AGM - Allegiance Mining

[Sean K]

Hello all,

Just a simplistic view on AGM, but if you comapre this with Jubilee (AGM will produce just slightly less nickel pa than Jubilee, 8500mts for AGM, Jubilee 9500mts), and you take into account the total shares on issue, you will find that currently AGM shud trade closer to low $3's...maybe a few cents more.

Ofcourse there are differences, like Jubilee is already producing...but if the nickel market holds, AGM will not be that far behind...maybe pushing past the $2-$2.50 mark by the end of the year if the mill startup all goes to plan.

Just my simplistic thoughts...

hoppie, are there any other differences that could account for the disparity in valuation? JBM have a few deposits with about 500,000 tns Ni in a district containing about 7M tns, with significant exploration potential, and other investments. While they might be planning on producing around 9500tns a year they plan to ramp up to 20,000tns I think. I think JBM have about $280m in the bank too. How does that compare?

 

[Broadside]

hoppie, are there any other differences that could account for the disparity in valuation? JBM have a few deposits with about 500,000 tns Ni in a district containing about 7M tns, with significant exploration potential, and other investments. While they might be planning on producing around 9500tns a year they plan to ramp up to 20,000tns I think. I think JBM have about $280m in the bank too. How does that compare?

My understanding is that AGM has significant exploration upside. With regard to peer comparison, if we are indeed comparing apples with apples AGM is due for a major rerating when production commences.

 

[hoppielimp]

Hi Kennas,

Like I said its a simplistic view, but I look at the mine life which I believe stands about 15 years for AGM, which I think is long enough for an initial estimation without any further resources being discovered.

Jubilee yes intend to ramp up but this will take time. From a snap shot point of view, the simplistic equation is where I placed AGM (full prod 8500mts) at roughly the same point in time of production etc as Jubilee. (I think at the time JBM = 16.50, FY07 production est. stated as 8500-9000mts)

So in theory AGM should get to a share value equivalent (about $3.10) close to where Jubilee is now (when they are in full production). Jubilee as u mention are looking to increase production...and when it does or then ofcourse the comparisons end.

I believe the increase in production is scheduled for 2011 so for the time being I don't think JBM current share price has too much premium placed on this future increased production.

Now if the Nickel prices go down the gurgler then ofcourse everything goes out the window.

 

[Sean K]

My understanding is that AGM has significant exploration upside. With regard to peer comparison, if we are indeed comparing apples with apples AGM is due for a major rerating when production commences.

Hi Kennas,

Like I said its a simplistic view, but I look at the mine life which I believe stands about 15 years for AGM, which I think is long enough for an initial estimation without any further resources being discovered.............

Now if the Nickel prices go down the gurgler then ofcourse everything goes out the window.

Yes, agree with the exploration upside for AGM but taking a cursory look at the maps JBM might have a little more to work with. I'm not sure if that is sufficient to explain the valuation disparity at this point though.

Perhaps most of the valuation difference can be put in the stage of development? Maybe.

I do have AGM having about 160,000 t compared to the 500,000 t that JBM have. If this is correct, then it is a significant difference. That should be a consideration in a valuation, perhaps.

AGM have $50m in the bank, JBM $280m. I note ABN reckons they will need another $40m to get to production. Probably via a placement and spp diluting the company slightly but not a great deal.

Not sure how grades compare? Could be a factor. Maybe AGM is better??

Some good broker reports on AGM's web site all slapping a buy on it, but target prices are $1.40, $0.73, and $0.89. I don't think they've upgraded the resource since these were put out. Brokers valuations are worth what though?

Anyway, all food for thought. Pretty hard comparing companies out there at different stages of development, different tonnage and grade, different management, blah, blah. AGM has been a stellar stock to own the past year. Hopefully they can get to production smoothly with no mishaps and Ni stays bouyant. All the best.

 

[chicken]

Credit swuisse just posted a report on Nickel....they are saying Nickel could hit $65000 a ton and prices will stay high for the next 2 years...AGM is starting production at the right time and their grades will be higher than others...I hold ,as all brokers have buy on this stock...AGM has so far delivered as promised and the mill is being installed now...see AGM news...tomorrow we have the AGM meeting and news should be very intresting...Also the contractors are mining the ore since march and its stockpiled for milling....

 

[chicken]

From AGM meeting....talk of listing on the Toronto exchange....3 drill rigs working to even find more Ni in Tassie....and all good news...Ni should stay over $25000 a tone for a while...see CS report...at present over $50k a ton...AGMs ball mill being installed no hitches..talk about a div.for next year...

 

[Ken]

CHICKEN you have done very well out of AGM.

Have you sold anything on the way up or just bought more??

 

[gunditrader]

Hi guys
Just wondering if anyone attended the agm today for agm. Apparently all the heads of departments were supposed to give presentations and Q & A.

Any comments from anyone who attended would be very much appreciated.

gundi

 

[savtin]

From another forum................................I too was at the meeting but the following captures the gist well.



Good afternoon folks, just back from AGM's agm, which ran for the best part of 3.5 hours. There were certainly a lot more people there than they had been expecting, so they had to stuff around with opening up another two sections of the conference room. The demographics were pretty evenly spread, not just the usual retirees. It was quite a buzz to be there actually, lots of people there would have made a truck load of money in the past 6 months or so.

Anyway, onto the more intersting things from the AGM....

The formal session:

As expected, there were several questions / objections to the share options given to the employees/contractors and its diluting effect that it has on the company's SP. THR, Eddie and the good Rabi had to spend quite a bit of time defending the board's decision to grant these options. It all came down to the need to hold on to these key personnels, without them there is no Allegiance as it stands today. From my personal point of view, I sit here in my comfortable home writing this report, these people are out there day in, day out in the wild west coast of Tassie to bring me wealth. I can't really complain. They've done a tremendous job and there's a lot more to be done yet.

An interesting question was raised regarding the possibility of dual listing on the Toronto Exchange! THR had to pause for a bit to gather his thought on how best to answer this question, to which he said... it's something that the board is "actively" considering! Make of it what you will .... He drew an analogy with gold companies... during the last resources boom, 75% of the gold producers were Australian owned and today, guess how many? it's only 25%! Most are now listed on the Toronto Exchange. He went on to say that if AGM doesn't grow quickly, it's only a matter of time that a takeover play will occur.

On the subject of Dividend, THR pointed out that it's something that's definitely on the drawing board. They will decide at the time how best to deal with the profit, they may use it to pay off the existing debts first then divi later but his preference is for dividends! This time next year, he sort of hinted that we will be asking at the AGM, not when but how much

The informal sessions:

There weren't anything really exciting to report. THR gave a pretty rosy picture of where PON will be with the China boom. They put up a slide on the developed and developing nations' consumption of Ni, China had hardly moved on the chart from 99 to 05. This indicates to THR that the boom has only just started. This probably means that PON will remain high for the forseeable future. He kept on saying above $25k, we'll all be very happy!

With the production plant, everything is going to plan. The project schedule was put up and it was pointed out that all the high risk bits are now behind us. The ball mill is a very low risk component, low technology bit of work. They don't foresee any issues there.

Tim Callaghan, the Chief Geologist, gave a quick summary on their drilling program. There are 3 rigs out there, Bison, East Avebury and Saxon, working as fast as they can. They are looking to build up the reserve as quickly as they can and will announce as data comes to hand. He couldn't really say much more, again ... one needs to read between the lines on this one.

The Geothermal stuff was rather uninspiring. They are at the very early stages of exploring the potential. It's important to note that Lindsay had to foresight to explore/exploit Ni when noone else is looking. This can ony be good for the long run.

That concludes what I gathered from the AGM. The only other informal stuff that I managed to gather after the sessions were:

1. There is no plan in place at present to order the 2nd ball mill. Incidentally, the lead time now is almost 2 yrs if one is ordered today.

2. Ian Levy stepped down from the CEO position due to health reasons. He'll be back on board when he's okay again. They've already found a replacement for Ian. I wonder if the SP will have another spike when this is announced?

I came away quite happy with what I heard and with PON to remain high, we can all look forward to reap more rewards soon!

 

[greenfs]

Thanks Savtin for a very informative overview. I really like this stock & think it is now time to buy in again and average up my entry price

 

[chicken]

CHICKEN you have done very well out of AGM.

Have you sold anything on the way up or just bought more??

Have not sold in fact bought more at 98cents....mining had started...milling of ore starting soon...mill is being installed word is AGM will start earlier production...AGM starting at the right time...all looking good

 

[mexican]

Well done to all who have this stock, a real strong Ni miner.
I still think it has a long way to go, with the 2 billion dollar off take agreement deal and good Ni deposits it will only go up. If I had some spare $ would buy some more (.98).
I have noticed also that there has been 4 more exploration tenements granted for the NW of Tasmania.
So there is alot of good deposits in that area.

 

[nioka]

An obvious attempt to influence the price this morning. One minute before opening two large orders at 96 and 97c dissappeared from the buyers. I had an order in at 93.5c which was filled at opening. On the quotes earlier I had considered increasing my offer but luckily I couldnt get on in time

 

[savtin]

Nice one Nokia.

Good finish for AGM ....lets hope this is the start of the next leg up...

very very undervalued at present IMHO.

$1.50 by Xmas i think.

 

[chicken]

Nice one Nokia.

Good finish for AGM ....lets hope this is the start of the next leg up...

very very undervalued at present IMHO.

$1.50 by Xmas i think.

Look at www.kitcometals.com add of AGM plus information about AGM,,,production start in October or 16 weeks away....lot of computer trading here also by brokers....tree shaking but SP should stay or slightly higher till production time in 16 weeks...June will be a non event till upgrade by brokers for AGM as this should happen...on the stainless news...INDIA is coming into the mix as more Ni is required by their mills so NI should stay high in price as there is a world shortage...the stock in LME is what the world needs or uses in 3 days....CS pointed this out 1 week ago...that Ni might go as high as $65k per tonne....and it looks as if the NI is not coming back to $25k in the near future...so its indeed looking good for AGM holders...DYOR

 

[greenfs]

The following commentary has been extracted from a Baillieu Briefing Note dated 25th May 2007:

Reality checks for some emerging producers

Given the current unease in the nickel and other non-ferous metals, we though it opportune to cross check our valuation with present share prices.

All 3 companies nominated have made recent presentations so we are working from their most current data.

The emerging two nickel producers in Albidon (Southern Zambia) and Allegiance Mining (Tasmania) are significantly overpriced, ie Albidion is selling at $2.89 (our valuation is presently around $2.10) for Allegiance its present share value is $1.06 (our current valuation is around $0.60c). In both cases we have assumed a longer life than is currently projected. Our long-term nickel price is US$5.50/lb (present spot price US$22/lb) which we see achieved in 2012.

In AGM's case, Jinchuan has 11% of the company, effectively removing any takeover attraction. Jinchuan has recently also become a shareholder in Albidon and given its previous history, one could expect that it will increase its shareholding.........

Based upon the foregoing, would someone provide a comment/opinion as to whether the discount in AGM share price valuation at $0.60 appears right /realistic given the current spot price for nickel?

 

[savtin]

From my experience with Baillieu's past recommendations and opinions, I wouldn't trust them if my life depended on it....

I have seen companies they put sell orders on and the stock price goes in the opposite direction.

Don't let their scare tactics throw you off from purchasing a good quality stock.

They obviously would love to buy in at 60cents.

WHAT A JOKE!!!!! They don't have a grip on the reality of the situation in regards to the long term strength in the nickel market.

 

[joeljp]

The following commentary has been extracted from a Baillieu Briefing Note dated 25th May 2007:

Reality checks for some emerging producers

Given the current unease in the nickel and other non-ferous metals, we though it opportune to cross check our valuation with present share prices.

All 3 companies nominated have made recent presentations so we are working from their most current data.

The emerging two nickel producers in Albidon (Southern Zambia) and Allegiance Mining (Tasmania) are significantly overpriced, ie Albidion is selling at $2.89 (our valuation is presently around $2.10) for Allegiance its present share value is $1.06 (our current valuation is around $0.60c). In both cases we have assumed a longer life than is currently projected. Our long-term nickel price is US$5.50/lb (present spot price US$22/lb) which we see achieved in 2012.

In AGM's case, Jinchuan has 11% of the company, effectively removing any takeover attraction. Jinchuan has recently also become a shareholder in Albidon and given its previous history, one could expect that it will increase its shareholding.........

Based upon the foregoing, would someone provide a comment/opinion as to whether the discount in AGM share price valuation at $0.60 appears right /realistic given the current spot price for nickel?

Valued at 60c? you're kidding! And I suppose that's why Jinchuan decided to buy more at 80c? They really should do their research a little more thoroughly!

DYOR

 

[pennystock]

I think I have heard just about the funniest thing all year. Thanks for your fantastic sense of humour Baillieu, nice one.

 

[chicken]

The following commentary has been extracted from a Baillieu Briefing Note dated 25th May 2007:

Reality checks for some emerging producers

Given the current unease in the nickel and other non-ferous metals, we though it opportune to cross check our valuation with present share prices.

All 3 companies nominated have made recent presentations so we are working from their most current data.

The emerging two nickel producers in Albidon (Southern Zambia) and Allegiance Mining (Tasmania) are significantly overpriced, ie Albidion is selling at $2.89 (our valuation is presently around $2.10) for Allegiance its present share value is $1.06 (our current valuation is around $0.60c). In both cases we have assumed a longer life than is currently projected. Our long-term nickel price is US$5.50/lb (present spot price US$22/lb) which we see achieved in 2012.

In AGM's case, Jinchuan has 11% of the company, effectively removing any takeover attraction. Jinchuan has recently also become a shareholder in Albidon and given its previous history, one could expect that it will increase its shareholding.........

Based upon the foregoing, would someone provide a comment/opinion as to whether the discount in AGM share price valuation at $0.60 appears right /realistic given the current spot price for nickel?

Bigest joke I heared all year....see AGMs webside see Fox Davies brokers report dated the 10thMay2007.....I would buy as many shares as I could get for 60cents....THEY ARE A JOKE...but some people just cant help themself...this share will run up hard towards production which is only 4 months away....big buying today....and reports are all good