OK, a few have asked for a spreadsheet.
I've found a little time so have knocked together a quick version. It includes outlier scenarios, both upside and downside as well as a range of possibilities in the middle. It seems incredible and it is.
It's hard to find a precise comparison for valuations because anything the size and purity/grade of Mintap is locked up inside large joint ventures (will we see such a vehicle in time ?)
But a little info on a couple of smaller Australian based contenders.
Metro mining : MMI.ASX
Market cap $325 million
From http://iminco.net/35-million-bauxite-mining-project-queensland-jobs-mining-metro-mining/
Metro Mining, who are looking to gain recognition in the mining sector released a study confirming the Bauxite Hill mine could become one of the largest independent mining operations in the North Queensland, Weipa bauxite region.
The study indicates the bauxite mine could have a shelf life of 17 years, with reserves of some 92 million tonnes (Mt) and resources of 145Mt
The basic infrastructure including an airstrip, haul roads, on-site camp and port location are locked in already.
Metro managing director Simon Finnis said, “Once approvals are finalised we plan to commence mining at 2Mtpa increasing to 6Mtpa over the first four years”.
“Whilst the study has been completed for steady state production of 6Mtpa, environmental approvals should allow production of up to 10Mtpa. Metro Mining will continue to evaluate the benefits of increasing production as the project moved through the pre-development and operational phases.The study estimates life-of-mine revenue of $5.7 billionand life-of-mine earnings before interest tax depreciation and amortisation of $2.5bn,” Finnis says.
The mine development hopes to take advantage of the forecast for Chinese imports of Bauxite to increase from around 52 million tonnes in 2016, of which 21.3 million tonnes came from Australia, to 136 million tonnes in 2026. The CM Group report states growth forecasts are being driven by continuing demand from China`s primary aluminium sector and a lack of bauxite within China.
Metro has secured an agreement with China’s Xinfa Group for 7Mt of bauxite to be delivered over the initial four years of mining.There is also the possibility to extend the bauxite mine through conversion of the existing Bauxite Hills resources to reserves. (...Greenstone involved here for those interested)
So, to re-iterate, "The study estimates life-of-mine revenue of $5.7 billion and life-of-mine earnings before interest tax depreciation and amortisation of $2.5bn based on 6 million tonnes per year and a resource of 145 million tonnes. Grades are respectable but Silica SiO2 content up around 6-9%
It is well worth reading announcements from Metro if you need insight into this area of the resources market. Their latest presentation and the Cap raising presentation are both good sources . Same for MLM.
Metallica Minerals MLM.ASX
12 million market cap
Last Investor Presentation from June 2018.
Once again Metallica have reasonable Al2O3 grades but SiO2 is getting even higher. Regardless they have have a small but neat operation approaching production (5 month payback period). You will note that operating costs, even in Australia, are around the $30 per tonne level. Imagine the cost savings for a tier one asset.
What Canyon have is an order of magnitude or three higher than both of these worthwhile operations.
The Cameroon government is working on infrastructure, from ports to rail, to power. I have been researching this company and others in my signature below since the TO offer for AVB was obviously going to succeed. I have come across a large volume of data leading me to think that the time is right for Cameroon to move forward and it will need to utilise deposits like Minim Martap to generate the revenue necessary. I apologise that not all references are in here but for those that know me...they are out there.
Turloch Mooney, Senior Editor, Global Ports | Mar 18, 2016 9:11AM EDT Construction work is set to commence on the second phase of the only deep-sea port in central Africa at Kribi, Cameroon after a second round of financing was arranged with the Export-Import Bank of China. The second phase of the project will cost $675.5 million and consist of two container berths, two bulk cargo berths and two hydrocarbon berths. When complete at the beginning of 2020, there will be 20 terminals along a total quay length of 6.5 kilometers (4 miles).
The new port is expected to effectively replace the existing Port of Douala, which lies 150 kilometers to the north of Kribi. An estuary port that requires constant dredging and with a draft of just 7 meters, Douala handles the vast majority of Cameroon’s seaborne trade, but is notoriously inefficient and regarded as one of the worst commercial ports in Africa.
Average cargo dwell time — defined as the time from vessel arrival to the exit of the cargo from the port — is 22 days at Douala, according the World Bank. The lengthy dwell time is in part due to the fact that small ferries are used to carry in goods from vessels larger than 15,000 deadweight tonnage that cannot berth at the shallow port. With a 16-meter draught, the new port at Kribi will be capable of handling vessels up to 100,000 dwt.
“The average global dwell time at the Port of Douala is five times higher than the one of Durban, twice of the Port of Mombasa, 1.5 times of Dar es Salaam; (it) exceeds by 22 percent the global dwell time at the Port of Lome and by 10 percent the Port of Tema. In major ports of Asia and Latin America, the global dwell time is on average less than a week,” the World Bank said in a 2015 study on the inefficiencies of the Port of Douala.
The first phase of the development at Kribi cost $498 million and consists of a 120-meter breakwater, a 362-meter container berth and a 308-meter general cargo berth. The two berths can handle vessels up to 50,000 and 40,000 dwt, respectively. Funding for the first phase was provided by the Exim Bank of China and construction works carried out by China Harbor Engineering Corporation.
For phase two, the bank is providing part of the funds on a concessional loan basis and part as a preferential loan. There is an interest free grace period of seven years after which interest is expected to be as low as 2 percent annually. The loan will mature in 20 years.
A third phase is planned, which will see 12 new berths constructed in the northern part of the port complex.
A consortium led by France’s Bollore group and comprising CMA CGM and CHEC was awarded a 25-year concession to develop and operate a container terminal at Kribi on 700 meters of quay with a 32-hectare (79 acres) yard and an annual capacity of 1.4 million 20-foot-equivalent units. Bollore Africa Logistics currently operates the container terminal at Douala, the Douala International Terminal, as a subsidiary. Cameroon is the second-largest economy in central Africa after the Democratic Republic of Congo. As well as the local economy, the port is expected to become a regional transport hub for Atlantic coast countries from Senegal to Gabon and neighboring landlocked countries such as Chad and the Central African Republic.
The new port is expected to boost Cameroon’s mining sector, with a new 510-kilometer rail link being constructed between the port and the iron ore producing area of Mbalam in the east of the country. Mota-Engil SGPS, a Portuguese construction company, was awarded the contract to build the railway line together with an iron ore berth at the port. Contact Turloch Mooney at [email protected] and follow him on Twitter: @TurlochMooney. A version of this story originally appeared on IHS Fairplay, a sister product of JOC.com within IHS.
Keep in mind also that the current resource for Canyon (CAY.ASX) is a combination of their historical assets (which helped them gain in-country experience) and the addition of Minim Martap, a mind boggling resource in it's own right.
So what will move Canyon Resources on from here? Check out the quality of management and the share holder base.
Take note of Canyon's aggressive development time frame and that development of the resource will likely require only modest capital expenses. I suspect there will be very modest cap raisings between now and production or take over (a real possibility, the prize is enormous and as we know the big guys don't like leaving all the margin to us small fish). I've worked on a conservative expectation that they will blow out to 500 million shares but quite possibly it will be nothing like that. Given the numbers, even if it was double I would personally still be fine. Timelines to production? 1 to 3 years? Value along the way? All they have to do is dig almost from surface and load, transport to port and count the $s. Country risk? Yes, but isn't that where the fun begins
Disclosure: I was a buyer today and probably will be again tomorrow. Working on Top20 holders list even if only temporary before the big boys swarm in.
PS My heart felt thanks to all those who have been here for a long time and those who have done some great research (u know who you are). It has helped myself and others get it worked out quickly and it looks like only just in the nick of time. I am grateful and I will be happy to throw down on the bar at the next AGM in appreciation, or on the veranda bar in Cameroon
PPS Only invest according to your risk appetite but I really like this company
...and that is not advice, just my opinion
CAY Price at posting:
18.5¢ Sentiment: Buy Disclosure: Held
(20min delay)
