Australia's largest stock trading and investment forum Australia's #1 stock forum

VAN DAU

Ann: Significant Upgrade to K2 DFS, page-15

First 15 Last

Share
Profile

Follow
elit

13,316 Posts.

168

10/10/14

18:41

Post #: 14108444
Share

Originally posted by Timber7 ↑

Hi Wazzooo,

Hope you are keeping well. I've said this in the past - mgmt are not short of will. The will to make this a success and progress assets to a conclusion is there, however its not a battle that they can win in my opinion. The obvious events of the past have made obliterated any case for investing in this stock. Mgmt salaries and packages are absurd, regardless of participation in recent raisings.

Not counting any options there are 2.7B shares on issue. In its most basic form ORD will have 45% of the Plutonic project at the end of the current 1M spend. 45% of the current NPV is 6.6M which equates to $0.0025 per share. The numbers get bigger depending on ownership figures. The current price is $0.002 per share so the stock looks cheap, but who has a substantial holding on an average of $0.002? Not many.

The reason why the project doesnt stack up (regardless of your average) is because the NPV is based on 3-years mine life. Assuming the company returns 100% of all earnings then you'll get back exactly what you bought ORD shares for ~$0.0025. Again not many are at this price. Its doesnt make sense - yes you'll get some return but nothing to compensate for investment (i.e Return on Equity/Investment). The other issue is that 3-years implies, 3-years LOM (life of mine). Even with a return of $0.0025 after 3-years, then what? ORD will have nothing as it has distributed all earnings and LOM is zero.

The project starts to make sense IF LOM is extended. i.e 10-years. But you cant extend LOM without further drilling to extend the resource and further CAPex to develop the mine. This means more CRs and further dilution (lower ROE/ROI). The other issue is that the DFS is based on a lot of 'resources', as opposed to 'reserves'. This adds risk to feasibility. ORD makes mention of 'financing' discussions - so either debt/equity/hybrids. In some form SHs will be diluted - i.e even with debt financing (servicing costs will have to be paid from mining profits instead of all profits being distributed). Also a $1400/oz POG($A) looks optimistic to me. Its currently at $1382 ($A) but as the world starts to revert to the norm then gold is gonna get dumped. Gold generally trends at USD $800/oz - gold is not a growth asset as many believe. It stems from the fact that gold is not consumed, but hoarder (the majority of it is held by the worlds population as jewellery or in safes for hedging purposes). As the world derisks and reverts to the norm - post GFC era, US rebuilding, slowing Asia - gold holdings will deplete (sold) and reinvested in traditional asset classes. This selling pressure will be no good for gold miners.

In summary, this is why its no longer a sensible investment proposition from my point of view.

Expand

Timber7 this is undoubtly a risky proposition....but fundamental to your analysis is your view on gold.....

Keep it to gold thread mate.....as I don't believe at all gold headed to USD$800...fundamentals for gold stronger than ever IMO and this is at bottom end IMO...as lot of pundits I respect would agree....but not going to argue with you on this thread about future for gold....

You are clever man....but I note no gold analyst so will certainly say your views are just that...without any specific rationale to justify this view on gold.....keep to your knitting mate before making such grand macro statements on stock thread...

Happy to debate merits of stock but not gold on this thread...thanks..

DAU Price at posting: 2.5¢ Sentiment: None Disclosure: Unspecified

VAN Price at posting: 0.2¢ Sentiment: None Disclosure: Held
1 Upvote

0 Great analysis

Reply

Top Stories

HotCopper Highlights: Your most watched stocks for Week 48, 2024

Breaking news: New opportunities for investors & companies - HotCopper opens to capital raising!

Week 48 Wrap: ASX flirts with 8,500pts; APRA declines mortgage loan easing; Trump's Bessent tied to Dem donor

ACW

This biotech stock raised $11M in a risk-off environment. Its Alzheimer's drug could change the game

History-making uranium sample grades and an imminent drill run. Infini Resources is poised to transform in 2025

There are more pages in this discussion • 7 more messages in this thread...

First 15 Last

Add VAN (ASX) to my watchlist

SPONSORED BY