Category Archives: Mining

Is Regency Mines a steel at this price? #RGM

Disclosure: This blog is the work of Sunil Mark-Singh (Silky). Sunil holds Regency Mines shares.

Overview:

Regency Mines Plc are a small cap resource exploration company creating value mthrough strategic investments and project development at bottom of the global commodities cycle.

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#MTR Kingsgate game of cards

Metal Tiger has been a sleeping giant for a while.

Interest has been sparked and investors are now taking more interest in the business.

This blog highlights some of the Metal Tiger Business opportunities (see here).

Since then Metal Tiger have indicated they are investing in Kingsgate. This blog provides some background information on Kingsgate and the Chatree mine and indicates MTR are not the only business who see Kingsgate’s challenges as an opportunity (see here).

Metal Tiger have previously stated they intended to curtail their asset trading activity and would sell investments at the appropriate time. We have seen this most recently with Greatland Gold (GGP).

We can therefore conclude that Metal Tigers investment in Kingsgate is possibly a strategic investment.

MTR have been steadily buying KCN shares in the open market. Currently have 5.34% of the shares plus whatever they bought on the 18th October.

Why are Metal Tiger interested in Kingsgate?

Obviously since the announcement of the closure of the Thailand Mine, Kingsgate shareholders have seen the value of their shares plummet.  Many large shareholders will have watched the share price drop from c$6 a share to c24c. Those who bought in at AUS$4 will have experienced a 94% drop.

If the mine re-opens and KCN shares increase in value to $2, this being a third of previous highs, based on today’s share price this would be a 440% return. This doesn’t take into account Kingsgate’s Chile assets or the profits MTR will have already potentially made buying KCN shares at a much lower price.

News on Chile asset due in December. This is expected to have a positive impact on the value of KCN assets.

So looking at conservative figures, MTR potentially looking at a minimum of a 500% return in a relatively short period of time. This is all dependant on the Chartree mine reopening.

What do Metal Tiger have to offer that could facilitate the opening if the Chatree mine?

1. Contacts

  • CEO lives in Thailand and is married to a Thai. Has great contacts in Thailand.
  • Terry Grammer lives in Thailand. Why in the last couple of weeks did he invest just under a half of a million pounds in MTR?
  • Mark Potter recently became a Thai national and lives in Thailand. Mark has exceptional contacts in Thailand.
  • Extensive network of contacts in government departments.
  • Team on the ground with extensive experience in obtaining mine permits. For example Surapol Udompornwirat a Thailand permitting specialist. Surapol previously worked for Kingsgate.

2. Reputation

MTR have a good reputation in Thailand. This is completely opposite to Kingsgate’s reputation.

Everybody knows that to operate in Thailand you need to respect the Thai culture.

3. Liquid Assets/funds

MTR have in recent weeks built up a significant war chest with for example £480k from Terry Grammer and returns from their asset trading division,

4. Sprott / Rick Rule

The Warren Buffet of the mining sector has made a significant investment in MTR. Why recently was MTR CEO at a meeting with Rick Rule of Sprott? Sprott will be on side with the KCN play.

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What happens next regarding KCN?

1. MTR decide not going to achieve their goal and exit their position with a substantial profit?

2. MTR continue to buy and at the appropriate time make their move.

a. Put somebody on the board?

b. Replace the board?

c. Package up KEMCO/KCN?

d. Use contacts/expertise to get Chartree mine reopened?

e. KCN take measures to repel MTR action. All they can do is take on debt to make business less attractive, buy back shares to make cost for MTR greater, convince shareholders that they rather than MTR are the best option for shareholders.

KCN have informed ASX that they intend to buy back 10% of the shares. These will be cancelled pushing up the share price. Unfortunately for KCN they now have to wait 2 weeks and can then only purchase 2% of the shares every 30 days.

This means MTR have a two week window to buy on the open market before KCN can do the same. I am therefore expecting MTR to buy everyday on the open market.

MTR can buy about 15% of the traded volume in a day without moving the sp up or down. The fact they are currently buying c20% in the open market indicates they are being fairly aggressive.

If MTR stop buying we can conclude they have reached their goal or have an off market agreement with a major shareholder.

This is getting interesting, with MTR currently in the driving seat for the next couple of weeks.

I await KCN’s and MTR’s next moves with interest. It certainly looks as if MTR are holding all the Aces in this game of cards.

 

 

 

 

Why convert £480k of MTR warrants now?

Metal Tiger Director converts warrants, thereby investing £480k into the business (see here).

Why would Terry Grammer invest just under £1/2m now, when the KEMCO IPO isn’t until February 2018? Why didn’t he wait another three months and use his capital elsewhere?

Whilst this development was expected (see here) in reality you would have expected the timing to be nearer the February KEMCO IPO date. We know MTR have funds, therefore cash flow isn’t an issue.

It would therefore be logical to assume MTR have another use for the funds.

Longterm holders await with interest the next development in the MTR journey.

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Invest in Metal Tiger #MTR or MOD Resources #MOD?

The recent brokers note on MOD Resources indicated a target, giving an uplift of 50% to the current share price (see here).

This target is based predominantly on the T3 prospect, a joint venture with Metal Tiger (70/30% split).

IMG_1788Investors wanting to invest in this copper prospect in Botswana, have a choice, invest in Metal Tiger (MTR) or invest in MOD Resources (MOD).

Because of:

1. British Pound vs Australian dollar exchange rate

2. MOD has significantly more shares in issue the MTR

3. 70% MOD, 30% MTR split

4. MTR having 5% of MOD share capital

the returns should the T3 prospect be sold and capital returned to shareholders would currently favour MTR investors.

Looking at  the pros and cons for investing in MTR vs MOD,you need to consider the following:

1. MOD have announced over the next year they will be investing A$10m in Botswana. 75% of this investment will be used on MOD/MTR prospects. The downside is what the exploration within MOD 100% areas will discover.

2. MTR JV covers several MOD prospect areas. All the areas highlighted in orange in this table.IMG_10073. MTR will be announcing this month details of the Thailand IPO (KEMCO). MTR shareholders will receive ‘free’ shares in KEMCO. Currently the MTR share price doesn’t include any value for Thailand.

4. Disparity between MOD and MTR share price. MOD share price has increased whilst the MTR share price has stagnated.

IMG_1858At some stage you would expect MTR share price to increase and for the gap to close. Alternatively it could be MOD over priced.

5.  Copper price now over $3/lb. This is still below the 5 year high with many analysts predicting the price will continue its rise.

6. Having met the management of both companies they come across as professional and competent.

7. Assays due from the holes drilled on T3 when drilling recommenced in the first week of August. We already know visible copper present. What will happen to the share price if significant results or trading halt called due to ASX requirements? Could this result in a spike in the MTR sp as trading will not be halted on the AIM market?

8. Sprott took a significant investment in MTR. Why didn’t they invest in MOD when they did their placing? Have they decided that MTR is the better investment?

9. Finance – both MTR and MOD have significant capital to fund drilling.

10. NPV of A$210m for T3/T1 is only going to increase as data analysed.

Looking at these 10 points, the following graphic indicates the best investment, MOD or MTR (white = neutral, green MTR, red MOD).

IMG_1793

 

Near term more value is going to come from MTR/MOD JV licence areas rather than those owned 100% by MOD.

If somebody wanted more exposure to the other MOD licence areas, you could put a strong case forward to invest in MTR, take the potential near term gains and then invest in MOD.

Another consideration would be each businesses other interests such as MOD’s Sams Creek asset and MTR’s investment portfolio.

MOD or MTR, it looks like September is going to be a very interesting time for the share price.

The recently released MOD, Ocean presentation and brokers note made me question if I should invest directly in MOD. I have concluded that investing in MTR offers the greatest potential.

If MOD and MTR merged (after the KEMCO split), this would remove the requirement for investors to make the decision and also simplify the acquisition process, if a major copper business was interested in the business. 

Investors who invest now are in at basement level prices. It’s just a matter of sitting and waiting for the BOD’s of both businesses to deliver.

#MTR – everything is aligned for a share price rerate.

Many analysts, chartists, bloggers and twitter posters are predicting the Metal Tiger share price is going to re-rate upwards.

Many follow what analysts and chartist ‘experts’ say and this can become a self-fulfilling prophesy. The herd arrive and the share price goes up.

The Swiss Cheese model suggests that when everything aligned the unexpected happens. The share price rise could therefore when it happens according to the theory be significant.

IMG_1317

We have for several days now had share price rises of 3%+ a day with a c14% rise over the last week.

 

1. Resource  increases

These have been happening for a while and are covered in these two blogs.

MTR stunning results under T3. link

MTR results due. link

MOD Resources our partner will be issuing additional data in the very near term (possibly this week). This information is expected to significantly increase the T3 resource and translate into better NPV and IRR figures.

Obviously the price of copper breaching the $3 a pound level for the first time since November 2014 (see here) also significantly increases the potential returns from the T3 prospect.

 

2. Strong fundamentals, business strategy and leadership

Charles Hall (Chairman) and Michael McNeilly (CEO) interview highlights the changes that are taking place.

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This link takes you to an interview with Charles and Michael.

Metal Tiger is a private investor friendly business. It was no surprise when Charles a private investor with a T1 holding was appointed Chairman.

3. Thailand IPO 

The Thailand IPO will be announced soon.

Metal Tiger shareholders will be ‘gifted’ shares in the new business KEMCO.

The positive noises coming from Kingsgate and the Thailand Government regarding the Chatree mine are also a positive for those involved in mining in Thailand.

 

Conclusion

The cheese holes are aligning, with many aligned and long term holders are about to reap the rewards.

Those that hope to benefit from keeping the share price low will soon be shocked by a significant sp re-rate. The share price re-rate will be quick and the impact devastating for those who haven’t realised it’s coming.

 

Is Regency Mines #RGM share price a joke?

The following graphic indicates that based on Vali Carbon Corporation alone the revenue for RGM will be a minimum of £9.3m per year and if output reaches 100,000 tpm £18.6m.

IMG_1566

These revenue figures take no account of:

  • Rosa – year 2 production expected to be 120,000 tpm = revenue of £22.32m/year.
  • Rosa – Highwaller production could reach 600,000 t/yr = revenue of £111.6m/ year. Being conservative and assume only 50% efficient = £55.8m
  • Washed coal revenue of $8 / ton
  • Other coal opportunities indicated in the above graphic.
  • Regency Mines interests in Motzfeldt, Horse Hill  and Curzon Energy.

 

Regency have recently raised significant funds, so finance isn’t an issue. We also are expecting news regarding Horse Hill, providing additional capital.

Regency have 3.35% of Horse Hill as indicated in the following graphic.

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Based on information in the public domain you have to question how the market cap of the business can remain c£3.5m for much longer.

What will be the catalyst resulting in a share price re-rate?

Will it be?

1.  Market realising the implications of the revenue streams and significant under valuation of the business?

2. Announcement about Rosa – production or management team.

3. Announcement regarding Horse Hill.

4. Curzon announcement.

5. Motzfeldt announcement.

It is clear without any announcements regarding the above five points the share price at its current level of 0.55p offers significant upside.

The imminent revenue streams and share price have no correlation.

Obviously the Chairman believes great upside as he has twice in recent months bought shares on the open market at above 1p a share.

This share will re-rate very quickly on news or when investors realise the revenue that is as good as guaranteed with plant on site, permits in place and off take agreements signed.

Is the share price at the minute a joke or is the lack of communication from the business deliberate?

Could it be Regency aren’t keeping investors informed whilst they assist  somebody to obtain shares with a low entry price?

Whatever is happening it’s a great opportunity for private investors.

Metal Tiger investing in #Thailand. #MTR

The Thailand IPO is due to happen in June/July 2017.

This will be when Metal Tiger shareholders will be ‘given’ shares in KEMCO the new Thai company.

Not many companies you can invest in knowing that in the very near future you will be the beneficiary of shares in another company. What is even more compelling is the current share price of Metal Tiger doesn’t take into account any value for Thailand.

KEMCO will be launched in June/July and this will be followed by events that will potentially have a positive impact on the share price. These being:

1. Thailand new permitting requirements goes live in August.

2. MTR apply for relevant permits August.

3. Kingsgate started their 3 month consultation period regarding the closure of their Thai mine at tthe beginning of April. Positive outcome announced July/August would have impact on sentiment towards KEMCO.

4. Directors and Major shareholders of MTR have been exercising their warrants. If this continues it is a clear indication all are preparing to ensure they are entitled to as many ‘free’ KEMCO shares as possible.

5. Announcement about key investors who have taken part in the KEMCO IPO.

Thailand venture is approaching a 3 month period when announcements are expected that will have a positive impact on market sentiment.

 

We also have Botswana with the current delay associated with environmental permits due to come to an end as announcements on applications submitted and awarded released to market.

 

Tiger shareholders who have researched the business can see the bottleneck of news that is coming. Investor sentiment could change overnight with the announcement of any one of the above events.

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