Tag Archives: Aim

Regency Mines #RGM update due.

The current Regency mines market cap of £3.5m has no relation to the assets of the business.

Regency have a diverse portfolio of assets covering different commodities and jurisdictions. A portfolio that offers significant opportunities and manages the potential risks associated with businesses that have one business in one area.

The following graphic indicates the diverse nature of the business, its potential and the minimum expected revenue.

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The slight delays to the coal projects are just that. A much larger deal is anticipated from that previously envisaged.

We know Legacy Hill have been carrying out due diligence. We will soon know the partners involved in the bigger project deal.

Rumours are circulating that a large coal deal is about to be announced. Longterm Regency shareholders await the news with anticipation.

The share price will react on the coal news and the bashers of the stock  will disappear into the either.

We then have the following news coming:

1. Conclusion of the deal from the HHL shares sale to Alba.

2. Mambare Nickel/Cobalt News.

3. Motzfeldt news.

Regency Mines market cap will then IMHO be much higher than the current £3.5m.

 

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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.

#RGM Metallurgical coal

The market for metallurgical coal in the United States is increasing predominantly because it is required for steel production.

The following table indicates some key reasons as to why the price of steel is increasing.

IMG_1727

 

With the positives around steel it is hardly surprising we are getting coal companies announcements such as:

  • Contura Energy are in the middle of a $162m IPO (see here).
  • Warrior Coal have record income of $129.9m in Q2 2017. Warrior’s highly successful second quarter validates their value proposition as the only publicly traded ‘pure-play’ hard coking (metallurgical) coal operator in the U.S. (see here).

U.S Coal global research firm IHS Markit also pointed out that metallurgical coal revival isn’t just dependant on Trump infrastructure projects.

Probably the single biggest driver of the surge in exports is that there is international demand for U.S. metallurgical coal right now. “That is a function of the market rather than the political environment.”

Regency Mining are well placed when production commences to deliver much needed metallurgical coal.

It would appear the recent RGM RNS indicating coal projects are not now going to be progressed piecemeal but the ‘big picture’ route taken is based on some solid foundations..

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.

IMG_1497

#RGM cheap production of expensive coals

Regency issue newsletter highlighting their plans for coal production (see here).

IMG_1441

Some of the key highlights:

  • Regency focusing on ‘cheap production of expensive coals
  • Focusing on metallurgical coal rather than dirty coal. Required for steel production.
  • Rosa announced coal reserve of 453,000 tons is very low as:
    • Based on 300′ auger rather than 1200′ Highwaller mining.
    • more coal identified
  • Val has 100,000 tons/month production target
  • production / revenue stream imminent.
  • RGM have first mover advantage.
  • Rosa coal at $130/t = $4.5m net attributable profit.

As news is released the share price will react accordingly. It is clear from the newsletter that further information is going to be released to the market.

The business is aware figures released to the market are conservative. We await the revised NI 43 101 report and also for RGM to release actual coal outputs. The market will then realise the business is undervalued.

 

 

 

 

#RGM potential revenue £9.3m to £55m+?

The Regency Mines RNS today (see here) highlighted two significant developments:

1. Rosa – mine permits in place and production has commenced with a weekly revenue stream.

2. Vali Carbon Corporation – 50,000 tpm offtake contract being negotiated.

IMG_1420

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_1418

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 tpm = 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, Mambae and Curzon Energy.

 

Based on information in the public domain you have to question how the market cap of the business can remain c£5m for much longer.

What will be the catalyst resulting in a share price rerate?

Will it be?

1. The 50,000 tpm offtake contract currently being negotiated being announced to the market.

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

3. Announcements from the company regarding their other investment interests.

#MTR fund raising and MOD Resources.

Metal Tiger placing has created some unrest amongst smaller private investors with many believing the dilution of their shareholdings has benefited the BOD and major investors.

In fact the BOD and major investors have also seen their shareholdings diluted.

So why has the Metal Tiger placing happened when the share price so low?

What we do know is MOD have said they intend to drill the life out of T3. To do that they need funding.

We now have A$5.46m (c£3.19m) raised by MOD resources with institutional investors partaking. MOD Resources are ready to start drilling T3 in early January 2017.

What would have happened to the MTR share price if they hadn’t already had their placing? In all probability the MTR share price would have gone down as investors would know MTR need to fund 30% of the T3 exploration. This scenario would have resulted in the MTR placing being at lower levels than has already occurred.

It looks like MTR had no choice but to raise the necessary funding when they did.

We know the CEO of MTR and MOD BOD members, together, attended meetings with potential funders during MOD boards recent visit to the UK. Is it possible as a result of these meetings, institutional investors indicated willingness to invest in MOD?

If that’s the case this could explain why MTR offered warrants as part of their placing and MOD haven’t.

It is going to be interesting to see what happens to the share price of MTR as a result of this news.

Investing is about the transfer of wealth from the impatient to the patient.

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