Vane Minerals Share Discussion Threads

[combo83] 09/9/2012 18:16

opal, agree that the in-house resource estimate for La Colorado should help dispel doubt about its longevity. With production beginning at Saltito within the next few months, it's clear they are planning well ahead so the ultimate transition from La Colorado to Saltito / LaV can go smoothly.

[combo83] 09/9/2012 18:06

The legal document is interesting in parts and VANE is keen to reiterate the $8.5m investment, e.g.

"The proposed Complaint in Intervention recounts that VANE has spent $8,500,000 exploring and developing these and other claims in the region. At stake in the litigation is the continued viability of VANE's claims and its investment in the area. Under any analysis, VANE's mining claims, and its substantial investment, constitute a significantly protectable interest that justifies its intervention in the existing litigation."

Will be interesting to see what comes of it.

Agree that cash may have been tight in the last quarter as they repaid £500k of the loan note, though overall net profit should continue at current PM prices.

[opaldouglas] 09/9/2012 17:59

Cerrito, to put a little more meat on the bones of Mexican operations as reported La Colorada will provide security of supply for the next 17 months. This takes us up until mid 2014.

Vane have already announced a non compliant NI43-101 resource estimate for La Valenzuela of 43,000 tonnes which should ensure another 15 months security of supply (see link below). So at 9000 tonnes per qtr we're looking at security of supply until 2016.



I do believe however Saltito will be the next vain to be mined at Maria Fernanda concession so La Valenzuela will have to wait. Factor in Jorge Luis concession and things look good.

Also Bouse (copper exploration target) has now shown up with strong gold values which Vane could possibly add to the mix and additional Hearts Desire & Blind Indian mine as announced in interims... on that note i assume Vane will go it alone should exploration prove successful?!?

Anyway i'm waffling again. In essence unless Vane decide to produce a NI43-101 resource estimate we'll always be unsure to exact security of supply but it does appear current predicament looks pretty good.

[opaldouglas] 09/9/2012 17:31

Combo, i'd be happy if Vane was to except compensation of 8.5m ;) V helpful post which helps delve into Northlands figures.

Cerrito - I'm unsure where Simon Rothschild or Harry Gourlay said cash was tight??? Granted Vane doesn't have huge amounts of cash in the bank but with 1.1m and record revenues things are looking rather good.

Also delay with Copper exploration isn't down to monies but permits as i understand? (Northland have stated Vane intend to plan an additional 5 targets well in advance to mitigate any future delays).

Regarding cashflow i completely agree this really is key as nobody wants any further dilution! I believe revenues will continue at a similar pace as this year in 2013 (circa 12-15M dependent on gold/silver prices) which will generate enough cash to continue exploration programme and also should generate a nice cash balance (which could be used for M&A surely?).

That said, given the obvious intention to bring out the new 200 Tpd mill revenues could potentially triple if directors are confident of La Valenzuela, Maria Fernana & Jorge Luis mining concessions. Of course this would require cash to bring this online but it appears Vane are currently taking the softly softly approach whilst picking and choosing next targets and not over committing themselves.

[combo83] 09/9/2012 12:19

Good points Cerrito / Opal.

The 'appraised value method' (AVM) used by NC to arrive at the 1.5p target is an interesting one. I agree it's on the conservative side, but looking at how they arrive at this number it's easy to see how the price target could potentially increase substantially as the company continues to make progress.



For example, the 'exploration stage discount' is currently set at 90%, corresponding with "initial positive geochemical or geophysical results". Successful Phase 2 drilling at McGhee Peak would likely upgrade Vane to the 75% discount category: 'positive results from a drilling based exploration program'. That more than doubles the current value attached to the Cu exploration programme.

If the results are particularly good (e.g. economic mineralization at both the north and south drilling targets, a mile apart), they could potentially upgrade the 'prospectivity enhancement multiplier premium %' from the current 30% to 60%: 'realistic potential to establish a multimillion oz world class deposit'. That would provide another doubling of the value attached to the Cu exploration programme (cumulative with the above).

At Mexico they also use conservative inputs. That's good practice, but it also renders some of their forecasts of future cashflow and cash reserves on the conservative side.

e.g.
Gold price ($1530.9 / oz Au, actual $1737 / oz)
Silver price ($29.6 / oz Ag, actual $33.7 / oz)
Mining costs ($600 / oz, actual $582 / oz)
Gold recovery rate (75%, actual 80%)
Silver recovery rate (75%, actual 77%)

With gold and silver widely forecast to set new highs in 2013, the valuation of Mexican operations could easily be revised upwards in future notes.

Overall, upside potential vs downside risk looks very good imho.

With regards to the uranium case 'NMA et al vs Salazar et al' which Vane motioned to intervene back in June, it can only help considering it's all been discounted. Even if the 1 million acres or a part thereof are not reinstated, Vane still has a fair case to be compensated for its $8,500,000 investment in exploring/developing claims in that region. That could provide a significant cash boost, although how long all this takes to play out in the courts is anyone's guess.

Overall very positive, gla.

[opaldouglas] 09/9/2012 11:17

Finally had a good chance to read through interims properly, really happy with progress to date and backs up everything discussed.

As always the most important aspect of interims for me is the Mexican gold/silver operations (slightly boring compared with Copper exploration granted!) but it really mitigates the downside tremendously. With recovery rates improving and production costs coming in lower its a really good team effort by Vane & Ruiz brothers.

With gold prices heading northwards in recent weeks, full year revenues should hit $12M which is huge increase compared to $3.68 last year.

Interims make reference of $300,000 which has been spent in developing La Colorada and prep work on further assets within joint venture area so should hear further news in due course.

The recent released coverage from Northland suggest 17 months production to run from La Colorada/diablito which is an extra 5 months than i predicted.

On the copper side of things, Railroad was a dud... heyho - onto the next target. Permit delays for McGhee peak are frustrating but this doesn't overly concern me. Interesting Vane appear to be pre-empting this for future exploration: (from Northland note)

"In order to speed up work on the porphyry targets, VANE has initiating the permitting process at an additional five targets well in advance of planned drilling. Permitting at further targets is also expected to begin shortly to stop permitting delays in the future"

Northland research note is helpful but the have assumed gold prices $1,531oz & silver of $30/oz which are both well below current prices and obviously don't factor in increased production and new mill coming into play which could triple revenues - this is obviously what Vane are working towards.

Additionally factor in that McGhee Peak looks v promising and now initial exploration work at Bouse has shown strong gold/copper values 1.5p seems very conservative.

OD

[cerrito] 09/9/2012 11:14

Of course these were good results and Friday's share price increase justified. That having been said, the deficit in cash flow from operations is troublesome given the fact that as the Chairman says in his statement cash is tight and one reason why copper drilling going slowly..indeed cash spent on investing activities in the first half almost halved compared to the year before.
One reason for the operating cash flow deficit was the increase in inventories as foreshadowed in the August 9 RNS; this should reverse itself in the second half of the year.
The second was the increase in receivables-broadly in line with the increase in sales and the third reason was that there was no corresponding increase in payables, which of course increased substantially in the second half of last year. As they are selling to Penoles we need not worry about the quality of the trade receivables but there is the imponderable of if they are financing their JV partners or their JV partners are financing them. We were told in the audited accounts at 12.11 that £783K was owed by JV's and £823k owed to JV's so that at that date it was pretty much broadly balanced.
To me the ability to generate cash from their Mexican operations is essential and I do not feel I have a good handle on this. Cash flow in the 2nd half will be good for the reasons explained on August 9th but I am not clear if there will continue to be a substantial increase in revenues and hence demand for working capital; what the exact mechanics are with their JV partners as to who finances what and indeed cash required for further exploration/development work of the other mines-not to mention the m & a they keep talking about and cash needed to commission the ball mill.
I note there was no Going concern statements in the interims so one assumes there has been no change to their statement that they have enough cash for budgeted exploration expenditure till December 13.
At June 30 they had £1.1m of cash enough for 15 months of investing expenditure at the low rate we saw in the first half so one assumes that they anticipate Mexico producing decent cash.
As regards Uranium one assumes that if Romney wins the ban on Federal lands would be lifted in due course but given the current state of the uranium market and Vane's lack of cash the current banning of work on Federal lands does not appear to me to be much of an issue. I note New Mexico has a Republican Governor which suggests that Republicans in power are no guarantee for granting of mineral rights.

[shanew48] 08/9/2012 18:04

think this is worth hanging on for 2-5 years for potential £1.04 sp!!

gl every1

[shanew48] 08/9/2012 18:02

so this seems worth hanging on for 2-5 years for potentally share price going to £1.04p!!

count me in.

gl all.

[thinking] 08/9/2012 11:07

Great to see some positive coverage and examples of just how big this company can become, from its humble beginings and todays price.

[barnsey] 08/9/2012 10:41

Northland Capital has its finger firmly on the pulse of VANE Minerals (LON:VML) after the miner's first half profits exceeded expectations.

A copper-molybdenum porphyry system, which was successfully drilled in the period, caught the eye of Northland analyst Dr Ryan Long.

He thinks that if one of the two mineralised targets identified becomes an economic deposit, the effect would probably be "transformational" as shown by Copper Mountain Mining Corp.

He pointed out that Copper Mountain went from a £4.5 million to a market cap of £173 million in five years with one porphyry discovery.

VANE shares soared 28 per cent on the news to change hands at 1.18 pence each.

[barnsey] 08/9/2012 10:40

Northland Capital has its finger firmly on the pulse of VANE Minerals (LON:VML) after the miner's first half profits exceeded expectations.

A copper-molybdenum porphyry system, which was successfully drilled in the period, caught the eye of Northland analyst Dr Ryan Long.

He thinks that if one of the two mineralised targets identified becomes an economic deposit, the effect would probably be "transformational" as shown by Copper Mountain Mining Corp.

He pointed out that Copper Mountain went from a £4.5 million to a market cap of £173 million in five years with one porphyry discovery.

VANE shares soared 28 per cent on the news to change hands at 1.18 pence each.

[combo83] 08/9/2012 02:09

Kiruna, you're welcome.

shanew48, agree it's an excellent mid/long term investment. The share price in 12 months is hard to predict but I do note that:

(1) two brokers are now covering Vane (Allenby Capital and Northland Capital), both suggesting the potential upside on an economic Cu porphyry discovery is vast (up to 104p). The initial drilling results triggering the beginning of this revaluation could possibly take place with the next 12 months.
(2) Northland today suggested a target of 1.5p and upside of 8.2p (vs worst case/peril downside of 0.2p). This was based largely on revenue forecasts with conservative inputs (e.g. cash costs of $600/oz, $1531 oz/Au, and $30 oz/Ag).
(3) The actual spot prices today are much more favourable ($1735 oz/Au $33.3 oz/Ag) and widely forecast to continue improving, suggesting a higher price target.
(4) In 2013 we should start to outline more resources within the Ruiz JV, possibly leading to construction of a new mill. This has the potential to triple revenues.

I'm optimistic Vane will deliver on its exploration potential eventually. The backdrop of rising precious metal prices and QE3 is a favourable one. all imho, gla

[kiruna] 07/9/2012 23:05

Thanks Combo

[shanew48] 07/9/2012 20:23

hi every1, bought in today at 1.13 with £400, am considering topping up £500 per month for next 12 months or so, where could/should share price be in around 12 months time in any1s opinion?

i feel this has been derisked today, and is a excellent mid/long term investment.

any opinions most welcome.

[shanew48] 07/9/2012 19:27

hi every1, bought in today at 1.13 with £400, am considering topping up £500 per month for next 12 months or so, where could/should share price be in around 12 months time in any1s opinion?

i feel this has been derisked today, and is a excellent mid/long term investment.

any opinions most welcome.

[thinking] 07/9/2012 17:26

Great day with the price holding above 1p, hopeful that with coverage over the weekend / next week we should see the heights of 1.5p/1.75p again

[combo83] 07/9/2012 16:01

Kiruna, new thread:

[kiruna] 07/9/2012 15:54

News release, Comments anyone? Or am I the last one here?

[combo83] 07/9/2012 13:31

Just looking up these two new claims: Heart's Desire and Blind Indian.

Heart's Desire: Workings include shaft and surface operations. This mine was worked from the early 1900's to about 1914. It produced some 200 tons of ore averaging about 7% Cu, 2% Pb, 3 oz. Ag/T, and 1.6 oz. Au/T.

Those are bonanza grades by modern standards. Would be very interesting to see how that turns out in terms of tonnage. I couldn't find similar data for Blind Indian.

In other news: -



And brokers Northland Capital initiated coverage today with a BUY rating and a price target of 1.5p.

[opaldouglas] 07/9/2012 12:00

Couldn't help looking in, nice to see some good movement. Should hopefully get some real coverage from press in the near term. Currently on a 5 hour train journey through lithuania missing all the fun!