AXN - Alliance Nickel

[crazyjimsmith]

Here's part of an article from The Australians Robin Bromby.

GME Resources has 1.2 million tonnes of contained nickel and 75,000 tonnes of cobalt.

GME is capitalised at a touch over $75 million, but one broker who has run the numbers reckons the resource is worth about $25 billion at present prices ($US32,652/tonne for nickel on Thursday night).

Of course, it's the same laterite nickel that felled Centaur Mining & Exploration and just about did the same to Anaconda Nickel (now Minara). But GME's latest annual report indicates the company is thinking of a novel and cheapish means of treating the laterite - heap leaching. Interestingly, Minara is due to have a heap leach demonstration plant ready next month as an alternative strategy to its complex existing technology.

The other problems are that GME's resource is spread over nine deposits and it doesn't have a treatment plant. But our broker believes it can't be long before someone takes a crack at GME to get hold of that resource.

I thought it was weird that nobody here is covering this.

 

[tour]

Re: GME Resources (GME)

i cannot agree more smith, and its finally getting some recognition.i've been holding for some time now and have been doing alot of research on this, and i rkn the prospects are good.
the potential t/o by minara IMHO will be immimnent as they already have dealings with each other, even without it its they still have a significant amount of NI underneath their land.

i predict the next 2 weeks is gonna be a bumper.

 

[EasternGrey1]

One week on, looks like the jump up has started. But IMHO it's got an awful long way to go ..

Continuing a conversation from the "Nickel" board ..... updated numbers:

Today's announcement states that GME has resource 128.1mt @ 1.00% Ni = 1.28mt Ni.

Minara's nearby JV Murrin Murrin resource is 325mt @ 0.99% Ni = 3.2mt Ni.
Minara only has 60% ownership, ie. 1.92mt.

So GME has exactly 2/3 of Minara's resource, at the same grade.

MRE market cap is $2,484m. 2/3 of that is $1,656m. Even after today's rise, GME market cap is only $107m.

Looks brilliant to me, even with development expenditure still to come!!

 

[imajica]

with 1.28 million tonnes of nickel and 75000 tonnes of cobalt

and a market cap of 140 million

undervalued : I believe so!

in ground value has been calculated at 25 billion by a broker

Read the article here

 

[Caliente]

company looks good, but the sheer outdated nature of the website does not ring confidence with me. Why have they stopped issuing annual reports after 2002?!?!

 

[imajica]

you might have checked out their old website

New Website

 

[Caliente]

ahhh. much better ^_^

 

[alankew]

Is their nickel and cobalt hedged and if so at what price,sounds lika a good un.

 

[tour]

2 weeks on and let see what has happened:

-consistant high Volumn of trading that has never happened b4.
-reached a all time high of 60 cents +
-upgrade HL reasource incresed fourfold to 18 mt
-nickel prices 19 yr high

for GME IMO this is still the begining, there is more resources to be upgraded as indicated by the directors into HL, and MRE HL plant is to be completed by december, and if Nickel prices can stay at this price we should see another
bumper 2 weeks for GME.

one broker suggest their resources is worth +$25 billion dollars and with 215million shares, mkt at $140 million it looks undervalued.

heres my break down:

215 million shares
600000 tonnes of contained nickel
price of nickel AU$43421 (US $33,000/.76)
Value = $28 billion dollars
once in production they will able to produce say 12,000 tonnes p/a
NP margin (35.6% for JBM), let say for GME it will only be 30% to take into account of plant production, and set up cost:
NP = 156.3
NPAT: 109.41
EPS = .50888
P/e: .8342 average pe for jbm and mre is 15 and 10 therefore we willl use 12.5
sp of gme once in full production = .50888*12.5 = $6.361

of course it'll take time to get into production but its the possible t/o by MRE thats what interest me. if their HL demonstration plant is sucessful they can be in production straight away and take advantage of the current NI price. i guess a $2 t/o price tag or a 1 in 3 rights issued is not out of the qns.

ANother interesting thing is that their land is in the same area and often connects with each others land, and by looking at where their plants are its very close to GME's HEPI area where the bulk of GME's resource lays.

my target for the next 2 week is 80 cents fingers cross.

GL to all GME holders

 

[tour]

Another thing I did not take into account is their gold reserve and their cobalt tonnage.

 

[EasternGrey1]

A reasonable analysis, Tour. I have worked on my own figures, they're different to yours but the end result is in the same ballpark (ignoring cobalt etc). Certainly if things go generally to plan these shares will go past $6. I don't think about 2-week price targets, though, because the market is so unpredictable. For as long as things appear to be going generally to plan, I intend to just hold.

I can't find any reference to hedging in their last annual report, quarterly report, or presentation. I doubt they would be doing any hedging yet.

 

[pbsear]

Trading Halt? Any views?

 

[crazyjimsmith]

Hopefully the trading halt will bring good news.

GME has been hitting a barrier of 65c. Expect it to fly if the news is good.

Huge upside if the heap leach technology is proven.

 

[EasternGrey1]

Up about 40% in 3 days. Apart from it having been stupidly oversold, anyone know precisely why?????

 

[Halba]

when are they producing

how much will they produce?

what is the costs of their production/any delays/proven technology issues?

These questions have to be asked. I struggle to see value in lateritic nickel

It took MRE a decade to get into full production, and it costs billions of dollars for a fully fledged laterite mine. Heap leach can only produce so much.

Tour says "they can be in production straight away". This does not mean they can suddenly produce 12,000t out of thin air. They have to prove demo plant for a year, then after a year slowly ramp up. Could take ages

 

[EasternGrey1]

Their last presentation answers most of your questions. The project timetable, operating costs, etc, are in the last few pages.

Some articles on laterite Ni:-
Nickel Resources - CMCCC
Ecerything you wanted to know about laterites but were afraid to ask
Nickel Laterite Processing - Aker Kvaerner

• 72% of the world's nickel resources are laterite.
• There are at least 7 laterite projects in production.
• Laterite production has to increase to meet future demand.
• Aker Kvaerner has participated in the majority of all the lateritic nickel pressure acid leach projects that have been studied or developed around the world.
• Minara(Anaconda) had big problems because they tried to cut corners.

Now that Minara and others have solved the problems, it is reasonable to assume that GME, with Aker Kvaerner assistance, will produce from their laterite deposit successfully.

I have put all their latest figures and dates into a spreadsheet. Using 60% of today's Ni price ($US34,925/t), today's exchange rate ($A1=$US0.7829) and a 15% discount rate, I get a per share NPV of 0.97. ie, Ni can drop 40% and my GME shares should still return significantly better than 15% p.a.

Because GME is highly leveraged to the Ni price, if they end up getting today's price for their nickel then we're looking at an NPV15 of $3.

 

[EasternGrey1]

I omitted to mention that in my calcs, I ignored cobalt. Given that GME also have Co with a "street value" of $US2bn, that alone should justify a reasonable part of GME's $160m market cap.

 

[explod]

The value of the resources within this company are being realised now. It is nice to be on board, no soveriegn risk and clear blue skies for aussie resources

 

[kelvin8r]

Hey Guys

This is my first post. Anyone got any thoughts on GME at the moment? Looks like there starting to get back on a bit of a roll after the crash. 7.5c up today

 

[EasternGrey1]

Didn't last long - down again on Friday.

I presume the drop is to do with headline nickel price dropping from 40k+ to 25k, as well as nervousness about US sub-prime mortgages and maybe simple profit-taking/stop-losses.

Looking back about 6 months, on 16 Feb Ni price was 41k and 27-mth Ni was 26,925. Ni price is now 27,775 (down 33%) and 27-mth Ni is virtually unchanged. Looking further back, 13 Nov 06 is the earliest figure I've got - 30,200 and 27-mth 21,750 - so although Ni has dropped 8% since then, the 27-mth price is actually up 23%.

So I think the underlying strength of Ni is still there, and if no recession will at least hold if not pick up.

At 27k Ni, I believe GME is a steal. But, as always, I can never be sure that there isn't something wrong that no-one is telling us about. But that applies to all stocks, of course.