AZC - Australian Zircon

[roland]

Do you have any idea what the value of the shipment was? They didn't mention it in the announcement.

 

[prawn_86]

No, I only have the announcement info also. I might try to talk to the MD tonight, as I have been in contact with him previously.

Personally I dont think the value would have been much. Prob less than 500k as ilemite is the cheapest of what they are mining. this is just a guess though.

The main positive from the announcement is that the mine is up and running and cashflow has started and it will only increase from here

 

[Sainter]

Their website says
Ilmenite Australian concentrate, min 54% TiO2, FOB
Bulk concentrate US$75 - $85/ tonne
Spot prices US$70 - $90/ tonne

If we assume upper of US$90/t ~A$100/t, then 300t = $30k. Not huge, but a start!

 

[prawn_86]

If they dont want the 30k they can send it my way

Like I said, the amount isnt important. Its the fact that mining (and cashflow) have begun

 

[prawn_86]

First cash has been recieved and another load of Ilemite and the first batch of Zircon has been sent off.

Excellent announcement and good to see this co get on with things with a limited amount of fuss.

Now all is needed is for the market to recognise the potential here...

 

[banska bystrica]

Bought these today at 19c. Bargain long term. Short term weakness is due to some operational issues with the commissioning and general market weakness. The front end is fine but there are some technical problems with the back end. Nothing fatal, but nonetheless frustrating and hence the commissioning has taken longer than orginally expected.
EPS expected to be around 6c so currently on a prospective P/E of 3.

 

[prawn_86]

Yeh I think these guys are getting slammed on a combination of the market, and the poor performance of Iluka which is the sector leader.

People dont seem to realise ILU's fall is due to poor management rather than lack of demand, so they tarnish other mineral sands producers also.

I like mineral sands as they are so easy to get going, unlike other commodities.

Upside:
Already producing, Receives payment when product reaches the port not China, has forward sold all product with 75% (I think) hedged against the currency, co it has sold to will take as much as they can supply, reliable management, will be increasing throughput

Downside:
Poor marketing, Iluka fiasco, possible problems to increase capacity (same with any mine)


I think that they will start to get recognised when a financial report comes out showing positive cashflow.

Remember they have more than the one project

 

[technobabble]

I've been bullish on this stock for at least the last six - eight months but only entered a little over a week ago at - wait for it - $0.14. Why didn't I enter earlier? Just gut feel. The market wasn't acting the way it should given the announcements. When I was convinced it 'couldn't go any lower' (famous last words) I coughed up.

Given the close on Friday, I'll probably add to my position on Monday because, if anything, I think they look like a cheap buy for Iluka or any other producer. It's only money!

 

[prawn_86]

Letter to shareholders today stating that if all goes to plan pre-interest and repayment revenue should be around $20 million.

Perhaps these guys are finally pulling their finger out when it comes to the marketing side of things...

Waiting, waiting


EDIT - this should put them on track for 5c eps, once you take out loan repayments. No tax due to the fact that they have accumulated losses. Accountants correct me if im wrong...

 

[Sainter]

I haven't read their update, but revenue as I understand it is incoming cash PRE costs, ie not profit. So what are the costs as I assume you have to take them off the $20M also!

 

[prawn_86]

Yes sorry Sainter.

Say interest payments of $5mill would leave $15 mill and then costs would need to be taken out of this. Not too sure as to how high/what the costs will be.

Will be nice to find out...

 

[prawn_86]

Actually, a clarification has been released to the market.

They are expecting EBITDA to be $21 mill providing all goes to plan. IE - production stays as is or higher.

Take out say $6mill to pay off loans etc leaves $15mill.

15mill / 290 mill shares = 5.1c EPS.

Its all falling into place now ... hopefully

 

[prawn_86]

Ok lets do a comparison between AZC and IMA (here you go Grace )

AZC​

Market Cap - $40 mill

Plant already built and operating at 600tph. Shipments have been going out for the last 5 months and money is paid when the product is loaded on the ship.

Projected EBITDA of $21mill so approx profit of $15mill = 5cps

Therefore current PE is approx 2.8

Other tenament is WIM150

total combined resources for the project total 177.5mt @ 3.2% HM. Given
only approximately 15% of AZC tenements have been effectively explored,
further upside is possible.

IMA​

Market Cap - $100mill approx

Still in exploration stage.

Grace stated:

Look back at all of their drilling. They have HM to surface at very high grades. Broker estimate some time back was 100 - 200 mill tonne at 10%. A considerable amount of drilling has been done since. This is on just one deposit, and they still have lots of drilling to go on this deposit, let alone their other deposits. One other deposit is 9km wide x 28km long. That should be a beauty when they finish there.

Broker report:

Geopeko classified Bidaminna as an Indicated Resource totaling 44Mt @ 3% HM, however as some minor aspects of the original data can no longer be verified, Image is confident that Bidaminna can be classified as a JORC-compliant Inferred Resource.

they do however have high grades, and a lot of other tenaments




So as you can see a similar resource, although IMA is likely to get upgraded in the near future.

AZC however is already in production, so it is at least a minimum of 1 yr ahead of IMA and has no worries about dilution or funding or anything of the like.


This to me shows 2 things:
AZC is undervalued on a number of factors
IMA is possibly overvalued (although i have not done in depth research)

 

[prawn_86]

Email recieved today from Jim Wilton:

Prawn,

Regarding your enquiry about the share price, we too are disappointed with it’s current levels. Obviously the market in general, and mineral sands in particular, are fairly “soft” at the moment, but even so, under any measure prices of 13-14 cents per share grossly undervalues the company and our prime asset, the Mindarie Zircon Mine.

As you would have read, construction and commissioning of the Mindarie Zircon Mine is essentially complete, and we have been selling products within specification, including prime zircon, for several months now. We are still ramping up to full production levels and plant availabilities, and optimizing the process plant to ensure maximum product recoveries. We expect to be at full capacity, with maximum recoveries, during the 2nd quarter of this year.

Regarding WIM150, the study team working on that project will be reporting to our Board in early April. At this time we will get a clearer picture of how best to progress this to a Bankable Feasibility Study.

As to marketing, please be assured that there are concerted efforts made to highlight our achievements in the investment community. We expect to soon be in a position to provide financial forecasts to the market, which should translate to a strengthening and increase in our share price.

Regards,

Jim Wilton
Chief Executive Officer
Australian Zircon NL

Pretty standard response. i asked about hwat marketing efforts are being carried out, but he glossed over that bit nicely...

 

[prawn_86]

When questioned further about the marketing efforts Jim had this to say:

Some of our Directors are very involved in the marketing of our Company to the investment community. In fact 2 of them are in Toronto as we speak, after having been in London last week.

Hopefully they can convince a few Cannucks to buy in

 

[grace]

Ok lets do a comparison between AZC and IMA (here you go Grace )

AZC​

Market Cap - $40 mill

Plant already built and operating at 600tph. Shipments have been going out for the last 5 months and money is paid when the product is loaded on the ship.

Projected EBITDA of $21mill so approx profit of $15mill = 5cps

Therefore current PE is approx 2.8

Other tenament is WIM150

IMA​

Market Cap - $100mill approx

Still in exploration stage.

Grace stated:


Broker report:


they do however have high grades, and a lot of other tenaments




So as you can see a similar resource, although IMA is likely to get upgraded in the near future.

AZC however is already in production, so it is at least a minimum of 1 yr ahead of IMA and has no worries about dilution or funding or anything of the like.


This to me shows 2 things:
AZC is undervalued on a number of factors
IMA is possibly overvalued (although i have not done in depth research)

Hi Prawn
The resource we are waiting on is Cooljarloo and Cooljarloo North (which are neighbours to Iluka and Ti-west's exhausted mines but with plenty of infrastructure. Can paint a nice picture there.) "Cooljarloo" is only partly drilled.

The Bidaminna resource you refer to above is the deposit I think they have just purchased next door to their deposits they will start drilling soon. Bidaminna is 18km x 500m and due for drilling April/May. I guess buying the deposit next door would be cheaper before rather than later.

The deposit that I hope will put Image into the real limelight (above Iluka) will be the one that is next door to Diatreme resources. 28km x 9km.

Image have been hitting very high grade to surface which should make for very profitable mining.

As I said, hard to compare. MC of Image is for future growth expectations in my opinion. At the end of the day, I am happy with my holding in Image.

 

[prawn_86]

As I said, hard to compare. MC of Image is for future growth expectations in my opinion. At the end of the day, I am happy with my holding in Image.

Yeh Image certainly does have a lot of prospects with good grades, spread across a lot of tenaments.

I just find it strange how the market can price a producer and an explorer so differently.

Im certainly not saying image is a bad stock, i just feel it reflects how undervalued AZC is.

 

[r m]

Prawn

I think we have to accept that zircon isn't very interesting for most investors.

Personally, I love the idea of a company making a profit, and paying dividends from that profit, by shipping sand thousands of kilometres to China.

I own some Astron shares (ATR). They are involved in selling zircon, etc to China. The ATR thread on this site is dead so I know what it is like to post to yourself.

You could also look at ATR but there are issues to consider - recent sale of Chinese end of the business, government intervention in joint mining venture in Africa, change of focus of the company to titanium, etc.

I plan to keep an eye on AZC. Do you have anything on the quality of the managment? It would be interesting to look at their CV's and their previous business successes / failures, etc.

 

[prawn_86]

Hi R M,

Last time i looked at ATR they had been in suspension for not putting their books in on time... That was a while back admittedly. Just after they had agreed to seel whatever it was they were selling.

Re: Management (note that this is all research aside from what is presented on their webpage: http://www.australianzircon.com.au/directors-and-executives.php) -

Michael Kiernan used to be on the AZC board, he resigned early last year (from memory) citing too many other commitments.

CEO - Jim Wilton

Jim Wilton is a graduate of Geology and Economic Geology from the University of Adelaide, and a graduate in Business from the Queensland University of Technology. He started his professional career as a Geologist in the mining and exploration industry in Queensland, initially in the coal sector in the Bowen Basin, then moving into gold-copper operations in the Hodgkinson Province west of Cairns. He then transferred into business development and resource assessment roles within the coal and energy industry in Brisbane. Jim then spent the next 10 years leading teams assessing merger/acquisition and business development opportunities in the energy, oil and gas sectors, based in Adelaide, South Australia.

Exploration Manager - Gerard Bosch
couldnt find much external stuff.

Chairman - John Branson
Is a non-exec director of AED
And also the Chairman of Stuart Petroleum
And the Chairman of Pembroke school, of which my college principal is also a director

 

[Tukker]

Noticed recently that while profits have been slammed with a high exchange rate, world production is also expecting to slow.

http://news.theage.com.au/cosolidated-rutile-expects-profit-fall/20080417-26s9.html

David Robb made a short comment on Consoladated Rutile's profit decrease. "He also said reduced output from rival suppliers in Indonesia and South Africa would benefit the company." Which basically tries to put a silver lining on it all.

Yeh Image certainly does have a lot of prospects with good grades, spread across a lot of tenaments.

I just find it strange how the market can price a producer and an explorer so differently.

Maybe its because AZC is a producer at a time where adverse conditions for being one prevail. My thinking is maybe its actually better to be finding the stuff now so you are ready to position yourself for the change of tide. I don't think Image will ever mine on its own even through a JV, i so it makes for a good takeover target by neighboring Iluka.

I enjoy reading your thread here. Cheers for those who have contributed

i have a IMA position.