ADY - Admiralty Resources

[AussiePaul72]

Another good day for ADY today with good volume and testing above 50c again. The market seems to have given the announcement and share offer the tick of approval. Holding!

 

[nikki]

I am excited but a little confused with their announcement today. are these two new tenements different to the existing ones that have been supplying the ore. also, can anyone tell whether they have indicated what quantity this new find is likely to be.

I am so impressed by the fundamentals of this company but i keep doubting myself because of the market cap of ADY.

As much as i think there are advantages to having huge shares on offer by creating liquidity there is something so frustrating about the day traders who hammer a stock back to its openning price when image where the stock would be today if yesterday's aggressive selling had not happened.

 

[rub92me]

I am excited but a little confused with their announcement today. are these two new tenements different to the existing ones that have been supplying the ore. also, can anyone tell whether they have indicated what quantity this new find is likely to be.

I am so impressed by the fundamentals of this company but i keep doubting myself because of the market cap of ADY.

As much as i think there are advantages to having huge shares on offer by creating liquidity there is something so frustrating about the day traders who hammer a stock back to its openning price when image where the stock would be today if yesterday's aggressive selling had not happened.

Yes, they are additional to what they're currently mining. They've only touched/seriously looked at about 2% of the tenements they have.
Grades are looking promising, but beyond that there isn't much to say until they drill more holes. It's all a bit academic anyway how much iron ore resource they will eventualley end up with, and I don't think there is any doubt of much more to come. They're capped by how much they can get out the ground and shipped more than by their resource imo.
It will be interesting to see how they will value the two separate entities (iron ore and Lithium) going forward and how they will split it out. I think that will give a good insight in what to expect from this in the future.
Without the daytraders it would be a bit dull to watch, in the longer term they won't decide where the shareprice will be 2-3 years from now though.

 

[nikki]

It's all a bit academic anyway how much iron ore resource they will eventualley end up with, and I don't think there is any doubt of much more to come. They're capped by how much they can get out the ground and shipped more than by their resource imo.

It will be interesting to see how they will value the two separate entities (iron ore and Lithium) going forward and how they will split it out. I think that will give a good insight in what to expect from this in the future.
Without the daytraders it would be a bit dull to watch, in the longer term they won't decide where the shareprice will be 2-3 years from now though.

good point about the cap because of the 3.9(?) mtpa permit. i assume now they will be able to reduce costs by taking from tenements with higher FE grades. I wonder if they will be able to increase their permit once they have more proven resources.

is the japonesa and japonesita FE hematite or magnetite (i couldnt find info on this). the annoucement today talks about finding megnetite which i think is worth more than hematite (no idea why?) - which is why SDL's ore is worth more than GBG's aside from volumes.

your right about the excitment of watching ady - it certainly keeps me on the edge of my seat

 

[skating101]

the market does seem particularly disinterested in ADY right now, i suspect despite the good news everyone still wants to know what the IPO will be for the new Rincon Salar entity, it really does seem to be holding the share price back at 50, nevermind the fundamentals are still strong and more good news.

 

[rub92me]

the market does seem particularly disinterested in ADY right now, i suspect despite the good news everyone still wants to know what the IPO will be for the new Rincon Salar entity, it really does seem to be holding the share price back at 50, nevermind the fundamentals are still strong and more good news.

Sorry, but I don't understand where you get the apparent disinterest from. Volumes the last 10 days are near record highs and the price has gone up 50% in the last 3 weeks. Having another good go today at poking its head above the 50 cents.
Some further info on the proposed demerger from the ADY website:
Questions & Answers on the Admiralty Resources Demerger

Q: What is the process for the Admiralty Resources demerger and how will my share holding be affected?

Step 1: Consolidation of Admiralty Resources (ADY) shares

Admiralty Resources shares will be consolidated on the basis of 1 new ADY share for every 3.47215 existing shares held.

As an example; at the time of the demerger a shareholder has 100,000 ADY shares trading at 40 cents. After consolidation their holding would equate to approximately 28,800 shares trading at $1.39.

Step 2: Issue of Rincon Lithium shares

All shareholders will then be issued 1 Rincon Lithium share for every consolidated ADY share they hold.

This will occur after the experts report, director's report, prospectus for the demerger, cost base for Admiralty Resources and Rincon Lithium shares are calculated and an EGM (Extraordinary General Meeting) is held.

Q: When will the demerger take place?

At this stage the demerger is scheduled for February 2008 however there are many issues which could affect this date.

Q: How will the demerger affect share price?

It is likely that the ADY share price will drop after the demerger reflecting the value of the Rincon business being extracted.

The Rincon Lithium share price will assume a premium to the value currently held in Admiralty. This is because pure chemical companies trade at a 25-50% earnings premium to iron ore companies.

The affect of the demerger is to give shareholders a free increase in price by virtue of the different P/E's.

Q: How will the value and subsequent cost base of the new ADY shares and Rincon Lithium shares be calculated?

We will get an expert to calculate the value and subsequent cost base of the Santa Barbara business as well as that of the Rincon Lithium business.

 

[roland]

ADY's performance today makes me forget a little about PDN. Depth is good, volume is good, propects are good - what more could you ask for

 

[nikki]

thanks for posting that Rub92me.

i read that on their web page and saw great potential in them commissioning a professional assessment of the two projects. I think that will highlight even more the value in the lithium based projects and will positively impact share price.

clearly, the selling and buying volume in the past week has been pretty impressive. unless there is a severe correction in the DJIA tonight i am feeling optimistic aboud ADY hitting .6

 

[skating101]

Your right rub92me i only said that because I felt that the number of people buying and holding the shares at that time seemed small since the SP was closing at the same price everyday with big swings during the day. Also do you guys think the Santa Barbara iron ore operation a good invesment by itself?

 

[nikki]

I think once they manage to get some of the sales contracts for the ore it will be a great company because it will be one of the few small to mid cap iron ore companies with an income stream to do more.

Given the size and number of tenements and the purity of the ore there is great potential in what it will do. I think the cap on its annual production will impact how large it can get in the long-term. Once this is amended the potential for it to become huge just in terms of ore production seems huge.

I am more worried about the potential of exchange rate, tsunami in chile and port availability in terms of what it will do in the future.

 

[rub92me]

Also do you guys think the Santa Barbara iron ore operation a good invesment by itself?

That will depend on what they value it at when it demerges.
Back of the envelope estimates for revenue from 2009 suggests that Lithium costs vs revenue are 3 times better than for Iron ore.
So let's assume the following: after consolidation share price will be $2 with 280 million shares on issue.
ADY Iron ore will be: SP: 50 cents - market cap $140 million. 2009 profit on this around 21 million - 7.5 cents a share. That's good enough for me.
ADY Lithium will be SP: 1.5 - market cap $ 420 million.

 

[AussiePaul72]

That will depend on what they value it at when it demerges.
Back of the envelope estimates for revenue from 2009 suggests that Lithium costs vs revenue are 3 times better than for Iron ore.
So let's assume the following: after consolidation share price will be $2 with 280 million shares on issue.
ADY Iron ore will be: SP: 50 cents - market cap $140 million. 2009 profit on this around 21 million - 7.5 cents a share. That's good enough for me.
ADY Lithium will be SP: 1.5 - market cap $ 420 million.

Hey Rub92me, if your figures are close to being right and they seem quite plausable from the outset (although i'm not an analyst on these things) .....i'd be a very happy investor in ADY

This last month has been very encouraging for ADY ......up around 60% in the last 3 weeks from around the 33-34c level to a close of 53.5c today......and convincingly finished above the 50c level after testing it on a number of occasions recently ..... very strong volumes continue to be traded even as the SP has moved up

The demerger (without knowing exact details but from what i understand) could offer more value to shareholders. Also from my understanding, its not to late for new shareholders to get the whole share offer in both companies. This may be creating a lot of interest at present in the market. This is just my opinion and the way i see it ......DYOR

 

[AussiePaul72]

Huge day of trading for ADY today. Biggest volume (over 74 million) traded in a single day since early January this year.

IMO it seems that ADY is well and truly in the scopes of day traders at the moment. It hit an intra-day high of 59c (up over 10%) before sellers brought it back to finish the day at 54.5c (up 1c on Fridays close).

It does show there is a lot of interest in ADY at present one way or the other.

What do others read into the current ADY trading activity?

 

[rub92me]

What do others read into the current ADY trading activity?

Lots of effort (volume) for little gain. Short term I wouldn't be surprised if it retraces a bit over the next couple of days on lower volume. Unless they throw in another nice announcement of course .

 

[nikki]

hi rub92me, would you mind telling me what the red line is through the top chart. i am not much of a chartist.

i agree about retracing backwards. the candle it formed yesterday would certainly keep me at bay!!! the fast stochastic (on a 5 day average) shows over-bought signals whereas the MACD divergence is the strongest it has been for a while - so good news would certainly revive some strong buying interest.

its a shame it did not get the chance to test .6. that would have been interesting to watch. i guess anything more that a 10% gain in one day is signal for traders to sell on the day.

 

[rub92me]

hi rub92me, would you mind telling me what the red line is through the top chart. i am not much of a chartist.

It's the 34 day EMA (Exponential Moving Average) confirming that the (shortish) trend is up. But then we already knew that anyway I suppose... If it dips too far below that I'd be looking for another opportunity to add for the long term.

 

[SevenFX]

If it dips too far below that I'd be looking for another opportunity to add for the long term.

Rub92me
Is that even if it were Onetell or HIH :, as companies trading below 120-200ema for extended periods could indicate a sign of trouble.

Nikki.

You may find this link useful, as sight has plenty of good stuff.
http://stockcharts.com/school/doku.php?id=chart_school:technical_indicators:moving_averages

Cheers
SevenFX

 

[rub92me]

Rub92me
Is that even if it were Onetell or HIH :, as companies trading below 120-200ema for extended periods could indicate a sign of trouble.

Nope; if it would trade below 120-200 EMA for a long time I would probably sell as I agree that could be a sign of trouble (or at least not going anywhere positive in a hurry). It hasn't done that for a while though.
When I said 'dip', I meant to imply a short sharp move below the 34 day EMA line (which is higher than the 120-200 day EMA).

 

[nikki]

Thanks for the site Teckmann. What a fantastic site with so much good stuff to read???? Appreciate your help.

Rub92me, can i ask whether you can connect the software you use to a live feed from something like etrade or commsec. i noticed it is well priced to buy but how do you get your information re the stocks. Sorry everyone else for asking this but no idea how to differentiate between all the stuff that is out there and i need something more sophisticated that etrade!!!!!

 

[rub92me]

Hi Nikki, I use Amibroker with a plug in to Interactive Brokers to get intraday data for some of the stocks I follow closely. I use Premium data to get my end of day data which I use to run scans and test my set ups and trading plans (futures and ASX data). Still learning most of that myself though.