Van Dieman Mines Share Discussion Threads

[daz] 24/8/2007 10:22

Just looked again at the Fox-Davies note, they mention a Nov 2006 capex estimate of £6.9m for each operation, which with mining inflation will have increased further say by 7% to £7.38m.

Using a 3:1 debt/equity split, that works out at £1.85m from the equity component.

If you assume that 50% of the recent net placing money £0.656m/2 = £0.328 can be subtracted that leaves £1.52m to be raised as a minimum.
A rights price of 8p would require approx 20m shares to be issued, roughly 20% of the shares in issue or a 1 for 5 rights issue.

I would emphasise this is the minimum just to get Scotia operational, they may need to raise additional working capital and fund further exploration development.

Although the sum to be raised is small in relation to other fund raisings, it's reasonably significant given the size of the company.

The shares may fall further nearer the fund raising and are unlikely to do anything until production starts at the end of the year. That said they look good value for a near production company, so I will hold at these levels on a one year view.

[mikehardman] 24/8/2007 09:25

got my eye on this one, crept back further onto my radar after today's nice resource stmt

good to see familiar names here - thnx for your valuable commentaries

[jonwig] 24/8/2007 08:42

The TMF write-up is good knockabout fun, but remember when reading it that he wrote after selling his shares.
I decided, on the train home, that I wouldn't be selling on the basis of the day's events.

I think he overdoes the drama - only one investor took such a strong line (insti: New Star A M). Other concerned questioners were more supportive of the board in its attempts to move the project forward.
However, it does seem likely that MS will resign at some point as part of the price of getting a fundraising off the ground.

Equity, debt? Nothing was mentioned, nor the amount. Complete equity funding to the extent of, say, 50% dilution could be offset against possibly a 50% uplift in the project's value.
On the other hand, long-term debt might need to be accompanied by an equity stub (ie. essentially convertible bonds).

There was, actually, one very attractive young lady in the room (KL, maybe? - shall I approach her?) but she was there as the company lawyer...

As for cashflow, the 100 × 200 litre drums of concentrate mentioned in the annual report have a market value not far short of £500k.

[daz] 24/8/2007 08:22

KL
Might be wrong but I don't think they need to raise too much equity if any. The IPO only raised £3.3m, so I doubt they would need more than that. With a 3:1 debt finance/equity split, it wouldn't amount to too much.

All,
Couldn't find the AGM presentation on the website, has anyone had any luck?

[wassapper] 24/8/2007 07:48

Jonwig et al - thanks for your agm comments. Could not make it. 24 is a VERY good turnout for an unknown company!

Just a point, I think now is a VERY good time to raise money if the plan is good. Every day through this 'crisis' miners have announced successful fundraisings. Rio at the top of the scale with $40 bn.

There is plenty of money for good projects that will bring a good return. If VDM fits into this category then great. It is a pity the share price is so low.

[eggbird] 24/8/2007 07:09

VAN DIEMAN MINES PLC


PROJECT UPDATE

JORC resource in-situ value A$1.3 billion


Van Dieman Mines plc ('Van Dieman' or 'the Company'), the AIM listed mining
company which is developing 100% owned tin and sapphire mines in Tasmania,
announces an update regarding its Tasmanian projects. The in-situ value of the
revised JORC resource is in excess of A$1.3 billion*.

At the Annual General Meeting of Van Dieman Mines plc presentations were given
to shareholders, these are available on the Company's website
www.vandiemanmines.com.

The reserve base is being reviewed continually as additional data is received.
In order to comply with the JORC code, the grades and pricing for the ancillary
products to the tin resource, primarily sapphires and spinel, are conservative.

The Company has also formed a joint venture with Columbia Gem House, V.
Columbia, to market the gem stones. The sapphire market in the USA is growing
and world prices for gem stones with provenance are currently increasing.

JORC Resources Statement

JORC Volumes (mn bcm) Tin Sapphire
Resource
Measured Overburden Ore Grade Contained Contained
(kg/bcm) (t Sn02) (mn cts)

Scotia 24.86 5.32 1.30 6,916 10.64
Ringarooma 33.18 6.04 0.89 5,396 12.08

Total 58.04 11.36 12,312 22.72

* based on a tin price of US$12,000/tonne and a sapphire price of US$16.00/gram


The first mine to commence production, around the turn of the year, is expected
to produce approximately 9,700 tonnes of tin and 21 million carats of rough, gem
quality sapphires. The gem stones will be sold to the 50/50 joint-venture
company, V. Columbia, at market prices. Van Dieman will also share the profit
generated by V. Columbia.

When the second mine, Endurance, comes on stream in 2008 production is expected
to double.

The current projects, Scotia and Endurance/Pioneer (Ringarooma) have measured
resources of 39 million m(3) with an estimated in situ value of A$480m. In
addition, the Company has the Great Northern Plains project with measured and
inferred mineral resources of, again, 39 million m(3) and, Offshore Resources of
199 million m(3), containing estimated 27,800 tonnes of tin. This has the
potential to double the output in 2009. The estimated in-situ value of the
inferred and measured resources of the Great Northern Plains are A$470m and of
the Offshore Resources A$440m.


Exploration and development

Over the past year as new data has been analysed the resource base has increased
significantly, as shown in the table above.

Stage 1 of mine development will be completed later this year when the Scotia
Mine comes into production followed by Endurance in the second half of 2008.
Stage 2 is the development of the Great Northern Plains where the measured and
inferred resource is expected to be upgraded in mid-2008. In addition, we expect
to be in a position to produce JORC estimates of the resources at the Pioneer,
Monarch, Wyniford, Boobyalla and Offshore tenements during 2008. The Directors
estimated planned development programme is set out in the presentations
available on the Company's website.


Clive Trist, Managing Director, Van Dieman Mines, commented:

'I am very pleased with the progress that we have made in developing the
resource base. We have one mine about to commence production with two others
scheduled to come on-stream in 2008 and 2009.

'We are continually adding to our knowledge of the resource, which now has an
in-situ value of over A$1.3 billion, and expect to be in a position to further
increase the JORC figure later this year'.

[vanbrussel] 23/8/2007 23:53

Daz, wasn't at the AGM. The post was retrieved from the first NR.
But I have to say we have excellent connections with
London City Airport from my hometown Antwerp
Departure at 07:55 Arrival at 08:00 for £25, can't take a cab for that

[daz] 23/8/2007 23:26

VB/Jonwig - Didn't realise other posters were going to be there as well, would have been good to chat but perhaps next year, although there might be a queue longer than the one for the London dungeon after todays entertainment

Excellent and very amusing summary of the AGM from Colin on TMF, well worth a read.

[bo doodak] 23/8/2007 21:56

Thanks for the info Daz/Jonwig.

[wiganer] 23/8/2007 21:17

Thanks for a balanced summary jonwig

[jonwig] 23/8/2007 19:06

Hello, VB, Daz,

thanks for your summaries of the AGM content, etc. Sorry I didn't have chance to meet you or talk at the AGM - I was busy buttonholing directors, then missed my train!

I counted 24 present plus 4 directors - quite a lot!

A few points to add. First, strange that the share price dropped at 1pm (when it finished) yet there were a few buys in the afternoon, maybe based on the statement issued at 1:15, which was pretty positive.

The meeting started with a welcome from Chairman Michael Spriggs followed by a very interesting presentation by MD Clive Trist. This will be put up on the website soon, he said.
One shareholder interrupted here with a comment about the share price, and CT got his retaliation in early ... we're aware that the website and general communication aren't as good as they could be - we're planning an overhaul of the website, etc.
I won't go into detail about the presentation (since it should be available soon), except that he went into more sapphire detail than tin detail! Sapphire seems to be the exciting thing...

He also clarified that the six-year offtake deal with ThaisArco begins with the first shipment, not from the date of signing. (I planned to ask that.)
Tantalum content will be recognised and credited to VDM.
JORC resource figures from other tenements are to be updated, and results published 'shortly'.
From the geological pictures shown, I suspect there will be a considerable uplift here.

There was then a presentation from Neil Kinnane, the Expl & Opps Director. Whilst he knows the ground, knows his workers and knows his job, I don't think he knows what questions shareholders want to ask, or how to answer them.

The elephant in the room was, as already mentioned, the need for further fundraising. CT refused to be drawn on size, but said it was being negotiated, and an announcement would be made in due course.
This is, of course, an ideal time to raise more funds in the market!!

Over coffee, I asked NK about breakeven costs - he didn't seem to spot the urgency of my request, but the figure would probably need to be revised upwards to around $8,000/t. That's not surprising.

I also had a brief talk with Kenan Frey, the Marketing Director. He's also very enthusiastic about sapphire, and seems to be the driving force behind the JV for cutting and marketing. Spinel is on the back-burner at present.

So, it's push/pull...

Positive: the potential (more tin, super-sapphire) is greater than previously thought;

Negative: can they raise needed funds and on terms which won't be too dilutive for existing holders.

My verdict - I'm holding. But the balance is pretty horizontal IMO.

[daz] 23/8/2007 16:36

Went to the AGM as well.

While some good things were said about the sapphire JV and the plans for the other tenements, it could be overshadowed by the financing situation.
The board were asked several times, following the auditors comment in the annual report, whether they had enough cash to bring the mine into production. The board wouldn't answer and just said that they hoped to make an announcement soon - as per the AGM statement.

I think if they just wanted more cash just for expansion they would have been more forthcoming, so the silence I think indicates finance is needed to bring the mine into production, which is not totally unexpected of course.

The main permits have now been approved for a couple of months, so I'm not sure why it's taking so long to agree loans with the banks, especially as takeoff agreements are in place with Thaisarco (tin) and Columbia House (gems).
After recent events the delay in getting the loan agreed is likely to mean they have to pay a more punitive interest rate and forward sell a large proportion of the tin output, which could affect returns.

The directors near 40% interest in the company though gives them every incentive to get the mine up and running and profitable as soon as possible.

Some institutions are obviously very unhappy with the company as the chairman was asked to resign over the lack of communication and perceived mis-information!

[vanbrussel] 23/8/2007 13:40

AGM-highlights:

1. Considering undertaking a secondary fundraising
2. Endurance should be in production in late 2008
3. Board strengthened:
- Ron Goodman has a background in processing plant design and plant management
- Mike Etheridge has excellent geological and technical qualifications

-----------------------------------------------------------------------------

AGM Statement: Development approval for Central Concentrate Clean-up Plant received

Michael Spriggs, Chairman, Van Dieman Mines plc ("Van Dieman" or "the Company"), the AIM listed mining company which is developing tin and sapphire mines in Tasmania, made the following comments at today's Annual General Meeting:

"The year has been one of frustration as unexpected delays in the permitting procedure, the majority of which were outside the Company's control, have held up the project by almost 12 months. The Board fully understands the disappointment of the shareholders. However, I can assure them that their concerns have been listened to and that everything possible has been done to ensure that we can move quickly, now we finally have in place the permits relating to the Scotia mine. Final development approval was granted in June.

"We have used the delay to refine the equipment in order to improve efficiency, to define better the parameters of the mine operation and to put in place marketing agreements for the tin, sapphires and spinel production. Further resource exploration has been carried out.

"The local Dorset Council has now issued the development approval, which will enable the Central Concentrate Clean-up Plant to be commissioned and allow us to commence processing stockpiled bulk sample concentrates produced from the operation of the pilot plant.

"Initial processing of these stockpiled concentrates over the next three months will enable the company to fine tune the clean-up circuit and will result in the production of an estimated 10 to 15 tonnes of tin and 6,000 to 10,000 carats of corundum. This material is expected to yield somewhere in the vicinity of 1,000 to 2,000 carats of sapphire.

"All necessary plant and equipment has now been sourced, staff are in place and construction has commenced.

"Permitting for the second mine, Endurance, is proceeding well and the mine should be in production in late 2008.

"In line with the Company strategy as outlined at the time of the IPO and as stated in the latest Annual Report, the Company is considering undertaking a secondary fundraising in order to meet the commitments as outlined above. A further announcement will be made regarding this shortly.

"We have also taken the opportunity to strengthen the Board. We have recently announced the appointment of two complementary Non-executive Directors, Mike Etheridge and Ron Goodman. Mike has excellent geological and technical qualifications and is also a proven businessman with plc Board level experience whilst Ron has a background in processing plant design and plant management. We are very pleased that both have agreed to join us and look forward to receiving their input."

[wassapper] 21/8/2007 13:43

We have seen these speculative corrections in other metals over the last few years. "It is the end" ... "LME stocks rise" ... yes they do but then they decline and metals proces rise again. The fundamentals have not changed,

Demand - CHina et al
New supply - always delays
Legislation etc - tin to replace lead for solder

Keep the faith and keep buying if you agree with the above analysis. DYOR.

[goingnowhere] 20/8/2007 09:33

its a shame they're not digging anything up yet!!

[papalpower] 20/8/2007 09:15

Tight Supply Prompts Chinese Tin Price Hike in July

By Ginger Ding
17 Aug 2007 at 10:19 AM GMT-04:00


SHANGHAI (Interfax-China) -- Strengthened government policies on domestic tin smelters and miners have led to tight tin concentrate supplies in China and placed pressure on tin smelters, pushing up domestic refined.................................

[daz] 17/8/2007 16:12

Yes, tin price is down but I think the company is going to make more money from sapphires, though not sure quite how much.

Managed to get a few more yesterday. I just hope they can raise the necessary finance in the current climate.

[jonwig] 17/8/2007 09:40

Tin price comment from a China perspective.
As suggested in other commentary, spike since end-July was speculation-based ... now being unwound, I guess.
Nevertheless, continued tight supply persists:

[jonwig] 16/8/2007 12:21

New Non-Exec Director - looks to have street cred:



let's hope they don't have to pay him too much. Maybe he'll take shares in lieu?

[nigthepig] 10/8/2007 18:43

vb- thanks, that sounds quite reasonable.

[jonwig] 10/8/2007 09:15

Thanks, VB. A bit of cheer needed!

[vanbrussel] 10/8/2007 08:56

Fox-Davies Broker Report Update 1-AUG-07 (available on Minesite)

With near term production, we believe the Company offers significant value compared with the current market cap. With many of the obstacles of the past two years now overcome, upside is offered once the first two operations are in production, with further value expected to be generated from the third operation.

Upside comes from uplift in sapphire prices. Rough prices modelled are a conservative US$3.20/ct, with upside achievable by undertaking cutting. This will be done through a 50/50 JV with cutting company Columbia Gem House (CGH), under which Van Dieman Mines would recognise 50% of the uplift in value. Branding is important, with CGH championing 'fair-trade' gems. Sales of ancillary gold, spinel (black gemstone), zircon (industrial mineral), tantalite (tantalum ore), rutile (titanium ore) also offer value. In addition, by its nature the JORC sapphire grade is a conservative base-case, with an increase in grade potentially achievable.

Risks involved include further delays in permitting the second operation, although we believe this is mitigated by the fact the first operation has now been permitted,setting a precedent for both the permitting process, and for alluvial tin-sapphire mining in the region. Also, whilst we believe upside is offered in sapphire grade, as for any alluvial operation, there is a risk that grade may not meet expectations.

[red river 1] 08/8/2007 23:19

Looking good as far as I can see, added some more last Friday and if it dips further I will add again. Rather strange movement today given one small sell!

[jonwig] 08/8/2007 15:55

JMB - thanks for the confirmation.
I should have read the RNS more carefully first time, but had a fixation on the number 1,500 tonnes.

Tin price topped $17,000 yesterday on the LME.