Premier African Minerals Share Discussion Threads

[ihavenoclue] 30/1/2018 20:10

Yes Bull ... it is currently killing a one bag :)

[vitec] 30/1/2018 18:48

Bull, every time I go away there is some action. I am relaxed my friend as I am going to be spending 5 weeks in the Caribbean and the USA, so no complaints from me. I am going to forget about PREM and not be tempted to check the share price I will not be able to set any orders for 1p as the share price is so low my broker will only accept orders at a maximum of 150% of the current share price To that end Bull you are correct that I could do with the share price being double its current status.

[jungmana] 30/1/2018 18:43

Today i will take a 2 bag from here . Had enough of George and his endless stories.

[the bull] 30/1/2018 18:38

I would imagine vitec could relax on his hols if it at least got back to 0.4 after the recent dissapointment

[the bull] 30/1/2018 18:36

just a one bag at the moment would lower my blood pressure, or is that two bag to double, yes two bag then

[ihavenoclue] 30/1/2018 17:57

Doctor ... if PREM 20 bagged from here it would still be 40% below the estimate in July 2017 of what PREM would be worth in a year.

[vitec] 30/1/2018 13:02

Tedoby that would fit with George being advised by a close friend not to separately list Zulu. We know who the close friend is and if Circum was to have a corporate event then PREM would not need a separate listing or monies from a JV partner even though I would like to see some other mining expertise imported into PREM.

[doctor 69] 30/1/2018 09:53

Tedoby Thanks most helpful . With time prem will 20 bag

[tedoby2] 30/1/2018 09:45

Circum as a private company understandably operates under stringent privacy policies. What that means for us as shareholders in Prem and indirectly in Circum though in the main is that we have great difficulty in obtaining the basic information we would normally be given and would normally need before investing. Understandably that can be a little frustrating at times.

At the meeting last week there were questions and answers following a brief update by GR on each of Prems three main assets RHA Zulu & Circum. But when it was time to talk about Circum GR seemed to me to go decidedly coy. Prem was then and is now almost certainly in a "close period" and as such GR was restricted in what he could say to those in the room. Whilst I was aware of that even so he seemed overly cautious to me at that juncture and I don't think I imagined it. I saw him fidgeting before saying words to the effect "I'd love to tell you all more if I could but I can't. I just can't". He said it more than once. So I was left wondering why would he be feeling so awkward about discussing it when he seemed far more relaxed when talking about everything else.

I can only think of one reason and that is that Circums impending "corporate event" (in whatever form that may take) isn't far away now. I know we've all heard that many times before but lets look at what we know on timing with perhaps one or two reasonable assumptions thrown in to see if on the balance of probability this time it may be right.

Circum was awarded the Mining Licence for their Danakil Mine in March 2017. I believe the Mining Licence was the last of three of the prerequisite permits before starting. From that I've formed the view that permitting couldn't be the cause of any slow progress or delay - if indeed there is one. In its license applications Circum would have been required to submit details on timing. Financing would also have been an integral part of that and raising it one of the main milestones agreed. Permitting would have been issued conditional upon Circum adhering to the agreed timetable so I'm firmly of the view that the Ethiopian government will be monitoring progress very closely indeed.

We know that the Ethiopian government has a considerable vested interest in the mine and as part of the normal protocol I've no doubt they will be having regular meetings with Circum to ensue all things agreed are going to plan. I feel sure they won't be accommodating any slips and the posibility having it's licensing rescinded because it's running behind an agreed schedule will be the last thing Circum wants. This isn't a case where the government have said "Here's your License now get on with it" you can be sure of that.

We also know that Morgan Stanley have been engaged in March 2016. Originally to conduct a strategic review of the project. But then a few months later in the summer last year they were also instructed to look for a suitable strategic investment partner for Circum.

Previously by August 2015 Circum had received several approaches from suitable partners with particular interest from China but whether they've fallen by the wayside now we're not told. I suspect not and who knows Morgan Stanley could well be short listing suitable partners as I write otherwise I think we would have heard there was an issue. It's a case of an awful lot's said by silence here.

The $30m finance raised from the last Circum placing to pay for local infrastructure costs could well be running out by now and that could be putting additional pressure on Circum to raise the main finace needed for the mines Capex . This is what Circums COO Chris Gilchrist said in June "Moving forward, the project has now reached a critical point - and requires a strategic investment partner to help fund its construction and development". Emphasis placed on "now"!

The fact that GR has stopped acquiring Circums shares should not in anyway be considered as any indication on timing in my view. The arrangement has always been a share swap and GR doesn't have sufficient shares to trade at the moment. Moreover perhaps at the current share price level the proposition doesn't look particularly attractive.

So what could Circums Danakil project be worth and moreover what could Prems investment in it be worth in Prems share price terms. Well that obviously would depend upon several fundamentals not least of all the market price of MOP & SOP at the date of valuation verses Circums costs & production rates

I'd like to share several ways of valuing Prems investment in Circum in share price terms at three different times in Danakils development. One at the time of an IPO or an outright sale - in theory they should be the same. One when the mine will be producing it's initial target of 2mt's MOP and 0.75mt's SOP in say 2022. And finally one when the mine is producing 5mt's of potash of the same proportions in say 2024 which in fact is also a milestone noted on Circums website.

Other than an outright sale I've assumed Circum will enter into a 50/50 j.v. with a strtegic partner. I've also assumed DenakilCo's AISC's will stay the same as will the sale prices of potash which are roughly $230/t for MOP and $270/t for SOP at the moment I believe.

I'm aware there are several ways to value the mine and the most appropriate will depend upon what stage the mine is at in it's development. I am going to do my best to show three. Firstly the simplest one calculated on the "in-ground" value of the resource. This is the least accurate and of little use in my view but still worth a look. Of the other two one is based upon a "earnings metric" principle but discounted because of timing and the other by benchmarking a DenakilCo against similar companies.

The total measured and indicated resource that's currently NI43-101 compliant is 2.8bnt's of MOP & SOP combined. Although studies have suggested there is a total 12bnt's on site for the purpose of an in-ground valuation the uncertified quantity shouldn't be counted at present. A Danakil mine valuation on this basis could be said to be combined resource x ave price of MOP & SOP x a factor of say 2% (2.8bnt's x $250/t x 2%) which would give us $1.4bn (for an IPO or sale price in the near future).

Again for an impending IPO or sale a valuation using a discounted earnings metric could look something like 2.75mt's x say ($250 - $120) x 10 x 40% = $1.4bn. 10 is the P/E ratio I've used and 40% represents the discount for timing assuming a ROI of 30% is reasonable. The other figures represent revenue and AISC's. The results from the two calculations so far are notably similar and would produce an immediate revenue to Circum and Prem of roughly $14 a share for which Prem effectively paid $1.50 for it's 5.2m or so.

As an operating mine in 2022 producing 2.75mt's of MOP & SOP using an earnings metric the valuation may look something like 2.75mt's x say ($250/t revenue - $120/t AISC's) x 10 = $3.6bn. Using this example Circums share in a 50/50 j.v. would therefore produce a notional Market Cap for it of $1.8bn and a comparable share price of roughly $18

As an operating mine in say 2024 producing 5.5mt's of MOP & SOp combined on an earnings metric basis the valuation would give us approximately $6.5bn. Using this example Circums share in a 50/50 j.v. would therefore produce a notional Market Cap for it of $3.6bn and a comparable share price of roughly $36

Finally to the one I believe Analysts would favour i.e benchmarking using projects where costs and values have already been determined. Circum has already done the exercise and Prem RNS'd this information in December 2015. The benchmark came from Liberty Mutual Insurance's ("LMM") investment inYara Dallol ("Yara") which although a much smaller project neverthelss is a useful comparison. I don't intend to repeat the details but extrapolating those details would give Danakil a valuation of at least $1bn for an impending IPO or sale

So to summarise having done the best I can to research and value Danakil three different ways at three different timing points I have a feeling the "corporate event" we've been waiting for could happen any time soon.

I believe the launch price of an IPO or an outright sale could be anything from $500m to $1,4bn which would put the price of Circums shares at anything between $5 & $14 each (Prem owns over 5.2m shares at the moment).

I also believe we could be looking at a "DanakilCo" Market Cap of around $4bn by producing 2.75mt of potash in say 2022 growing to a Market Cap of roughly $8bn in say 2024. Based upon a 50/50 j.v. That would give Circum a notional Market Cap of $2bn in 2022 and $4bn in 2024 in a 50/50 j.v. if I'm right and it all goes to plan.

Under the circumstances Prem could receive as much as a $70m cash injection if it sells its current holding after the "corporate action" or alternately roughly $100m contribution to its Market Cap by 2022 and over $200m on the same basis by 2024. That is if Prem keeps its current holding. If Prem increases it these figures would be proportionately more in theory. Prems investment cap in Circum stands at 12% I believe.

AIMHO and just my view which may be of interest FWIW

GLA

[doctor 69] 30/1/2018 09:21

My 500 k just moved peel off0.22

[doctor 69] 30/1/2018 08:12

ReasonBle buying this morning . 4 on the bid but peel hunt must have some stock to shift . However once peel comes off the offer , could move up nicely . News should be good this week ,

[ihavenoclue] 29/1/2018 12:54

Wally ... I don't believe the MM's accumulate any shares like PREM.

It's just that everyone who wants out is now out and the selling seems to have dried up (thankfully) but nothing at the moment to give any upward pressure IMHO

[tedoby2] 28/1/2018 12:54

What's this? Two Doctors acknowledging my post in a positive way - one after the other!

I'll have to do it more often! Ha ha.

Thanks guys.

GLA

[dr jekyll] 28/1/2018 11:41

tedoby2, you have improved my morning with that post :)

[doctor 69] 27/1/2018 17:56

Tedoby. Excellent

[turbotrader2] 27/1/2018 16:54

Some of us are bullish

[tedoby2] 27/1/2018 09:29

GR has confirmed that RHA has a loan account with Prem Afr and most of us know that. As far as I'm aware no one knows what that is in $ terms and it's constantly moving. As at the end of December I believe it was around $22.9m having done the research so for the sake of a figure lets say it's $23m. Therefore using that figure NIEEF as the majority shareholder are indebted to RHA to just less than $12m ($23m x 51%) and the balance is owed by Prem's subsidiary company.

As security GR has ensured that Prem's subsidiary company registered in Mauritius is ring-fenced and the debt has been registered as a "senior debt" facility within RHA all to protect Prem Afr and our investments as much as possible.

As I understand it RHA's route to profit could be quite quickly achieved by improving access to the underground stopes prime ore bodies and from there to the conveyors at relatively little cost. GR has confirmed that this week.

But he and others think there's benefit to be had by third party experts continuing to appraise and advise on ways to further improve the mines performance and life cycle costs. That clearly is going to take additional investment but at the moment he considers it could be money well spent. Why produce say 10,000 MTU's APT per month from the combined source of pit and underground when 12,000 MTU's can be achieved at less cost with a little more planning and careful investment in a rising Tungsten market being the philosophy.

At a 10,000 MTU's APT per month the mine should be making around $12m p.a. gross profit at todays European Tungsten prices and that extrapolated could be nearer $18m at say a 12,000 MTPU's monthly run rate with economies through scale and life cycle cost savings.

As I understand it having had constructive discussions with NIEEF Prems subsidiary has put forward a formal proposal to NIEFF to change the ownership structure in RHA in it's favour in exchange for discharging all or part of NIEFF's debt and to bring the mine back into operation as soon as possible.

At the same time I believe a suitable strategic partner has been short listed who is prepared to invest in RHA as a new joint venture and who has the necessary skill set prepared to control it's operation.

The parties don't have to wait for impending new laws to make any changes in ownership. They can be effected very quickly through the existing Shareholder Agreement which I think is very useful to appreciate.

None or very little of this is adequately reflected in Prems share price at the moment in my view. Some see RHA as a "basket case" when clearly it isn't and there's a reasonable roadmap to what could be a very profitable mine.

AIMHO

[the bull] 27/1/2018 00:00

I wouldn't mind a trip out there, could do a bit of biz and check out the assets

[tidy 2] 26/1/2018 19:28

3 times over valued here and that's generous

[the bull] 26/1/2018 14:36

I thought the RHA profit alert may have been due to the % negotiation that is going on, well that is what I hoped. But I read on the LSE board that GR felt he had been led up the garden path. What the hell is going on at that RHA plant, I bet several shareholders would be in a better position to keep tabs on it if the BOD cannot

[dodge city] 26/1/2018 14:31

Good to see that all you "investment experts" are still living the dream here.

lololololol

[the bull] 26/1/2018 14:30

Did any of the posters here go to the meeting? The LSE bb seems more active on PREM and quite a few attended it seems.

[donald tramp] 26/1/2018 14:15

The final nail in the coffin for me was the conversion of $100k that was owed into stock. That move was so transparent it was untrue.

You have to ask yourself if someone can be so absolutely rubbish in making so many business decisions as a CEO of a company or whether all the moves are in fact engineered. Now there is the talk of him "speaking with a friend" and probably not going ahead with the separate listing. I sold out at a loss but it was the right decision, this is a 1 way ticket to a de-list in the not too distant future.

Pwhites post a few days ago was not far off the money, my advice would be take the hit and move on, while you can still salvage something.

GR is the front of house in this charade but he certainly isn't pulling the strings.

I'm not looking to buy back in cheaper before anyone jumps on that bandwagon, take of my comments as you will, doesn't make an iota of difference to me.

Have a good day all.

[dmitribollokov] 26/1/2018 10:06

You're right to take the pain, only going to get worse...