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ANW aus tin mining ltd

4.76%

2.0¢

Ann: Exploration and Development Update, page-187

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89 Posts.

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18/03/18

10:08

Post #: 31835131
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Originally posted by mikesz ↑

So I thought I would recap for everyone what we have here. I did some earlier work on getting my head around valuation for ANW and I stand by my estimate of around 10c mark. I think at the time most people had agreed that was reasonable and not much has changed.

valuation of $0.095

@87 Crash did an excellent post here that pointed to a very similar figure

ANW has lots of Tin, certainly enough to be globally significant producer and certainly in the top 8, maybe even higher. G2 production at nameplate should see us producting 550tpa at a profit of just over $10k per tonne. Product purity is good at 63% With Taronga coming on line in the next two years we should add another 2800tpa at very similar profit margin. There is also a very strong possibility of resource expansion from Torrington (near Taronga in NSW). Historically that the epicentre for Sn mining in Australia.

Then we have a neat silver reserve of 4.4Moz to add to cashflow. Measured and JORC2012.

Plus we have decent grades of Cobalt at Mt Cobalt however not enough drilling or metallurgy has been done to understand quantity or viability at this stage.

Plus we have a significant resource of Nickel Suphide at Pembroke and Kilkivan. This could actually be very significant although we haven’t focussed on defining the resource as yet. Being a sulphide product by default makes this very easy to get to market as processing would not involve complex HPAL plants (expensive).

All in all, if we can get G2 and T1 producing we are looking at $45m annual cashflow just from our Sn resources. Given it a simple 10x multiplier and we could have a $450-500m business here. We are so close to production but obviously there are always risks. As some pointed out here we have a few things to watch out for:

1/ delivery risk with G2 and specifically delays due to weather, access to site and people risks. Completing the civil works at Granville is quite a critical event for the company. It effectively will kickstart the growth stage for the company towards the valuation given above. ANW is mitigating this risk by hiring a new GM of Operations and having a civil contractor lined up. All other permits are done.

2/ supply chain risk with sending our product to Traxys in Malaysia. We have heard that 5t of product was shipped late last year and first payment was received. Recent cashflow shows $61k. However we are expecting closer to $125k in that column, so the final payment is clearly outstanding. Risk here is that either something is not right with the product purity as tested by Traxys (could explain why we have new spirals being installed into the circuit), or there is something wrong with Traxys itself, or we have problem in the middle (shipping etc). I cannot see the company doing anything to mitigate this. They have mysteriously gone very quiet on this.

3/ risk of running out of cash. Last quarterly stated we had approx $460k left in cash to drive G2 civil works, Mt Cobalt exploration and metallurgy. Admin and staff costs were covered outside of that number. Metallurgy for Mt Cobalt alone was $200k so the way I see it we don’t have that much left. I know the CEO said he is not worried about cash - that was probably the biggest surprise to us all recently. So I anxiously await the next quarterly. Given we have 1.86b SOI I would really hate to see further dilution via future CR given we are so close to own revenue.

The above says it all really. A tremendous opportunity to 5 bag from here, near production, solid metal demand with LME reserves running extremely low and Sn price going up strongly. We also appear to have a poly metal strategy now, which will diversify this company a fair bit and hopefully new and existing investors can see the potential of parking their money in ANW.

I really don’t want anyone to just think this is rosy, of course all IMO and DYOR. There appears plenty of upside with some fairly well understood risks.

Can we pls use this Sunday and onwards to add to this POV in a constructive manner?

Expand

Wonderfully summarised and a great read! I share similar concerns with the limited cash and G1 tin concentrate with Traxys.

I understand there was still some tin being dressed in February and no news has been announced regarding the initial shipment either so I'm optimistically assuming we will get an announcement once all of the G1 tin has been completely finalised.

Now for my main worry, "Off‐take agreement executed with Traxys Europe for all tin concentrate. The Company is pleased to announce that Ten Star Mining has executed an off‐take agreement with Traxys Europe (Traxys) for all tin concentrate from the Granville Tin Project. The two year off‐take agreement enables Ten Star Mining to sell its tin concentrate providing the Company surety of a sales stream."

This is a 2 year agreement which was announced on the 11th April 2016. We have less than a month to go before it ends. I couldn't find any news about this agreement being extended, this might seem scary but here is some food for thought. CEO isn't worried about cash right now, i'm assuming the remaining tin concentrate being dressed in February has been finished, sent to Traxys and we have received payment. So the agreement ending soon doesn't matter, it could be done and dusted already. This also lines up with December's capital raising where the board and management elected to convert $300,000 owed to them to shares. This conversion was done 2 months after the first shipment of tin, i'm not good at timelines but in 2 months ANW would have news about the shipment and progress so why convert debt to equity if something was wrong?

This is level 1 Granville (The notes next to each point are my own opinions and are most likely wrong):
• Production of saleable concentrate - Done
• Re-treating low/medium-grade stockpiles - February dressing (potentially done)
• Develop technical capabilities - Done
• Pilot logistics & sales - Done
• Level 2 permits obtained - Done

I'm gearing up for an announcement before the end of March/very early April. If all of Level 1 is confirmed then de-risking is successful and the next level is future cashflow from G2 (whenever they get that up and running).

ANW Price at posting: 2.6¢ Sentiment: Buy Disclosure: Held
13 Upvote

3 Great analysis

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