that it reached a deal with Liberia's Mano River Resources to buy 61.5 percent of an iron ore deposit there.

Severstal said it would also acquire a 6.29 percent stake in Mano River Resources, which controls African Iron Ore Group. The latter, in turn, owns the exploration rights for the deposit, Putu Range area."

[unionhall] 25/5/2008 10:09

Don't follow me but yes I believe so.

If some anaysts start puttng valuations on the Iron deal it would be a start.

Then we are due the assay results which should dramatically increase the New Liberty Gold reserves and lead to an increased mining plan.

Petra are due to announce the valuation of recent diamond find in Kono as well as a move to full production hopefully. ( They already have about two hundred people employed there last I heard)

The production equipment for Bouro Diamonds is due to leave South Africa this month for Sept/Oct Production start.

Stellar IPO is planned for June.

A number of other projects on the go...

So could be a great six months especially as they are better funded than ever before in Mano's history.

All in my opinion only.....

[rvsy38] 25/5/2008 08:50

unionhall

many thanks for the info.

do you think we are likely to see a substantial rise in London in the near future ?

i have a small holding but am getting tempted to increase it on the back of the announcement.

[unionhall] 25/5/2008 08:44

No - same shares - the Canadians just got a lot more excited and seem to have seen the real value of the deal and particularly the Iron. Perhaps AIM investors don't have many Iron prospects for comparison.

Also the shares in Canada recently have rarely traded more that 10 or 20k in any day so I imagine they are extremely illiquid.

[rvsy38] 25/5/2008 08:30

encarter

I am very puzzled by the discrepancy in the closing prices of Mano shares on the AIM and TSX -V exchanges last Friday.

I believe they closed up around 20 % on the day at 10.5p in London and up around 120 % at 38 Canadian cents in Toronto. This values the Canadian shares at around 20p.

Can you please explain the discrepancy - are they different classes of shares or is it something else ?

[encarter] 25/5/2008 06:38

A bit more press coming through now.

[encarter] 25/5/2008 06:29

Quiet here init. Better make the most of it i suppose before the idiots arrive.

Anyway Chip reading through the statement again, It looks to me like the details of the BFS still needs to be sorted and Mano may have to put their share in. Depending upon what they agree regarding the 38.5% i.e. how much Mano will retain and what their responsibilities will be.

"The SPSA envisages the provision of a facility, by the indirectly wholly-owned
Severstal subsidiary to AIOG, of up to US$15m to fund the Putu Range Iron Ore Project through to bankable feasibility study (BFS). The parties have undertaken to negotiate in good faith and use reasonable endeavours to enter into such facility agreement within 60 days after completion of the SPSA."

"Mano's holding in AIOG will be 38.5% at completion. The parties have agreed to
negotiate in good faith and use reasonable endeavours to enter into a shareholders' agreement to govern the relationship between the parties on or prior to completion."

An agreement regarding the 38.5% comes "on or prior to completion." of the SPSA. So they can sort out the details before hand and when the MDA is agreed they can hand over the cash. Which should easily be in time to finance all NL CAPEX. I think that's what Mano intend and they say as much in the statement

"As well as fast tracking development of the Putu Range Iron Ore Project through to production, the investment into the Company, following the
agreements with Severstal, would accelerate development of the New Liberty Gold Project through to production."

The numbers here are massive and which ever way you look at it Mano have 38.5%. Any further buy out would be worth a great deal more than the previous one. All financing troubles look to be over.

[encarter] 24/5/2008 19:35

"And, in Friday trading, Mano River Resources (TSX: V.MNO, Stock Forum) shares skyrocketed 112% to 36 cents after the micro-cap miner announced that it has signed certain agreements with Severstal's indirect wholly-owned Dutch subsidiary, Lybica Holding B.V. Severstal will pay $37.5 million for a 61.5% stake in the Putu Range Iron Ore Project in Liberia held under African Iron Ore Group, Mano's existing 80%-owned subsidiary. Severstal will also take a 6.3% stake in Mano. "

[encarter] 24/5/2008 14:45

unionhall well done for sticking it out. I paid about 9.5p for mine but i'm sure i'll make i nice profit also.

The diamonds are sorted and now it seems the iron and gold will be too. They shouldn't have any funding problems from now on.

Stellar float is still on for June as far as i know and result from March's gold drilling should be announced any day now so let the good tims roll.

[encarter] 24/5/2008 14:31

chipperfrd yes i am correct and believe most people have missed it. It effectivly doubles the value of our asset even before the real work starts.

The $15m for the BFS looks like part of the deal after that they need to negotiate an agreement. A 38.5% free carry would probably be asking too much but with the demand for iron ore right now it could be possible. Even a lump sum and say 18.5% would be fantastic.

It does say in the statement "As well as fast tracking development of the Putu Range Iron Ore Project through to production, the investment into the Company, following the agreements with Severstal, would accelerate development of the New Liberty Gold Project through to production."

[unionhall] 24/5/2008 13:25

encarter - with you all the way - been in Mano for six or so years I think - first buys at 2p odd from memory.

delighted now if they can realise the various assets sequentially in the next couple of years.

Should start with Bouro diamond production about Sept/Oct....and Kono production announcement in the next month or so surely.

[chipperfrd] 24/5/2008 12:52

encarter,

Good point about the AIOG valuation.
This deal with Severstal is quite transformational as, apart from their 38.5% share of the iron ore project with a substantial partner, they have also secured the equity part of the CAPEX for the NL mine.

They need $59m for NL CAPEX and were expecting to fund 70:30 debt/equity (ie $41.3/$17.7m). For the most part they now have the cash component and can set about raising the debt.

Dusting off my old DCF sheet: with $900 gold and applying a 8% discount rate, I make the NPV $161m and IRR 78%. A NPV10 returns $147m. So the $41m debt should be do'able even in this credit environment!

Of course, I don't suppose any of us are assuming that they will retain the 38.5% of AIOG after Severstal have funded the Putu BFS - their share of the CAPEX would be too significant. So one must assume a further buy-out to reduce their share down to a free carry perhaps. It would be rather convenient if this could largely fund the remaining CAPEX of NL but timescales look wrong unfortunately.
Chip

[encarter] 24/5/2008 11:02

unionhall the price paid for the 20% and 25% was a sweetner. It's what they were worth without the deal. I value AIOG by the last transaction in its shares which will be the issue of new shares to Severstal, £7.5M for 16%. That would value our 38% at around £19m then there's the £6 and £2m and i'm sure they'll take up the other almost £3m. Then we have 19m shares in Stellar which are going for a quid each. Also the gold, lets not forget that. With news due any day i think £5m is a conservative estimate. That's a total of £54m, please correct me if i'm wrong. You can also add on all the other bit and bobs we hold and cash in bank.

We know the iron is there and now we have the means to get at it.
Stellar due to float within the next couple of months and the gold about to come in. We should have an interesting few months.

[encarter] 23/5/2008 22:29

I expected a bit more today. Even the bb has been a bit quiet. I don't think the market has woken up to these yet so lets see what Tuesday brings. IMHO todays news is massive for Mano, it sorts out all of their problems. Their slice of the iron ore should be worth 10s of millions if not 100s of millions. My short term target is 20p.

[rapier686] 23/5/2008 21:21

They're closed now aren't they? Well I tried to flog 25k at 36c in the last 20mins but didn't get filled.

See what Monday brings, the positive aspect of London being closed is we won't dampen the trans Atlantic enthusiasm.

[chipperfrd] 23/5/2008 21:04

It is certainly shaping up as a great arbitrage opportunity. Pity AIM is closed on Monday!

[rapier686] 23/5/2008 20:44

It's top headline on Stockhouse!