AGM - Allegiance Mining

[d_crome]

Ni prices DOWN to $16's today yet Ni RESERVES are sliding???

WTF mate!!??

How can something REDUCE in price when the demand has INCREASED??

 

[Sean K]

Looking more vulnerable now having broken down through support at 85 ish cents, which will now be resistance on the way back up. Maybe a little support around 75 ish, but 70 cents looks like next stop on way down.

Fundamentals on the company haven't changed of course, except assumptions of PON, which everyone has probably incorrectly assumed would stay at all time highs through to production and onward.

Any revised fundamental forecasts out there on much lower Ni?

 

[pennystock]

There doesn't seem to be any let off for poor old AGM @ the mo! I'm hoping it's a lot to do with the end of tax year but with the Ni price retreating I think support as Kennas has stated could be around the 60c-70c mark. A broker did predict that AGM was worth 60c a while back and we had a laugh but things have turned for the worst. Having said all this I still believe AGM to be a good stock, hopefully this time next year we all might look back and smile

 

[nioka]

Todays price makes my top up of 16000 at 93c a week or two ago look sick. the quotes now are getting close to my average price. If it gets below my average of 67c I will buy more ,not sell. They will jump when production starts and that is getting closer. A resource upgrade would help. They seem to have the winter blues, bring on spring.

 

[Bushman]

A couple of points on this:

1. AGM is currently moving in correlation with the Ni price. LME quoted price of Ni in mid May was US$54k per tonne. This has gone down to approx $37k per tonne today. This represents a decrease of 31%. SP mid May was $1.17 down to $0.75 today. This represents a 36% decrease. I do not believe this should move purely with the Ni price based on my model presented below.

2. Per the FD Capital report dated May 07, the price of Ni should remain strong over the next 3 yrs until BHP (Raventhorpe) and CVRD (Goro) ramp up production in CY09/10. Current drop down to $37k seems to have a speculative element.

3. FD Capital give AGM a base case NPV per share of $0.81. I have produced a spreadsheet that reproduces that base case.

View attachment Base case Allegiance Mining v1.xls

Assumptions as per FD report -
- production 1m tonne pa ore @ 70% cut off grade, 11.93 MT over life of project (thus a 12 yr mine life).
- recovery 1.4% CY08 down to .8% in CY19.
- price per tonne assumption Ni $42,593 CY08, $35,422 CY09, $26,593 CY10, $14,330 CY11 to CY19.
- Jinchaun royalty 70 to 75% (I have assumed 72.5%)
- Mining costs per pound; CY08 $6.03, CY09 $5.77, CY10 to CY19 $5.15. Someone please check my pound to tonne conversion - I only know the metric system.
- Discount rate 10%
- Shares 682,500,000.

4. Base case NPV will be affected by the current factors -
- production increases at Avebury mill up to 1.8 mt. This is said to be a conservative measure;
- significant exploration potential in Bison discovery funded by Avebury cashflow;
- unused mills to increase capacity; and
- price of Ni.

My model allows for basic sensitivity. Thus if you are bearish on Nickel and decrease PD Capital estimates by 25% uniformly over the life of the asset, you will have a base case NPV of $0.48 IMO. However this ignores increased production. Thus if Ni prices decreases but production increases 80% (conservative estimate), NPV per share is $0.86. PD report has price forecast of $1.40 which implies Ni price estimates will hold and production will increase by factor of 1.8. This ignores the exploration potential.

Would be interested in peoples thoughts. I think this one is a good one and could easily hit $1.40 IMO given that long term PD estimate used seems conservative. By the way, I do not own any of these yet but am looking to do so once I free up some money.

With this one, DYOR and keep in mind that your view on Ni will very much influence your valuation despite the production upside. The gods and Asia will be the judge of this.

Note: report I quote is available on the Allegiance website. Excel model is my own creation so it could be way of the mark!

 

[chicken]

Niece bounce here as anything below 80c is a gift....over 6 million shares traded...as high as 81cents...blast I wished it bounced on monday..as it would have given me a niece start in the competition...ah well those are the breaks...

 

[porkpie324]

Yes chick a good SP rise today, topped up this morning, got back into AGM last week at .80c, I think AGM are oversold. BTW you can trade AGM with CFDs now porkpie

 

[nioka]

News today regarding a delay in the date for the production commencement and a dilution of the shares through a placement to Jinchuan probably explains the recent fall in the AGM SP. It will delay the profit I have anticipated from my investment in AGM but I do have faith that we will be well rewarded when production does eventuate. It appears most things are on track but the completion of the processing plant is delayed.

 

[d_crome]

Any outstanding reason for AGM's schlacking today?

5 cent drop and it looks to be headed to the 60's again - are people really THAT impatient for a return?

Looks like there's alot of short term, fair weather investors in the AGM boat - hopefully it doesn't ruin it for us long term holders.

 

[Bushman]

LME nickel price is down further today - $35,500 per tonne.

Would've thought that the Jinchaun shareholding would have had some upside given it locks in a equity partner that sells 90% of the nickel into China.

This one is baffling me as well as I am yet to read that the bottom has fallen out of the nickel market price forecasts in the medium term? Maybe it is a short term sell down as Ni comes down from an all time high and mgt lose some credibility due to a mine timetable blow out.

 

[porkpie324]

There has been a delay announced last week and as we all know any delay with a projected mine results in any companies SP being hammered, I got caught out too, had to close at a loss last week, but there will be some good buying oppotunities to come soon I'm sure.porkpie

 

[nioka]

AGM has a reverse speeding ticket today, having to explain the fall in the SP.
One of the reasons given was "various articles appearing in Tasmanian and national press about delays of 4 months which, to our best of knowledge, is not the case."
As the SP has now fallen to my average buying price it is now time for me to increase my holding.

 

[Broadside]

AGM has a reverse speeding ticket today, having to explain the fall in the SP.
One of the reasons given was "various articles appearing in Tasmanian and national press about delays of 4 months which, to our best of knowledge, is not the case."
As the SP has now fallen to my average buying price it is now time for me to increase my holding.

it referred to a delay from Oct/Nov to early the following quarter, and the next point was blaming erroneous reports of a 4 month delay...um, it would seem the reports were consistent with what the company told us last week?

 

[Sean K]

Niece bounce here as anything below 80c is a gift.......

If anything is a gift below 80, this must be Christmas Chicken...........You must be backing up the truck here......but Ni still looks vulnerable to further correction.......which was of course not in your ramping plan.......toot toot......sincere appologies to those in the red.......I sincerely hope PON recovers for you......topping up now seems fraught with danger IMHO, until there is a confirmed turnaround.......a slow down ticket?......OMG......at record XAO!......All the best to sincere longs....

 

[porkpie324]

I think the chairmans comments on 4th July is what decided me to close my loosing position, the excuse regarding the delay was pathetic blaming market conditions etc. I still rgard AGM as a good prospect but there could be more pressure to come. porkpie

 

[chicken]

If anything is a gift below 80, this must be Christmas Chicken...........You must be backing up the truck here......but Ni still looks vulnerable to further correction.......which was of course not in your ramping plan.......toot toot......sincere appologies to those in the red.......I sincerely hope PON recovers for you......topping up now seems fraught with danger IMHO, until there is a confirmed turnaround.......a slow down ticket?......OMG......at record XAO!......All the best to sincere longs....

See Kitco...Stainless news...PON to be around the $35000 a ton US....seems to be staying around this price....do not forget...there is still a shortage of Ni...the LME stock is 2.5days of what the world uses..I have even heared that Ni has everychance to rally...anything is possible in this bull market...AGM has got a ticket...why the FALL in the SP price...and there seems to be buyers coming in now..has it turned..dont know but looking at the graphs and indicators Mac etc...one can see its well oversold ...and Kennan I am sure you can see that as well....longterm AGM is well positioned...bought today at 68.5c...to 69c....stock has risen to 71cents as I talk..and big buyers are buying....maybe the insto have seen the light as the sell down was overdone..but who knows the market

 

[Sean K]

has it turned..dont know but looking at the graphs and indicators Mac etc...one can see its well oversold ...and Kennan I am sure you can see that as well

too early to tell, but these indicators are saying it has stopped for the moment.....hitting 200 d ma might help.......but.....look at the downtrend resistance line..........other horizontal resistance as shown.......picking bottoms and catching knives give bloody dity fingers........buyer beware......not sure where you get your nickel facts from?........plucked?......all I read is bad karma for Ni........

FN Arena news 18 June:

GSJB Were points out the latest rule changes at the LME, which are designed to prevent any collusion between major players in the nickel market, are also impacting on demand, just as the supply side picture is also being clouded.

Here China is the main culprit, as the broker notes it has lifted its output of pig iron from around 2,600 tonnes in 2005 to 32,000 tonnes last year and a forecast 90,000 tonnes this year. This is having an impact on the market’s fundamentals as it points out pig iron is now becoming a durable source of nickel rather than just an emergency supply when nickel prices are high.

As a result, the broker now sees the market as moving from a relatively balanced position this year to a surplus of around 24,000 tonnes next year and as much as 49,000 tonnes by 2010.

All the blame for the supply side response cannot be laid at the feet of China as Credit Suisse notes Australian producers will soon be able to again ship product from the Port of Esperance in WA, while Weres point out major new projects are scheduled to come on line in Australia and elsewhere during the course of 2008.

This has led the brokers to forecast prices moving lower not only across the remainder of this year but in coming years, with Credit Suisse forecasting prices in three months time of US$41,000-US$46,000 per tonne and in 12 month’s time of US$30-35,000 per tonne.

GSJB Were is similarly bearish in its forecasts, as from around US$18 per pound now the broker sees an average price in the December half of this year of US$15.17 per pound and in 2008 of US$12.85 per pound. Merrill Lynch’s new forecasts are for US$17.45c per pound this year (up from US$13.88 previously) and US$12.00 per pound next year compared to US$10.50 per pound previously.

Fortis offers some support though, suggesting the underlying strength of demand should at some point offer some price support, the group’s view being prices are unlikely to slide lower than last year’s average of US$23,000 per tonne.

 

[Jaeger]

Just dont get this stock price given the prices of similar stocks at the mo. PON aside, the PE ratio out to 2008 is set at 4.1, given it is currently at 45 for this year with production coming in beginning of 1st quarter 08. AGM's own Biz plan allows pricing for Nickel at US$15,000 p Tonne. I see that the upside in this share given 08 PE ratio is 4.1 should be much higher share price even in the near medium term.

DYOR, my thoughts are my own only...

 

[mexican]

too early to tell, but these indicators are saying it has stopped for the moment.....hitting 200 d ma might help.......but.....look at the downtrend resistance line..........other horizontal resistance as shown.......picking bottoms and catching knives give bloody dity fingers........buyer beware......not sure where you get your nickel facts from?........plucked?......all I read is bad karma for Ni........

Time will tell. I don't read too much into it, as sometimes the big boys keep the important facts to themselves and let everyone else (ieublic) what they want them too hear.

 

[chicken]

If anything is a gift below 80, this must be Christmas Chicken...........You must be backing up the truck here......but Ni still looks vulnerable to further correction.......which was of course not in your ramping plan.......toot toot......sincere appologies to those in the red.......I sincerely hope PON recovers for you......topping up now seems fraught with danger IMHO, until there is a confirmed turnaround.......a slow down ticket?......OMG......at record XAO!......All the best to sincere longs....

Well,.....like MGX where you and I had a difference...and go back and look what you said...re MGX...look at it NOW....so re AGM...I get my information from Kitcometals ....read Latest Stainless news....there its All the news by experts in this field....AGM is OVERSOLD...see your graph and mac on the technicals...70c seems to be holding....as far as KARMA...re Ni that will change as buying kicks in....see Damenstahls report..Thyssen in Germany are doubling their production of stainless steel in 2008....also Damenstahl said the 2007/2008 price of Ni will be between $30000 and $38000 a ton....as far as ramping AGM dont need to as at present its well manipulated by a big buyer....see buys and sells...and whoever it is will let it run when he or she is ready....Pity that production is delayed but share price will make up for it as soon as production starts....