Category Archives: Thailand

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.

 

 

 

 

#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.

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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.

 

#MTR Thailand an investment opportunity?

Metal Tiger have a significant interest in prospecting and mining activities in Thailand.

The signing of the JV for the Song Toh and Boh Yai mines being a significant milestone for the business.

To date the significance of this development has not been reflected in the Metal Tiger share price.

This blog makes some observations and addresses some of the concerns investors have raised regarding the Thailand operation.

Difficulties Western mining operators have working in Thailand.

The case of the Australian gold miner Kingsgate Consolidated is often mentioned to indicate why Thailand is a difficult place to do business.

Due to the Government refusing to extend Kingsgate’s licence their mine is due to stop operations in December 2016.

Kingsgate’s issues, directly associated with operating in Thailand are believed to be;

a) Not having access to the decision makers in Government.

To operate successfully in Thailand you need to have the appropriate contacts and to respect the Thai culture. Building up a business working relationship can take years.

Any negative comments about the country will almost certainly stop any chance of building good relationships with the Thai and could  possibly even lead to legal action.

This is exactly what has happened with Kingsgate. Unfortunately Kingsgates main man died and with him the relationship and link they had with key people in Thailand.

Kingsgate have gone from a successful operator in Thailand to the point of having their operating licence terminated. You can’t adopt a Western business culture in Thailand if you want to succeed.

The belief that if Kingsgate had done things differently they would still be a successful business is underlined by the fact that Northern Gulf Petroleum have offered 4.2 cents per share for a 50.1 per cent stake in Kingsgate. This values the business at $9.4 million.

Northern Gulf is run by a Thai national who clearly sees value in the business and believes he has the contacts, expertise and know how to cut through Thai red tape and get the mine permit extended.

b) Arsenic, manganese and cyanide contamination of local environment and associated health issues for local population (disputed by Kingsgate).

Lack of respect for Thailand is a big issue for the Thai. Even if issues have no foundation, if not addressed taking into account Thailand and Thai culture the implications for a business can be detrimental.

Saving face is key. Kingsgate adopted an aggressive stance when dealing with local environmental issues. A more appropriate approach would have been one that enabled both sides to save face.

 

So why do Metal Tiger believe they have the skills and expertise to manage the above issues and operate in Thailand successfully?

Metal Tiger via their RNS’s and Twitter account have mentioned on several occasions the importance of:

  • Respecting Thai culture. Hence the Merit ceremony that has taken place to celebrate the formal opening of the Company’s head office.

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  • The environmental / social issues. Hence the appointment of a CSR Manager.
  • Employment opportunities for Thai nationals. MTR are employing Thai nationals.
  • Local knowledge / contacts. Key members of the Metal Tiger team including its Chairman have lived in Thailand for many years.

It’s how you do business that will dictate success or failure.

Metal Tiger Thailand Risks

1. Granting of permits

If permits are not granted this is a significant risk.

Metal Tiger have employed an experienced permitting team who have commenced the  permitting process with applications in place for Special Prospecting Licence Applications in multiple provinces.

This is a link to the RNS providing the details of the licence applications.

Why would Northern Gulf Petroleum offer a significant sum for part of the Kingsgate mine if didn’t believe could obtain the necessary permits?

Why would MTR offer a significant sum for a stake in the Song Toh and Boh Yai mine if didn’t believe could obtain the necessary permits?

2. Finance

With costs associated with the Song Toh and Boh YAi mines,Thai nationals being recruited, new office opened and permit applications pursued questions have been asked about how being financed.

Currently this is being financed by Metal Tiger (London) but MTR have stated that  Asian finance will increasingly play a part in financing Metal Tiger Thailand (MTT).

I would expect we will hear news about Asian or possibly Saudi finance news soon. Saudi link being mentioned in a recent RNS.

Would MTR invest so much time, finance and resource in Thailand if they had any doubt about the ventures successful outcome? IMHO they wouldn’t, MTR would concentrate on their other ventures.

3. Thailand political instability.

The military coup is a risk as whilst the country is reasonably stable now, the future is unknown.

For many this is seen as an acceptable risk that is manageable, providing the business acts  in a manner that supports Thailand and its people.

 

Conclusion

Metal Tiger Thailand invests in prospecting opportunities and is therefore a high risk high reward investment.

MTT is also part of a JV in the once successful Song Toh and Boh Yai mine. The only risk with this mine is if permit not granted.

If Thailand doesn’t deliver, investors in MTR will still have their investment underpinned by Botswanna, Spain, Asset trading division, etc, etc.

 

The value of the Thailand asset will at some stage be reflected in the MTR share price. If not now one of the following milestones will deliver.

  • Finance partner announced.
  • Permit progress / granted.
  • Song Toh and Boh Yai back in operation.
  • prospecting results.

 

It is worth reminding ourselves that the recent Dowgate brokers note released in October, indicated an NPV of $75.4m for the Song Toh and Boh Yai mine. MTR paid $6.8m.

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Thailand has the potential to become the cash cow of the business and as such those that are invested now will have the potential to make the greatest returns.

 

 

Notes:

Response to some of the less informed questions raised on social media:

  • Question – 24km of tunnel doesn’t make a good mine. Response – makes for a far more economical mine than would be the case if had to dig the tunnel.
  • Question – mine is empty. Responselook at the RNS’s, clearly indicate that significant mine life.
  • Question – Cashflow is the issue. Response – RNS’s clearly indicate net assets £5m+.

 

 

 

 

 

#MTR – Gold mining in Thailand

Thailand currently only has one gold mine, operated by Australian gold miner Kingsgate Consolidated. Due to the Government refusing to extend Kingsgate’s licence the mine is due to stop operations in December 2016.

Kingsgate’s issues are believed to be;

  •  arsenic and manganese contamination (disputed by Kingsgate).
  • cyanide escaping from tailing ponds (disputed by Kingsgate).
  • disgruntled former employees.
  • not being able to deal with the issues.
  • not having access to the decision makers in the Government.
  • Kingsgate’s current liabilities exceeding its assets by $37 million
  • Shares suspended.
  • Will lenders lend more money if no viable strategy in place to reopen the mine?

Based on the above the outlook for Kingsgate is bleak and you would think the mine has no value as no licence.

 

So why has Northern Gulf Petroleum offered 4.2 cents per share for a 50.1 per cent stake in Kingsgate? This values the business at $9.4 million (see here).

 

 

Northern Gulf is run by a Thai national who clearly sees value in the business and believes he has the contacts, expertise and know how to cut through Thai red tape and get the mine licence granted.

Northern Gulf believe they can succeed when others have failed as they have the knowledge, contacts, and people to operate successfully in Thailand.

Metal Tiger in their RNS’s have mentioned on several occasions:

  • Respecting Thai culture.
  • The environmental / social issues. Hence the appointment of a CSR Manager.
  • Employment and opportunities for Thai nationals.
  • Local knowledge / contacts.

It’s how you do business that will dictate success or failure. Northern Gulf and Metal Tiger both believe mining in Thailand to be a potentially lucrative investment.

Both businesses have targeted businesses that have the infrastructure in place, thereby ensuring a fast track route to early profitability.

First movers make the largest returns whilst taking the greatest risks.

Metal Tiger have however substantially reduced the risk by having other opportunities such as Botswana and Spain in their portfolio.

Metal Tiger and their investors can see the bigger picture. Thailand looks to be an opportunity that whilst its value is currently not reflected in the share price, it will be the nearer the mine gets to the production stage.

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Great potential with the associated risks  This could become the cash cow for Metal Tiger and its partners.