Van Dieman Mines Share Discussion Threads

[chipperfrd] 02/10/2007 15:00

28-page note by FDC which helps to put it all together.



I came up with slightly different numbers, but with initial production due very soon, we will then benefit from some actual RoM figures.

Chip

[jonwig] 01/10/2007 19:21

Article on tin market and outlook:

[daz] 30/9/2007 15:06

Andy

Chesterfield Hotel
35 Charles St,
Mayfair, W1J 5EB

5:45 Thu 11 Oct

[andy] 29/9/2007 10:35

Aim,

IS the venue and time known?

[papalpower] 29/9/2007 03:07

Is that "not" or "now".......I take it its "now confirmed".

[aim_trader] 28/9/2007 18:42

VDM have now confirmed they will be presenting on the 11th of October in the West End

[vanbrussel] 28/9/2007 17:53

Production in a fortnight. Waw! LOL!
(Early October + Adds projected per annum estimates from Scotia mine)

Sorry, but my focus is on Africa and even not the easiest part of it.
When I see what damage Tasmanian and paper tigers alike can do,
the whole VDM-story looks Falwty Towers alike
Believe management is going to deliver on their accumulated energy

[daz] 28/9/2007 15:34

KL

Agree with the first point, they should have been ready to go as soon as they got the permits in June, if not rearlie. It's looks like incompetence that they've dragged out the fund raising for 3 - 4 months. They clearly needed extra funding to get the project going and had they raised the money in early July, they could probably have got the placing away nearer 13p.

Re the second point, it will be worth asking management why they didn't use cash flow to fund Endurance, even if it would have meant a delay of 6 months or so. It's likely though that there are some synergies developing one mine after the other for contracted equipment, personnel etc.
I think they are probably also relying on cash flow to fund further exploration as well.

Chip - yes, shouldn't be any tax to pay for a couple of years.

[chipperfrd] 28/9/2007 13:56

Thanks guys - some useful comments.

I am assuming there will be an allowance for losses to offset against tax in the early years, especially after the inordinate delay in production.

[katylied] 28/9/2007 13:18

...First hurdle though is to get into production...

Indeed, but the failure of management is in having to
raise so much capital at such disadvantageous terms,
precisely when their shares are so low...

And I have yet to comprehend, why so much money is
needed right now, just to get Scotia (open cast)
up and running for some cash flow...

[daz] 28/9/2007 13:11

Thanks Jonwig

2% to the landowner is not as much as I expected.

Maybe because I'm still quite new to the company and still optimistic but I think it can multi-bag from here, the company is saying it has an approx £500 against a £15m mkt cap. Perversely the valuation has hit an all time low just ahead of production. This is partly justfied by the need to raise more cash at a difficult time but if Endurance can contribute significantly to revenues and exploration adds further to the identified resource, 30p in a few years in't wishful thinking IMV.

First hurdle though is to get into production.

[jonwig] 28/9/2007 11:14

Thanks Daz.
Yes, I'd overlooked the warrants.

As far as tax goes, the said, last December:

The Van Dieman Tasmanian tin-sapphire project is valued at A$83 million in a
range of A$74 million to A$92.5 million on a before-tax cash flow basis and at
A$62 million in a range of A$53 million to A$70 million on an after-tax cash
flow basis,...

from which we can guess a tax take of about 25%; though how it's implemented I have no idea.
They also have to pay 2% of revenues to the original landowner.

17p (or even 15p) would suit me fine - I've given up dreams of multibagging with VDM!

[daz] 28/9/2007 11:04

Jonwig

Interesting post. A couple of things you may want to take into consideration.

A couple of minus points.
Prior to the placing there were 98,492,107 shares in issue according to the Aug 7th announcement, there are also 6.1m warrants, which I think should be inclused as they are likely to be exercised. I make the diluted mkt cap just under £15m at 10p

I think costs might be even higher than 8,000, it's something that needs to be asked of the management. It's possible they could be up to 10,000 with mining inflation.

Against that a positive.
The NPV valuations were done before the JV with Columbia gem was announced, I think there is considerable additional revenue from this source, which would substantially add to the NPV.

At the end of all that I come up with a valulation not too different from yours - slightly higher at 17p.

P.S

Does anyone know what the fiscal regime for miners in Tasmania? Do they have a revenue sharing or profit tax?

[jonwig] 27/9/2007 19:47

If I've read this correctly, they will have 91.7m (old) + 45.5m (new) = 137.2m shares in issue after the exercise.
Also £6.6m of debt on unknown terms.

The two significant numbers are:

(1) Stage 1 post-tax NPV of A$62m = £24m = 17.5p/sh.

That should be increased because the discount rate in arriving at it should be lower, and the tin price is higher than was incorporated in the calculation (US$ 10,000/t approx).
However, it should be decreased because costs are higher than before (at about US$ 8,000/t) and the debt needs servicing.

So let's say 15p for the share price.

(2) Total resource value of A$1.3bn = £520m.

A post-placing MCap of £13.7m (10p share price assumed) works out at about 2.5% of the resource.
This is amazingly low - 10% would be more normal.

Let's say 5%, giving a projected share price of 20p.

The thing is, even after all the delays and tribulations, there should still be a conservative 50% to 100% potential upside from here.

I've nearly talked myself into buying more of these.
Nearly!
At least I can feel more comfortable just holding.

[daz] 27/9/2007 19:07

It's lucky the company weren't asking for much money and has a reasonable story.
I think the major shareholders didn't really have much choice, if the company hadn't been able to raise the cash, its value would have plummeted, so they had to protect their investment, though it is a bonus that there hasn't been even more dilution.

[jonwig] 27/9/2007 15:00

I must admit that I had fears last week that they wouldn't pull it off considering the amount and the market conditions.

This isn't as rosy an outcome as I had hoped six months ago, but it's nowhere near as bad as I feared six days ago.

[vanbrussel] 27/9/2007 12:47

Pricing is not bad, considered no VDM liquidity at all

But honestly I get the shivers when I see RAB is involved
At a certain point in future they start with their automatic selling.
Had a bad experience with RAB in Mexico, on a low price placement
So when RAB decided selling this illiquid stock with 50% margin, - where there should have been a 100-125% in no time - the overhang lasted for months.
Things changed by now, company is going ahead, but waste of time

Situation is different here, considered they are in production in a couple of months.
Actually, I was positively surprised with their new plans, projects need a dimension, it's slightly more difficult but it's the same time that passes

[daz] 27/9/2007 11:20

They have done well to reduce the dilution that would have resulted from issuing more shares at a lower price but wish they would have avoided all of this by raising cash last year.

Now that it is fully funded, all that remains is to get into production sometime probably in late Jan. If they can do that I think there reasonable upside from current levels but there is a risk of further delays from the weather, assembling the processing plant, commissioning problems etc.

[red river 1] 27/9/2007 10:45

At least the placeing was at the current price which gives a little confidence and support imo.

[katylied] 27/9/2007 08:01

OK, they are going to issue 35,000,000 million new shares at 10p/share to raise £3.5m. They have also (already) raised £1m via 10,000,000 10p convertable (1:1) loan notes. They need EGM approval (part of the funding vote) to convert the notes immediately, otherwise VDM incurs (1st year) 24%/year and thereafter 36%/year interest. The notes have gone to "RAB Special Situations (Master) Fund Limited" (already a major shareholder), plus RAB get paid an up front commission of 500,000 shares. So in effect, RAB's voting support at the EGM has been bought.

The money raised above, are gross figures. Fox Davies will apparantly get £390,000 cash plus warrants for their trouble, equivalent to an overall fee of apparantly ~£600,000 (~13% of the total fundraising).

It remains to be seen, whether any other existing shareholders
will also get chuncks of the other 35m new share issue. The
interest terms on the notes (a done deal) are a typical
example of EGM blackmail, though it is quite some
time since I have seen one quite so crass. It may
be, they are expecting trouble at the EGM...

[katylied] 26/9/2007 07:47

First production now for Jan 2008? Ho Hmmmmmm.
No doubt about it, you just cannot be too
cynical about these mining minnows...

[jonwig] 26/9/2007 07:20

Thanks, Bo Doodak - I've just read it.

Minesite article on VDM's current situation.
Verdict ... Fox-Davies will make a mint if they can get the placing away.
I guess they will have earned it, and our gratitude!

[bo doodak] 26/9/2007 01:12

Not long now to first prod scheduled for Jan 08, (hopefully)
I'm sure we might all concur with Mr Trist's ''exasperation'' though !