W Resources Share Discussion Threads

[jaf1948] 02/3/2019 16:13

mogwhy, I'm always concerned that if we leave his comments unchallenged, then people will start believing them.

Anyway, after the meeting on thursday, it looks like we're still on course (despite what one person says) so I'm relaxed about WRES.

[plat hunter] 02/3/2019 13:56

Sleeven,

Kyrpton won't be able to provide you with any figures as he doesn't know what he's doing he's just a good old fashioned lump sum penny stock punter. Likes the look of it, likes how much it would look like after a 7 or 10 bag and convinces himself it will happen.

He's got nothing in the bag to share what so ever.

On your numbers however, I think WRES will be realistically looking at no more than 120T a month, which then casts doubt on any shareholder return whilst the debt is outstanding.

[plat hunter] 02/3/2019 13:34

JAFwhat is the point of cutting and pasting what I said to neither prove or disprove my point.Unless you know the grade of the shipment then it was just ore, which is pretty worthless.You're just mindless ramping and refusing to consider undesirable truths by turning a blind eye to what was actually shipped.

[jaf1948] 02/3/2019 13:32

Vish65, Totally valid comment with which I concur.

[vish65] 02/3/2019 13:31

As with ORM, commissioning is high risk and production and making a profit are totally different. No one in the market can judge what is going on here until there are metrics available on which to base a judgement. That is still some way off . The best people can do is remain cautious.

[sleveen] 02/3/2019 13:25

Krypto, I would be interested in seeing your calcs.

[sleveen] 02/3/2019 13:23

Been looking at the recent presentations.

T2 phase $3m revenue/1.5m EBITDA (ie after operating costs) /month.

About £18m in a FULL YEAR of producing 2700 tonnes of 65% wolframite concentrate. Let's be conservative and say $15m EBITDA cash generated

So most of the non-operating cash costs will be interest payments of $5m & G&A perhaps some tax. Allowing a conservative $4m for G&A costs leaves about 15 - 9 = 6m to repay the loan for 5years = $30m.

IMV the loan will be repaid sooner than 5 years.

[jaf1948] 02/3/2019 12:38

'And before anyone says that they're already producing, sending ORE to the market is not producing'

RNS 05/02/19: 'Following the first shipment, announced in December, W has completed three further shipments which have now been delivered to its European customer.'

[plat hunter] 02/3/2019 11:48

JAF, It's really difficult to hold any kind of discussion with you as you seem incapable of differentiating analogies and i also wasn't directing the point at you, so if you can't keep up with other peoples conversation or the narrative then it's probably best if you stay out of it as to not look quite so silly.

[jaf1948] 02/3/2019 11:35

Plat,

Why do you deliberately try to muddy the water ? You say '...it will take 12 months to pay back BlackRock, with 100% of revenue being used to pay it off.'.

If you look at the RNS of 16/02/18, the first key term is 'The Loan is for a scheduled term of five years.' There has never been a suggestion that WRES would even want to pay it off in 12 months so why come up with a totally hypothetical comment.

[plat hunter] 02/3/2019 10:20

Very true Sleeven

However, the issue with the debt here for me is that it's been drawn down for one single project, (La Parilla)and if revenue is 3 million a month (Mastermans claim) from this site then it will take 12 months to pay back BlackRock, with 100% of revenue being used to pay it off. That of course is unlikely as you obviously need to factor in working capital and cash flow to the mix.

If the NET margins are let's say 20% then it's going to take 5 years to pay it off, using 100% of NET earning on a resource with a lifespan of just 11 years. Hence why it is my opinion that Masterman is gambling on future W prices in order to extend the life of the mine with slower production.

[sleveen] 02/3/2019 09:48

ORME are also about to produce WO3 the project loan was around 40m from Oaktree who got 70% of the asset and ORM 30% for similar annual production to WRES. ORME were in a worse finacial position than WRES at the time.


So 5% warrants sweetener to BR in the case of WRES verses loss of 70% of the asset in the case of ORME, give me WRES all day long:-)

[sleveen] 02/3/2019 09:35

No problem.

How is any AIM company with a sizeable asset able to progress to profitable production without taking on a loan and it being repaid out of future cash generation (EBITDAG&A)

We know that around E1-1.5m/month EBITDA will be generated each month @ 200t/month during the T2 phase and E3m/month EBITDA during T3 phase.

I agree that any bank etc will want to make sure that a loan can be serviced and capital repaid, however there will be stress tests eg commodity price falls, construction delays, production issues etc to ensure that an adequate margin exists to protect the repayments.

But agree that as long as the lender can see how they get repaid, they wouldn't give a hoot about shareholders.

[plat hunter] 01/3/2019 23:44

You are right Sleeven,

I had misinterpreted the warrant situation

[sleveen] 01/3/2019 16:48

No warrant conversion notice has been RNSed.

[sleveen] 01/3/2019 16:42

"The warrants are exercisable for 5 years at nominal value. The warrants can be exercised on a cashless basis where the exercise price that would otherwise be payable by the warrant holder to the Company in cash, can be funded by the warrant holder taking a lower number of shares on exercise of the warrants, such number calculated to put the warrant holder and the Company in the same economic position."

-----> warrants are priced at 0.1p ie nominal value.

any conversion of warrants to shares would be netted off ie a cashless transaction.

so for each 0.1p warrant converted to 1 share @ say 0.4p would give BR 0.3p net. If the share price was 0.2p then BR would get only 0.1p net on a cashless basis , so the WRES share price does matter.

put another way @ 0.4p (4* 0.1p) for every 4 warrants converted BR would get 3 and WRES 1 on a cashless basis, @ 0.2p (2*0.1p) for every 2 warrants converted BR get 1 and WRES get 1 on a cashless basis.


Happy to be shown correct calculation if I've misunderstood.

[sleveen] 01/3/2019 16:34

HZM market cap £30m want to borrow $400m to mine nickel/cobalt

WRES MC £27m have borrowed $30m.



HZM going to struggle then and yet the HZM investors seem quite positive on landing the loan given the size of the mineral asset.

[wooster4] 01/3/2019 14:29

Just using your analogy above.

[plat hunter] 01/3/2019 13:13

Sorry wooster but I consider that a little naive.

The bank is only concerned with the projects ability to repay the debt, they are not concerned with whats left for the shareholders, hence why they took the options at a cash price.

[wooster4] 01/3/2019 13:10

Plat - surely if you go to the bank for a loan, they will send you packing if they don't think the project is a runner.