A thread for Vimy Resources information and discussion. In my opinion, VMY is the best investment case for ASX uranium exposure. Most long-term holders will know all this, but I spent a few hours today compiling some notes, here's an honest summary of them:
Market cap – 47m
Shares on issue – 415m
Cash – $6m recently raised @ 11c
JORC – 116m lbs U3O8 @ 570ppm
Overview
The best open-pit uranium play on the ASX. A high quality core project Mulga Rock in WA with an additional 3 largely unexplored tenements in the Alligator River region NT - the 3
rd richest uranium province in the world.
Vimy Resources Limited (ASX: VMY) is a Perth-based resource development company. Vimy’s flagship project is the Mulga Rock Project, one of Australia's largest undeveloped uranium resources, which is located 290km ENE of Kalgoorlie in the Great Victoria Desert of Western Australia.
Vimy also owns (75%) and operates the largest granted uranium exploration package in the world-class Alligator River uranium district, located in the Northern Territory. Vimy is exploring for large high-grade uranium unconformity deposits identical to those found in the Athabasca Basin in Canada.
Insto VMY Price Targets:
Pattos 26c
Cannacord 50c
Morgans 38c
Bloomberg consensus 44c
Core Project – Mulga Rock (100%)
Australia’s largest advanced uranium development project with a favourable DFS. Large 90.1m lb deposit with a ROM grade 770ppm. Simple open pit mining operation with an average depth of 43 metres. State and Federal Ministerial approvals received and secondary permitting well advanced. The Mulga Rock Project is located near Kalgoorlie-Boulder, a major mining service centre.
- The project
NPV is A$530M at an assumed long-term uranium contract price of US$60/lb U3O8, with an
IRR of 25% and project
payback period of 3.1 years after commencement of production.
- For every
US$5/lb increase in the uranium price, the project
NPV increases by A$172M.
- The all-in capital
breakeven uranium price for the project is US$44.58/lb U3O8
- The project generates an average
A$134M per annum free cash flow (EBITDA) after royalties.
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Column 4 |
| 1 |
Company
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| 2 |
VMY
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| 3 |
BMN
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| 4 |
TOE
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| 5 |
Share price
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| 6 |
0.115
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| 7 |
0.053
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| 8 |
0.027
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| 9 |
SOI
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| 10 |
415
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| 11 |
856
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| 12 |
2008
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| 13 |
Market cap
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| 14 |
47
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| 15 |
45
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| 16 |
54
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| 17 |
Core Project JORC
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| 18 |
90m lbs
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| 19 |
271m lbs
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| 20 |
84m lbs
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| 21 |
Target production rate
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| 22 |
3.5
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| 23 |
7.2
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| 24 |
3.0
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| 25 |
Capex
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| 26 |
493m
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| 27 |
900m
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| 28 |
267m
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| 29 |
Opex / lb USD
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| 30 |
28
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| 31 |
38
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| 32 |
31
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| 33 |
DFS Study price / lb
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| 34 |
60
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| 35 |
75
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| 36 |
70
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| 37 |
IRR
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| 38 |
25%
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| 39 |
15%
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| 40 |
-
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| 41 |
NPV
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| 42 |
530
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| 43 |
419
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| 44 |
-
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| 45 |
payback
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| 46 |
3.1
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| 47 |
4.4
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| 48 |
-
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| 49 |
Breakeven price / lb
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| 50 |
45
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| 51 |
52
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| 52 |
-
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| 53 |
Completed Phase
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| 54 |
DFS
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| 55 |
DFS
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| 56 |
PFS
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(VMY compared with the only other ASX listed uranium open pit developers BMN & TOE)
Mulga Rock - Battery Minerals Option:
After the end of the Quarter, VMY announced a potential upside to uranium value at the Mulga Rock Project through base metal by-product credits. The base metals plant is designed to recover copper, zinc, nickel and cobalt as mixed sulphide by-products from the tailings of the uranium plant. The DFS ultimately focused solely on uranium. However, growing demand for base metals prompted Vimy to review the viability of the base metals plant, with initial indications pointing to greatly improved economics. At recent base metal spot prices and the same inputs and assumptions as used in the PFS, Vimy derives a base metals by-product credit of circa US$4/lb U3O8. The JORC for the battery minerals option is 34MT Cu 280ppm, Zn 960ppm, Ni 480ppm, Co 240ppm
Other Projects – Alligator River
The Alligator River Uranium Province is a world-class uranium province. The deposits in the Province are a style that is unique to both the Alligator River and the Athabasca Basin in Canada. These deposits are noted for their large size and exceptional grades including some of the largest deposits in the world.
King River-Wellington Range JV (75% VMY):
1600km2 of land. Hosts the Angularli deposit and other highly prospective targets with limited sandstone cover. The Angularli deposit has a JORC 26m lbs, and an exploration target of 20-60m lbs. Recent 6m placement will be used to drill targets at the Angularli deposit, and at the ‘Such Wow’ prospect approx. 15kms SW of Angularli. The team is planning on completing a scoping study for the Angularli project 2018 to verify the project economics, due diligence has been sorted for an underground mining operation.
Algodo-Beatrice project (100%)
A group of tenement applications to the east of the Ranger (150m lbs) and Jabiluka deposits (350m lbs) under moderate sandstone cover.
Mt Gilruth project (100%)
A group of tenement applications to the southeast of the Ranger (150 m lb) and Jabiluka deposits (350 m lbs).
Management
View attachment 1141342
View attachment 1141351
Notable Top Holders
Resource Capital Funds 22% - with Vanessa Guthrie as board representative (prior experience CEO of TOE)
Forrest Family Investments 14% - Twiggy Forrest's fund. with Malcolm James as board representative (prior experience COO of PEN)
Acorn Capital 9%
Michael Fewster 9%
Macquarie 7%
Chart
Still some loose placement stock floating around creating a not-so-perfect descending triangle type pattern. Bullish OBV spike. A few small gaps to be filled (12c, 17.5, and 20.5c). Very limited downside here with recent 6m cash raised @ 11c and the uranium market bulls returning.
View attachment 1141273
Recent Broker Data
The recent rolling weeks data has significantly improved, looks like some positioning has started. Decent amount of buying across the board from both the instos and retail. Notable buying from Morgans who were lead broker in the recent raise,+3m net for the week. Other insto buying coming from Morgan Stanley, Argo, and Hartleys. Macquarie being the major selling making up for most of the selling.
Placement overhang still bit of a burden. Whilst Morgans, having done previous raise, are using recently liquidity to balance holdings, Macquarie are doing the opposite and using the liquidity to exit. In my opinion, we could see some nice share price movement once Macquarie have finished their selling.
View attachment 1141318
View attachment 1141321
(Potential) Concerns
- VMY's cash burn - VMY spend around $800-900k / Qtr on staff
- Project financing and securing decent sales contracts
- Maquarie selling
- Cameco buy-back option - Cameco have the right to buy-back one of the Alligator River Tenements within 4 months of a DFS. In the event of a buyback option being exercised, Vimy retains ownership of the surrounding exploration licences and only the area defined by a granted mining lease over the Buyback Project would be sold to Cameco.
Things to Look Forward to 2018
- Further RC and diamond drilling of Angularli to expand the resource
- Initial drilling at the 'Such Wow' prospect to confirm the concept
- Mulga Rock DFS update to review viability of the Battery Minerals option
- Scoping Study for Angularli
Disclosure - Accumulating
