Platinum Mining Of India Share Discussion Threads

[samuelhogg] 16/4/2005 17:52

I never had any sales pitch as mentioned in 13, I did call Cornhill this week to confirm everything was ok with my holding and was told that a lot of people haven't sorted out the paper work so I could increase my holding. I increased from 10,000 to 25,000 shares and was told a client with already 150k worth was willing to mop up the rest!
Also told there may be an article in the Mail on Sunday.

Did you all have to open an E*Trade a/c as well? I already had an account with them but thought that was strange. I never had a 1% dealing fees.

Samuel

[money4me] 15/4/2005 15:39

yes but that's what a lot of people will look to do - hope for a 20% rise on 1st day then take the money

[topinfo] 15/4/2005 12:43

Thats the problem if there is no tie in period they institutions can offload stright away if they mark it up.

[mad4it] 15/4/2005 12:41

I think it will probably open at a decent premium, to let the insiders sell their shares onto fresh buyers, then it'll fall.

But you can never really tell, perhaps it'll maintain a premium to the IPO price, but I doubt it. However I shall be watching closely.

Good luck to all those holding.

[topinfo] 15/4/2005 12:33

Mad4it. It certainly seems like it with this one, theres no way some guy from Cornhills is going to offer me some stock if its that tightly held. This is looking like it will fall at open on Tuesday with the offer not fully taken up. It may well be a good bet for the future but I think I will buy any stock that I want from my Broker on a t20 or t25 basis with no 5% charge and I dont have to pay for stock straight away like you would have to do with Cornhills.

[mad4it] 15/4/2005 12:29

Never believe the talk about how many times a share was 'supposedly' oversubscribed, such talk is usually designed to create buying interest to allow insiders to dump their shares.

EG: Look at GPX, recently: Supposedly oversubscribed 6 times, yet within a couple of days of the IPO the shares were trading below the issues price, after heavy selling into a manipulated first day rise, and there hasn't been the faintest signs of institutional buying now the share is at at discount to the IPO price.

I've seen it many times over the years; pumpy dumpy!

[topinfo] 15/4/2005 12:10

I was thinking of getting into this one but decided against it at last minute, but will watch it when it comes to mkt and see how it fairs. The mining sector seems to be going backwards at present and new issues are being sold cheaper than their issue price after only weeks of dealing on the main mkts. Look at Alexander Mining, Gasol, etc.
Another thing that worried me and please say if you got the same sales pitch but when I rung Cornhill Asset management about the placing this is what I was told.
" The offer has closed and was 4 times oversubscribed to institutions, but we have had a client drop out at the last minute who was having problems transferring money from Switzerland so we just happen to have 100k in value of shares, do you want some. You must pay a 5% commission and 1% dealing fees and you are not tied in and can sell even on first day. Ill email you forms, fill em in send em back etc etc!!!"
If 4 times oversubscribed why is this guy who Ive never ever spoke to, and am not a client yet of Cornhills, why is he offering me stock?
Why didnt they go back to those that didnt get any or didnt get enough and sell it to them.
With the amount I was going to buy i.e £3000 worth, it would cost me £3180 including costs from Cornhill. I suspect that this is not as popular as they are making out as there is no way they would have this much stock left hanging around and I will be able to buy the same company shares through my broker next week, a broker that I trust for the same or less if current flotations are anything to go by.
Did anyone else get the same patter on this one.

[plain vanilla] 15/4/2005 11:31

Rab in the placing, nice vote of confidence.

[money4me] 13/4/2005 18:04

he who dares Rodders, he who dares

[specul8or] 13/4/2005 12:12

I'm in on this one as well, quite heavy too. I received a mail hit saying "this could be the next Asia Energy" and I thought "yeah yeah yeah". Then I looked at the facts and figures and I have to say I was very impressed with what was in the brochure. For what its worth, here's my take on the risks.

GEOPOLITICAL RISK - Unlike some dodgy mining companies this one is based in a fairly stable country so it has limited risk geopolitically.

COMMODITY SPREAD RISK - It has done some prelims on drilling, which indicate potentially huge resources and many different credits which gives us a good spread across different minerals.

PRICE RISK - Its floating at a nicely discounted price. You can never tell what the MMs and speculators will do, but from a fundamental point of view the potential downside is minimal. According to my interpretations from the brochure, on valuation alone, if it proves what it thinks is there it sees this as a conservative 5 bagger, but a fairly good chance of being a 10 bagger. This is before taking speculative upside or further rises of commodity prices into account. Again, I am no expert, but this is how I understand the figures.

EXCHANGE RATE RISK - Pounds/rupees - not sure on this one, but isn't the rupee rising against the pound?

I've got very high expectations on this one. My take is that it seems to be one of the best potential small cap commodity companies around. The risks seem to be mostly covered, and as long as the reserves are proven the upside is indeed huge. Got a feeling this will be one of my best shares of 2005.

Here's to hoping - be lucky!

[money4me] 12/4/2005 19:02

The agreement sets out that PMCI will own 70% of the joint venture and Facor 30%.

Introduction
Platinum Mining Corporation of India (PMCI) has entered into an agreement with Facor to form Boula Platinum Mining (BPM). The agreement sets out that PMCI will own 70% of the joint venture and Facor 30%. The Joint venture 'Boula Platinum Mining' has been established to explore, evaluate and exploit the Platinum Group Elements (PGE's) at the Boula Mine, which is located 120km north west of the state capital of Orissa, Bhubaneswar. PMCI is to list on the AIM market, and is raising £8 - 10million. The funds to be raised pursuant to the placing are to be used, amongst other things to finance a 'bankable feasibility study'.
History
The Boula Project, located 120km to the north west of the state capital of Orissa, Bhubaneswar is an existing mine that has been mining Chromite on a relatively small scale since 1972 by Facor. The operations are also bordered by two other chrome mines to the south; therefore there is substantial infrastructure already in place to support a large open pit mining operation. However, it was not until 1997, when the French geological survey, the Bureau de Recherché Geologiques et Mineres (BRGM) in conjunction with the Geological Survey of India actually tested the site for Platinum Group Elements and concluded some very interesting results.

Table1: Results from the holes drilled by the BRGM on the boula mining lease

Hole Location Depth Inte val Assay (Pt+Pd) gpt
FGH 1 Ganga 171-182.8 11.8m 2.17
FGH 3 Ganga 172-215 44.0m 1.45
FGH 4 Ganga 84-152 68.0m 1.63
FGH 5 Ganga 42-180 138.0m 0.80
FGH 6 Ganga 66.5-219.25 153.0m 0.75
FSH 1 Shankar 45.5-163 117.5m 1.10

Although only 6 holes were drilled, as can be seen from the above table, the presence of Platinum Group metals was certainly proven, indicating a strike length of over 1000m. Since the joint venture was agreed, PMCI has carried out significant research on the site including testing of the 321 holes drilled by Facor over the mine life, and a number of channel samples, and some rock samples

Resource Estimates

As mentioned, it was not until 1997 that a discovery of Platinum Group metals was actually made. As a result there is 24.5Mt of pre-mined material that was initially disregarded as waste by Facor - it is now known that this material contains PGM's, with some spot values of up to 10g/t.

As a result there is 24.5Mt of pre-mined material that was initially disregarded as waste by Facor Indicated asset of $505,600,000 of pre mined PGM ore piles, and In-situ 274,000,000.




March 2005 Platinum Mining Corporation of India
Platinum Mining Corporation of India assets already totalling $779,600,000, against a post money market capitalisation for the company of around £35million, or 9% of the asset.

As a result of the BRGM study 1996 - 1998, there is also 14.2Mt of Indicated/Inferred PGM's, or 680,000 Ounces at 1.5g/t. This implies that working on a conservative estimate of $800oz for Platinum and $200oz for Palladium, and discounting 20% from the market price for these metals, as they are providing concentrate to the refinery and not final product, there is an indicated asset of $505,600,000 of pre mined PGM ore piles, and In-situ $274,000,000. Interestingly, since a certain amount of the information gathered relies on historical data, and the testing of older samples none of the findings can be mentioned within pathfinder documentation as it does not comply to competent persons criteria, implying that with the exception of 14.2Mt @ 1.5g/t equiv discovered from the BRGM study 1996 - 1998, the valuation does not encompass any of the potential PGM's in the ground that research would imply may exist.

Use of Proceeds

Clearly, with indicated/inferred assets already totalling $956,000,000, against a post money market capitalisation for the company of around £35million, or 7% of the asset. The objective is to transfer the value of the PGM's to the shareholders. The strategy to achieve this objective is to complete detailed resource delineation work ultimately leading to a bankable feasibility study and an intended decision to mine by Q3/2006, which should allow for a total re-valuation of the share company.

Other

Alongside Platinum and Palladium, as is common in this type of geology, metallurgical testing has also highlighted the presence of Gold, Ruthenium, Rhodium, Cobalt, Nickel and Copper. Which means that there maybe further potential for significant credits from other metals. Which means that there maybe further potential for production of other metals?

[money4me] 12/4/2005 18:49

I've taken a punt on these ones so roll on the 19th. Hope to see substantial gains. Offer note was positive I felt and will post it if i can

[mikehardman] 09/4/2005 15:34

Well you did ask ! :)

Charts are in; thnx.

[samuelhogg] 09/4/2005 15:02

A lot of that is above me but I will endeavor to take it all in.
Is it worth putting a couple of Platinum charts at the top?
Some can be found at

Samuel

[mikehardman] 09/4/2005 14:40

Subscription to the placing is closed (at least through Cornhill it is closed; I dunno if there are any other ways in, ie. if any of the institutions taking a chunk of the placing are farming out some of it; probably not.

The 'cheap' valuation is 'normal' to some extent, in that all mining exploration plays (ie. whole companies that have just exploration and no production, or exploration projects within larger mining outfits) are valued on the basis of what their assets are worth, discounted to allow for the time to actually getting positive cashflow from those assets - discounted cash flow, or DCF valuation.

Value may also be ascribed through net cash. And there may be various extra risk weightings or lightenings in light of special circumstances - maybe the mining minnow has a statement from a BHP or AAL that they'll stump up to cover any short-term cash flow problems, or maybe there's a BEE issue (Black Empowerment in South Africa), or maybe a sub-contractor has guaranteed to cover costs above a certain amount.

But back to the DCF...

Mineral resources do not start off being a known volume of ore with a certain percentage of target mineral. If they were, they could be valued at:
volume-of-ore-body x average-density = weight-of-ore-body
and
weight-of-ore-body x percentage-ore x value/unit-weight = value
where 'value' could be net value, ie. sales minus all costs.

But in practice, the rocks are labelled with different degrees of certainty that they may contain ore, complicated by factors such as extraction costs. There are different schemes in different parts of the world; eg. Russia does (or did) it differently to the JORC methods (see www.jorc.org); and there are somewhat different schemes for different minerals. The main division is into Resources and Reserves.

To quote:
"Mineral Reserves are a modified sub-set of the Indicated and Measured Mineral Resources (shown in the dashed outline in Figure 1). The conversion of Mineral Resources to Mineral Reserves requires consideration of factors affecting extraction..., including mining, metallurgical, economic, marketing, legal, environmental, social and governmental, and should in all instances be estimated with input from a range of disciplines. In certain situations, Measured Mineral Resources could convert to Probable Mineral Reserves because of uncertainties..."
[ ]

So, the valuation formula gets more complex, but it is still along the same lines.

So you end-up with an asset value.

But you can't convert that into cash overnight
(unless another company acquires your company for cash).

So, you figure out when you're mine is going to start producing, factor in its production rate (which will vary as the mine matures), then spread that future production (ie. net cash inflow) over the intervening years/months to get back to today - ie., you discount the future cash-flow to arrive at a current valuation - DCF.

Not trying to muddy the waters, but:
- as time passes, the ore body will become better-known (through field work and through actual mining), in terms of volume and percentage ore and extraction problems - so the resources and reserves figures will change over time
- extra costs may be incurred on exploration and testing, seeing if the initial ore body is larger than originally thought
- additional minerals may be discovered
- the market value of the mined mineral will change
So - the DCF valuation changes over time.

-- That's all general stuff --

In the case of PMCI...
Cornhill's research note comes up with a figure of $956m for 'indicated/inferred' resources, implying that there is a fair bit of work to be done before 'reserves' figures can be determined. In turn, that implies:
- risk - we don't know what the reserves are going to be until further field work has been done
- time - to do that field work
- risk due to that time factor - we don't know how factors such as mineral prices may change (but we have a sneaky suspicion demand is going to remain high)
There is also risk that, once resrves have been calculated, that the mine will not be economic; ie. the net income will not exceed the cost of production sufficiently to warrant actually building the mine. The bankable feasibility study (BFS) will determine that; that is some way off.

But let's not get scared by all those risks - they are common to all mining projects.
And if you are investing in the hope of seeing some good gains, risk is a complementary part of the package :)

That risk and the nature of DCF-valuation accounts for the big discount in PMCI's initial market capitalization, and hence stock price.

For a more graphical view of resources and reserves concepts, try this:

[topinfo] 09/4/2005 13:29

Is it possible to still subscribe to this offer and why are they valuing company so cheap if it has so many assetts?

[samuelhogg] 09/4/2005 13:24

Nice one MikeHardman, looking forward to see the interest that PMCI attracts.

Samuel

[mikehardman] 09/4/2005 13:10

Mission statement: "To develop India's first world class platinum mining operation."

"Platinum Mining Corporation of India PLC is focussed on bringing India's first platinum mine into production at Boula, Orissa State. The PGM+Gold deposit is centred on an existing open cut mining operation where chromite has been mined since 1972."
"The mine will potentially represent the first major new precious metals mine in India for over 3000 years"
[ from company web site ]


[e-mail].
Started trading 19apr05, after placing at 22p to raise around £14m gross, after which it was valued at £38.6m, following which there were 175,636,364 shares in issue.

Some retail investors will have got in on the placing through Cornhill were also responsible for the placing at Asia Energy's admission to AIM; AEN are also focussed on the Indian subcontinent, and they've done extremely well.

AIM pre-admission document:

AIM admission document:

The Board:
Executive Chairman - Richard Healey
Managing Director - post open - Patrick Gorman interim (Dr. Steve Newbery fired 1jun05)
Finance Director - Malcolm Groat
Health, Safety, Environment & Community Director - post open - Patrick Gorman interim? (Lisa Pickering fired 1jun05)
Director of Operations - Umesh Sahdev
Non-executive Director - Pat Gorman
Director holdings: ~53% (not sure if this is pre or post placing)

Cornhill's pre-listing research note suggests indicated/inferred assets already total $956m, and the market cap, at £35m is just 7% of that - quite a discount. Yes, it is early days, so a chunky discount is warranted, but at the same time, there's every chance that field work will increase the size of the resources.

15apr05: tipped as a 'speculative buy' in www.allnewissues.com
15apr05: coverage in Mining Journal -
16apr05: same tip out via UK-Analyst.com
See post #12 for details; thnx SuperDonkey.
19apr05: coverage on minsite.com -
1jun05: price drop due to summary dismissal of directors Newbery and Pickering (see RNS)