On Jubilee, they received an offer to acquire the PGM and Chrome business. It's disappointing the board is even entertaining the idea given;
1. $25 million EBITDA in FY24 and on track to hit $30 million in FY25.
2. NAV of $120 million.
3. Monetisation of excess PGMs (7 kOz) and more still to realise.
4. Chrome production still to reach installed capacity of 2.1 million tons.
5. PGM basket price up with supply deficits deepening during a period when the auto sector is recovering and platinum is gaining favor as an investment asset.
6. Modest net debt ~ $10 to 20 million.
Yes they need the cash to fully realise the copper strategy ($12 million per mine, 2 mines) but they will have $16 million from selling resources in the next 12 months.
There are costs and benefits - two factors you might want to consider is the political volatility in SA, and also the fact this would mean no more dilution - ever.
I would argue that Zambia is more volatile than SA - lack of established infrastructure and political instability - Remember the Konkola story?
In any case the argument is not about PGM vs Copper or SA vs Zambia. The argument is, are we getting good value for the asset based on its intrinsic value? Here again Leon and team failed to provide a quantitative argument and hopefully an independent expert will help. The judgements of management and the board will be brought to question should thr deal not go ahead (our fund is voting against it along with others).
If the idea is to avoid dilution, why consider paying dividends? In Leon's words, Zambia currently requires little capital to realise value and projects can easily fund each other. Also consider the recent resource disposal which should bring $20 milliin over 12 months - Enough to fund 3 x modules and 1 x mine acquisition.
If the view is to turbocharge growth in Zambia, a proven track record of delivery against promises is required to give shareholders confidence. Consider the following:
1. FY21 - Roan designed to process tailings with a target to produce 10,000 tons of copper.
2. FY23 - Decision taken to add the front end and increase capacity to 13,000 tons at 1.5% cu grade.
3. FY24 Roan produces 3,400 tons processing tailings despite construction interruptions, power challenges and without the front end.
4. FY25 front end commissioned. Ater experiencing power challenges, decision taken to acquire high grade feed and claw back production. Trials completed on high grade feed now reveal Roan can only do 4,300 tons per year, slightly higher than FY24 despite substantial investments.
Given the above, Leon and team still need to earn shareholder trust that they can deliver on promises.
More concerning, I am hearing rumors that an insider might be involved in the takeout of the PGM and chrome business. There's also chatter that there might be a fallout with the copper business MD.
Leon has stayed past his sell by date having held on since 2010. He owns little to no stock and does not have enough skin in the game. For a person who has been on the sit for 15 years, it's very odd.
On Jubilee, they received an offer to acquire the PGM and Chrome business. It's disappointing the board is even entertaining the idea given;
1. $25 million EBITDA in FY24 and on track to hit $30 million in FY25.
2. NAV of $120 million.
3. Monetisation of excess PGMs (7 kOz) and more still to realise.
4. Chrome production still to reach installed capacity of 2.1 million tons.
5. PGM basket price up with supply deficits deepening during a period when the auto sector is recovering and platinum is gaining favor as an investment asset.
6. Modest net debt ~ $10 to 20 million.
Yes they need the cash to fully realise the copper strategy ($12 million per mine, 2 mines) but they will have $16 million from selling resources in the next 12 months.
There are costs and benefits - two factors you might want to consider is the political volatility in SA, and also the fact this would mean no more dilution - ever.
Will be recording an interview with Leon shortly.
I would argue that Zambia is more volatile than SA - lack of established infrastructure and political instability - Remember the Konkola story?
In any case the argument is not about PGM vs Copper or SA vs Zambia. The argument is, are we getting good value for the asset based on its intrinsic value? Here again Leon and team failed to provide a quantitative argument and hopefully an independent expert will help. The judgements of management and the board will be brought to question should thr deal not go ahead (our fund is voting against it along with others).
If the idea is to avoid dilution, why consider paying dividends? In Leon's words, Zambia currently requires little capital to realise value and projects can easily fund each other. Also consider the recent resource disposal which should bring $20 milliin over 12 months - Enough to fund 3 x modules and 1 x mine acquisition.
If the view is to turbocharge growth in Zambia, a proven track record of delivery against promises is required to give shareholders confidence. Consider the following:
1. FY21 - Roan designed to process tailings with a target to produce 10,000 tons of copper.
2. FY23 - Decision taken to add the front end and increase capacity to 13,000 tons at 1.5% cu grade.
3. FY24 Roan produces 3,400 tons processing tailings despite construction interruptions, power challenges and without the front end.
4. FY25 front end commissioned. Ater experiencing power challenges, decision taken to acquire high grade feed and claw back production. Trials completed on high grade feed now reveal Roan can only do 4,300 tons per year, slightly higher than FY24 despite substantial investments.
Given the above, Leon and team still need to earn shareholder trust that they can deliver on promises.
More concerning, I am hearing rumors that an insider might be involved in the takeout of the PGM and chrome business. There's also chatter that there might be a fallout with the copper business MD.
Leon has stayed past his sell by date having held on since 2010. He owns little to no stock and does not have enough skin in the game. For a person who has been on the sit for 15 years, it's very odd.