Monthly Archives: March 2015

Ironbark Zinc – ASX:IBG

Current Share Price $0.09 per share
Market Cap 30/3/15 = $40 M

as of the Sept 14 Quarterly they have lodged the mining licence with the Greenland government 7th October

Currently ZInc Prices are at 5 year highs and are significantly above average for 25 year chart over $1/pound

Zinc is 4th most globally used metal

looming major zing mine closures

$50m Glencore merger and acquisition funding facility

70.8Mt @ 5.2% ZInc = 3,681,600 t of Zinc or 8,099,520,000 pounds
or
132Mt @ 4% = 5,280,000t of zinc or 11,616,000,000 pounds

Highlights of the Feasibility Report included:

NPV: US$609 Million (US$354M post tax) = 716 AUD (85c) or 416 post tax
IRR: 32.0% (22.2% post tax)
Equity Return: 37.9% (Geared NPV after tax)
Capital Cost: US$429.3 Million inc contingency (US$484.8M with First Fills)
Operating Cost: US$0.59/lb Zn (Payable, Net of by-product credits, Years 1-5, Smelter fees additional US$0.12/lb Zn)
Mine Life: 14 years
Life of Mine Operating Costs: US$3.42 Billion
Life of Mine Revenue: US$5.65 Billion

The Citronen base metals project benefits from the following favourable characteristics:

Located in Greenland – low sovereign risk
Located adjacent to deep, protected water on the doorstep of Europe and North America
Simple, flat and continuous ore zones
Open-pit fresh sulphide potential with very low strip ratios to supplement higher grade underground mined mineralisation
Long mine life, with resource open to further mineralisation in almost every direction
Simple, predominantly underground room and pillar mining operation
One of few world class deposits wholly owned by a junior company
Production scheduled at a time of many planned zinc mine closures, a shortage of zinc supply and anticipated high zinc prices
Ironbark is working with China Nonferrous under a MOU to deliver an EPC fixed price contract and financing for the project

Potential MOU with China Non Ferrous Corp

Large Backers

Cost of Operation 71c/pound

Major Mine Closures (11% of world supply in next 4 years)

My Conclusion

High Capex (needs funding (currently has large backers))
High opex Costs as historically the zinc price has not managed to exceed 50c
although supply side problems in the coming years may prove a catalyst

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Uranium Plays, is nuclear regaining some cred (asx:AEK, asx:PEN, asx:AEE)

22 March 2015

In the current environment of global carbon emissions the rush to find adequate base load power that provides low carbon emissions its hard to look past Nuclear power. With the energy density of uranium being over a million times more energy dense than gas and coal without the carbon it sounds like a no brainer path follow.
However Nuclear isn’t without its pitfalls as we have learned with the recent Fukushima (Japan) disaster as well as the other major notable disaster in Chernobyl in Russia. There is also the problem of spent fuel rods and the decommissioning of what is a largely radioactive site.
Other notable technological improvements have been the introduction of small modular reactors which are smaller, easier to set up and hopefully safer.

Even so on the supply side of things there is currently more than 20 plants currently in construction with China leading the way. This coupled with the demand side problems of not enough mines digging up the uranium needed to supply the current and new plants in construction.

There are possibilities from an investment point of view with an increase in uranium demand needed over the course of the next 10-20 years

the 3 that come to mind are

ASX:AEK – Anatolia Energy

Corporate Snapshot

Market Cap (as of 22 March 2015) 22M (30M fully diluted)
Share Price: $0.07
Cash @ March 22 $ 4 M

Project: Temrezli (in Turkey)
Where are they at:
JORC: 5.2MT @ 13.3M pounds @ 1,157 ppm

Currently in a position to start building the capex to start production by 2016

Pre feasibility study reckons:
12 year life
$41M Capex
pre tax NPV – $191M
Pre tax IRR – 65%
payback in 11 months of production
Cash cost of production: 16.89 per pound (versus current market price of $40)

Reasons to buy:
– relatively high grade
– Turkish government is supportive
– Low cost producer
– half the company owned by large backers (probability for financing higher)
– Excellent infrastructure (Power and Water)
– Expected supply deficit in 2020 (globally)

Reasons not to buy:
– drop in sentiment for uranium and nuclear power
– problems with financing
– problems with getting all the right Environmental & Bureaucratic requirements

other upside:
other deposits close by being explored
other research houses projecting price targets in the 20c+ region

see bottom for my verdict

—————-
ASX:PEN – Peninsula Energy

Corporate Snapshot

Market Cap (as of 22 March 2015) 124M (fully diluted 170M)
Share Price: $0.018
Cash @ Feb $ 70 M

Project: Lance Projects, Wyoming USA
Where are they at:
JORC: 51MT @ 53M pounds @ 476 ppm

Currently in a position to be the next producer of uranium

various feasibility studies reckon:
70+ year life
Capex = $146M ($33M (stage 1) + $35M (stage 2) + $78M (stage 3)) –
Note production will begin in stage 1 (0.5-0.7M Pounds (stage 1) + 1.2M Pounds (stage 2) + 2.3M Pounds (stage 3))
pre tax NPV (8%) – $288-328
Pre tax IRR – 36%
Payback 3.4 years
Cash costs $29.16-30.65 (only at Stage 3)

Reasons to buy:
– Next ASX co to production of uranium
– recent capital raising was success – showing support for the production (top 20 own 60% of company)
– project is in USA – very low sovereign risk
– broker research indicate price target of $0.06
– all permits signed off
– Secured some large forward contracts at good prices
– Foreign currency favourable movement
– infrastructure is good as can be being in the USA

Reasons not to buy:
– drop in sentiment for uranium and nuclear power – leading to drops in demand and spot price
– problems with capex building

South African project (Karoo) showing some potential

see below for my verdict

——————

ASX:AEE – Aura Energy

Corporate Snapshot

Market Cap (as of 22 March 2015) 8M
Share Price: $0.03
Cash @ Feb $ 1 M

Project: Reguibat – Mauritania (Africa)
Haggan – Sweden
Where are they at:
Reguibat resource estimate: 50M Pounds
Haggan resource estimate: 800M pounds

Currently have 2 projects
Reguibat will provide the most near term prospects
Haggan will need a partner with deep pockets to help develop

various feasibility studies reckon:
Scoping studies

Reasons to buy:
– long term view
– needs some backers
– Haggan is 800M pounds (3rd largest undeveloped uranium resource on planet) being spruiked as a very low cost high margin project – strategically close to Europe
– both projects provide some blue sky based on initial scoping studies

Reasons not to buy:
– drop in sentiment for uranium and nuclear power – leading to drops in demand and spot price
– needs some big partners to develop both projects
– capex costs for Haggan would be astronomical
– Run out of cash

see below for my verdict

—-

In my opinion: the project that represents the lowest risk is asx:PEN with near term production
in terms of risk/reward the likely potential be made from asx:AEK being less progressed than PEN but the economics seem better overall at their current market
asx:AEE poses the largest risk but also the biggest potential reward

I would put money on AEK or Spread across all 3 if you wanted exposure to each (60% PEN, 30% AEK, 10% AEE)
depending upon how bullish you are on Nuclear energy but the future does look relatively bright as other alternatives do not tick the boxs of
– base load power
– lower emission

As always This column is the personal opinion of the writer and does not imply any stock recommendations or offer financial advice. Readers should do further research of their own or talk to their adviser before acting on themes in this article. All prices and analysis at the Date of publication at the top of the post

ASX:IWG iWebgate – protecting your VPN

Corporate Snapshot

Market Cap (as of 15 March 2015) 227M (fully diluted (300 shares escrowed Dec 16)) 345M
Share Price: $0.38
Cash @ March 15 $ 3 M

Type of Co
IT – growth phase

In My Honest Opinion:
what they do:
provide a security platform for VPNs (Virtual Private Networks)
reduces the need for a firewall
seeks to segregate the Network, connections, devices and data

SWOT
Strength
won awards – a growing presence in the USA

Opportunity
growing use of virtualization since 1998 when it first came out
subscription service
fast and scalable

Threats/Risks:

Buy this because…: possibility of takeover

my call: wait seems quite highly priced for a such a small co even in the IT sphere

ASX:BLK Blackham Resources reviving old gold mines

Corporate Snapshot

Market Cap (as of 9 March 2015)(fully diluted) 22M
Share Price: $0.12
Cash @ Jan 15 $ 4 M

Type of Co
Mining – Explorer moving to production
Economics

potential mkt cap 44-220M (based on NPAT of $30-50M (using 1,200 USD gold price and 75c AUD and $1100 cost)

What is it worth:

varying views from different brokers/research houses
Paradigm – 173M NPV , 90c-1.35/share @ $1500/oz gold price
BBY – 25c/share
BW equities research – 40c-74c/share NPV $105-186M

In My Honest Opinion:
what they do:
restarting a disused gold mine
4.7Moz @ 3g/t
1.3Mtpa plant producing 100k ounces per annum
10 year mine life
$1.1M Cash + placement 3.0M

SWOT
Strength
low sovereign risk
restarting old plant
Weakness
not much cash

Opportunity
more gold around the area
Exchange rate favourability

Threats/Risks:
finance out of debt ? cheaper for shareholders than Equity

Buy this because…:nearing production, or if Gold price moves up or Aussie Dollar gets worse

Type of Buy: Buy & hold (until in production)

ASX:CVT online security for your cloud

Corporate Snapshot

Market Cap (as of 9 March 2015)(fully diluted) 108M
Share Price: $0.28
Cash @ Jan 15 $ 14 M

$ 0.0356 Cash/NTA per share

NPAT Fcst – unable to ascertain as yet
potentially mkt cap $300M-$500M ?

expected increase 200%-400%

In My Honest Opinion:
what they do:
security for the cloud

What’s happened to Date
Listed

SWOT
Strength
High barriers to entry
lots of accreditation
secure platform
patents
easily integrated into existing infrastructure
easy to use and integrate
security is a big thing now
high profile execs

Weakness
still in infancy
Need more sales

Opportunity
security is a big thing now

Threats/Risks:
other competitors
they make no money, or burn cash quicker than they can make it

Buy this because…:sexy stock at the moment and there is ample room for growth

Type of Buy: Buy and hold – watch – get out at a certain point when the steam runs out

ASX:1PG – online HR disruption

Corporate Snapshot

Market Cap (as of 9 March 2015)(fully diluted) 197M
Share Price: $1.65
Cash @ Jan 15 $ 13 M

$0.08 Cash/NTA per share

NPAT Fcst – unable to ascertain
potentially mkt cap $500M-$1B ?

expected increase 150%-400%

In My Honest Opinion:
what they do:
Online HR Saas for Referrals/talent assessment and internal innovation

What’s happened to Date
acquired – Branchout – online social media site much like linkedin using your facebook to find professional connections
Finalised their software offering and have fully implemented their systems now

SWOT
Strength
no other major competitors except for linkedin (revenue 643M) or maybe Seek
game changing technology increase efficiency by reduced hire time, lower cost and improved retention
a lot of Venture capital starting to be pumped into the company
patents
already many large clients (red bull, accenture, footlocker, Destination hotels, Fitness first, Amazon, UST Global, orange, sears, champ sports)
Weakness
idea is still in infancy
Opportunity
potential buyout from another firm
HR market worth in US worth $190B Expected to globally $456B
Threats/Risks:
they make no money, or burn cash quicker than they can make it

Buy this because…:sexy stock at the moment and there is ample room for growth

Type of Buy: Buy and hold – watch – get out at a certain point when the steam runs out

ASX:KNL Kibaran – graphite in Tanzania

9/3/15

Corporate Snapshot

Market Cap (as of 9 March 2015): $22M (fully diluted) 24.3M
Share Price: $0.16
Cash @ 31 December $ 1.9 M

Balance Sheet
Assets @ Dec 14
1.9M cash

=$0.01 Cash/NTA per share

EBITDA Fcst 28M for full year (based on scoping study)

PE – Fcst – 1 (based on estimated $25M NPAT)

In My Honest Opinion:
what they do:
Graphite explorer
JORC: 22.7T @ 9.8% for 2.2MT contained graphite
The Good
Offtake agreements
favourable pricing of graphite – currently very sexy
NPV from scoping study – 213M / payback 2.5 years with 27 mine life / low strip ratios 2.2:1
Opex Costs $489/tonne
$28M EBITDA Fcst

The Bad:
not enough drilling has been completed to given measured category in JORC
not much cash
Still a long way off
$56M capex

Other risks
Risks:
Country – Tanzania – relatively stable, infrastructure, mining friendly

Buy this because…: offtake agreements which may fund capex, most things are ok, getting capex funding is the big item to tick off and will this dilute the
however: still a long way off production, not sure if there will be any price catalysts anytime soon

Type of Buy: hold (longer term)