ERA - Energy Resources of Australia

[mathias679]

absolutely dominated over the last few days, up around 30%, possibly initiated by the positive report regarding ranger.

 

[notting]

A broker upgraded it by 100% and they announced they can go underground to overcome the giant dam issues plaguing them. Market seemed to like all that!!
Doesn't say much for RIO who should have snapped the rest of it up before all this happened. Could package it up again and offload it again in a couple of years time for a fortune!

 

[Garpal Gumnut]

A broker upgraded it by 100% and they announced they can go underground to overcome the giant dam issues plaguing them. Market seemed to like all that!!
Doesn't say much for RIO who should have snapped the rest of it up before all this happened. Could package it up again and offload it again in a couple of years time for a fortune!

It says little for the brokers when they have to log on to ASF to work out a stock is going up.

gg

 

[notting]

It says little for the brokers when they have to log on to ASF to work out a stock is going up.

Whatcha smoken their GG??

 

[Garpal Gumnut]

Whatcha smoken their GG??

Thanks notting

I do not generally deal with "brokers" , "real estate agents " or "used car salespersons"

I have been set in ERA since mid March as some of my indigenous mates told me a lot of white fellas were crawling over ERA assets in suits, with ipads, samsung cell phones etc etc, the usual useless bastards they send out to sites from broker houses. I was in for av 1.275

It is also a well known fact that the assets have dried out.

Last Friday it was obvious on the price range and volume that these silly bastards had managed to put their reports in so I topped up again at 1.30

I topped up again on Monday at 1.415.

I'm just sitting at the moment.

It is just a huge joke that brokers today pitch it as a buy.

If they cared about their clients they would have done it last week.

It is a huge buy.

gg

 

[stevenxu33]

ERA up 8% today, anyone know why?

 

[Out Too Soon]

ERA up 8% today, anyone know why?

Like many Uranium stocks ERA is greatly under-valued & waiting for Fukushima to dim in the memories & the share market in general to come out of the doldrums. I think some are just taking long term positions while the sp is still asleep. (could be a long wait)

(PS: skc, I just noticed that mistake way back where I said I got a div chq, don't know what happened but you were right, hasn't been divs for ages I'm curiously checking my records to try & find where my mix up was, I'm guessing I got a chq from one of the other uranium stocks I hold. Must be getting senile

 

[G Gekko]

Just wondering how others rate ERA as of today? I've been considering buying as I too rate the business as undervalued and I think with the depressed price of Uranium it could be a good time to buy. However their balance sheet is not doing too well and they've expressed they cannot afford to expand which doesn't bode well for my confidence in their confidence for the future.

They're still pretty attractive with low debt though.

 

[chops_a_must]

Just wondering how others rate ERA as of today? I've been considering buying as I too rate the business as undervalued and I think with the depressed price of Uranium it could be a good time to buy. However their balance sheet is not doing too well and they've expressed they cannot afford to expand which doesn't bode well for my confidence in their confidence for the future.

They're still pretty attractive with low debt though.

They are in trouble IMO.

Not a whole lot happening out there.

Maybe once the money stops flowing to the T/Os...

 

[So_Cynical]

Just wondering how others rate ERA as of today? I've been considering buying as I too rate the business as undervalued and I think with the depressed price of Uranium it could be a good time to buy. However their balance sheet is not doing too well and they've expressed they cannot afford to expand which doesn't bode well for my confidence in their confidence for the future.

They're still pretty attractive with low debt though.

Watching and waiting...good to see im not alone.

Its hard to figure where the bottom is with ERA, do know that they are trading at about a 33% discount to the last cap raising and yet holding pretty much all the cash they raised back then (2011) its a punt considering that they don't actually have a mine at the moment..and don't have the necessary paperwork yet for the deeps project.

And there burning cash and plan to continue to do so..MC roughly at Cash backing and yet they hold considerable assets that are worth considerably more if they actually have a fully permitted mine or 2...its a genuine punt.

I will continue to watch and wait.

 

[G Gekko]

Watching and waiting...good to see im not alone.

Its hard to figure where the bottom is with ERA, do know that they are trading at about a 33% discount to the last cap raising and yet holding pretty much all the cash they raised back then (2011) its a punt considering that they don't actually have a mine at the moment..and don't have the necessary paperwork yet for the deeps project.

And there burning cash and plan to continue to do so..MC roughly at Cash backing and yet they hold considerable assets that are worth considerably more if they actually have a fully permitted mine or 2...its a genuine punt.

I will continue to watch and wait.

And here I was thinking they had at least one mine. Must be just a project at the moment. I definitely wouldn't want to buy in unless I see some cash flowing. A profit would be nice too. Unfortunately it doesn't meet my criteria at the moment so I won't buy but it looks like it could be an attractive corp if they could get up and running.

 

[ricee007]

Wonder if the latest incident will effect price or not?

ERA is down playing it... but, anything that gives the "Traditional Owners" more ammunition has got to be a negative long term.

 

[So_Cynical]

Wonder if the latest incident will effect price or not?

ERA is down playing it... but, anything that gives the "Traditional Owners" more ammunition has got to be a negative long term.

Negatives being negatives i would expect a fall in the share price on the open tomorrow.

 

[ricee007]

Negatives being negatives i would expect a fall in the share price on the open tomorrow.

Did definitely take a hit
-16.5c on Monday, -13c so far today.

From a base of $1.30, now $1.000

 

[pattypoo]

ERA is starting to make a comeback - up from $1.21 to $1.65 in a matter of 20 days.

That is equivalent to a 37.5% increase in 20 days.

I've been reading a few articles that uranium is picking up again.

Is it time to invest into the uranium market ?

http://www.marketwatch.com/story/re...stocks-higher-2014-03-11?reflink=MW_news_stmp

 

[pattypoo]

By the way, I do not endorse or take responsibility for material in the hyper-linked sites.


I just want to know what people on aussie stock forum think about this?

 

[VSntchr]

Uh oh!

From Rio today "Rio is considering a US$300m impariment relating to its shareholding in ERA".
The market certainly gave every holder collectively about a US$300m impairment after that 62.5c smackdown.

Big collapse for ERA today...but with a market cap of ~$350m I can't see much cause for a bounce?

Some ramblings as I try to assess the situation: (apologies for any oversights)

They are able to process stockpiled ores of $146m as at Dec 31 and had cash of $293m + $12m receivables.

Looking at non-current assets they have:

• Inventory $85m
• Undeveloped Property $203m (who wants to buy this!?)
• PPE $358m - (~$296m is plant and equipment - can this be sold for BV?)
• Tax Assets $175m (worthless without profits, maybe value for a shell takeover?)
• Trust fund investment $66.7m

$90m of the $146m stockpile is finished product.
We can say the CA are worth $450m.
Then non-current assets we can say maybe $85+$100+$300+$66.7 = $552m

So a total asset value of $1bn if you think they can sell the undeveloped property for $100m and achieve close BV for Prop and Equip.

Current liabilities (without provision) knock off $111m.

Then you have to account for rehab of the land which is $40m CL and $480 NCL = $520m.
Throw in another $4m for Employee benefits and you have $524m that the company is required to pay out.

So my very very basic estimate of the equity value comes to around $367m.
FWIW, current market price with 517.73 shares on issue implies mc of $347.

A company disclaimer worth taking note of "The ultimate cost of rehabilitation is uncertain and can vary in response to many factors. It is reasonably possible that outcomes within the next financial year that are different from the current cost estimates could require a material adjustment (increase or decrease) to the
rehabilitation provision for the Ranger Project Area."
One positive note was that the Dec 14 report showed a $75m reduction in the provision due to updated technology.

Another risk to the downside, is that the equity value above does not take into account any burning of cash through operations since Dec 14. FY14 burned about $64m!!! This may be a bit pessimistic to extrapolate out given the difficulties experienced in this year involving having to buy Uranium to fulfil contracts due to a shutdown of processing. They will also have reduced expenditure going forward without the feasibility study continuing.

Note: There is also some option value on the outside chance that the land ever does make it past feasibility stage/gain traditional owner approval rights.

 

[skc]

Big collapse for ERA today...but with a market cap of ~$350m I can't see much cause for a bounce?

Some ramblings as I try to assess the situation: (apologies for any oversights)

They are able to process stockpiled ores of $146m as at Dec 31 and had cash of $293m + $12m receivables.

Looking at non-current assets they have:

• Inventory $85m
• Undeveloped Property $203m (who wants to buy this!?)
• PPE $358m - (~$296m is plant and equipment - can this be sold for BV?)
• Tax Assets $175m (worthless without profits, maybe value for a shell takeover?)
• Trust fund investment $66.7m

$90m of the $146m stockpile is finished product.
We can say the CA are worth $450m.
Then non-current assets we can say maybe $85+$100+$300+$66.7 = $552m

So a total asset value of $1bn if you think they can sell the undeveloped property for $100m and achieve close BV for Prop and Equip.

Current liabilities (without provision) knock off $111m.

Then you have to account for rehab of the land which is $40m CL and $480 NCL = $520m.
Throw in another $4m for Employee benefits and you have $524m that the company is required to pay out.

So my very very basic estimate of the equity value comes to around $367m.
FWIW, current market price with 517.73 shares on issue implies mc of $347.

I think you are way too generous with the asset value calculation. For a start, the plant and equipment won't be sold for anywhere near the book value. No one disassemble a processing plant and move it elsewhere. And uranimum processing plant probably can't be used easily in other operations (guessing only, due to contamination and that faint green glow). It can at best be sold for scrap (if that). Also, if the Ranger 3 Deep expansion ever gets going, it'd need those plant and equipment already on site. So if you give it option value, you can't realise the PPE.

By RIO's announcement, it's clear that there's a chance that ERA simply doesn't have enough asset / future cash flow to pay for all the rehabiliation works. So I think it's pretty safe to estimate the equity value to be zero.

The option value, however, probably has a pretty wild range. ERA in its heydays (~2008/09) had a market cap ~$8B and generated some $400m operating cash flow. So if everything works out and the expansion project somehow gets going in 6-8 years time, AND that uranium market actually recovers, there might be some value afterall.

BOC is an example dormant copper mine in PNG... it some how still trades at $150m equity value despite no mining operation since 1989. It was trading @ $800m back in 2010/11. So option value can be quite high, although I really don't know about the specifics behind BOC.

I can't really offer a firm number on the option value... but my guess is the share price could sink a lot more on flow alone before finding a floor. We only traded 10m shares today.

 

[VSntchr]

I think you are way too generous with the asset value calculation. For a start, the plant and equipment won't be sold for anywhere near the book value. No one disassemble a processing plant and move it elsewhere. And uranimum processing plant probably can't be used easily in other operations (guessing only, due to contamination and that faint green glow). It can at best be sold for scrap (if that). Also, if the Ranger 3 Deep expansion ever gets going, it'd need those plant and equipment already on site. So if you give it option value, you can't realise the PPE.

By RIO's announcement, it's clear that there's a chance that ERA simply doesn't have enough asset / future cash flow to pay for all the rehabiliation works. So I think it's pretty safe to estimate the equity value to be zero.

The option value, however, probably has a pretty wild range. ERA in its heydays (~2008/09) had a market cap ~$8B and generated some $400m operating cash flow. So if everything works out and the expansion project somehow gets going in 6-8 years time, AND that uranium market actually recovers, there might be some value afterall.

BOC is an example dormant copper mine in PNG... it some how still trades at $150m equity value despite no mining operation since 1989. It was trading @ $800m back in 2010/11. So option value can be quite high, although I really don't know about the specifics behind BOC.

I can't really offer a firm number on the option value... but my guess is the share price could sink a lot more on flow alone before finding a floor. We only traded 10m shares today.

Thanks SKC. I was purposely trying to be optimistic in my assessment above, kind of a devils advocate given my position. Traded it short through the day and held a small pos into the weekend. To be honest though, the entire process has been more experimental for me as the sizes are immaterial to my usual trading - my knowledge of the sector is quite limited.

That's interesting about BOC. I haven't had much experience with stocks holding such high market value on option value alone. Agree on the uncertainly around option value for ERA. The % chance for success is low, but the payoff quite large if they ever get going again. I can't see any positive catalysts in the foreseeable future and any buyers hoping to buy this option value certainly have a loooong time to get set. Putting myself in the shoes of a long term investor, I could not justify sitting in this for 6+ years waiting. I would be selling now, getting the tax credit prior to June 30 and then keeping it on a watchlist.

This has been in a range of $1.10-$1.40 (with a few failed breaks either way) since 2012. That's a pretty long time to consolidate...

Looks like their was a bit of covering on the close yesterday. Shortman only shows 2.2% shorts, so holders shouldn't really be holding their breath for a squeeze...the spurt on the close could have been some of the prop guys covering their intra-day plays :

 

[skc]

Thanks SKC. I was purposely trying to be optimistic in my assessment above, kind of a devils advocate given my position. Traded it short through the day and held a small pos into the weekend. To be honest though, the entire process has been more experimental for me as the sizes are immaterial to my usual trading - my knowledge of the sector is quite limited.

That's interesting about BOC. I haven't had much experience with stocks holding such high market value on option value alone. Agree on the uncertainly around option value for ERA. The % chance for success is low, but the payoff quite large if they ever get going again. I can't see any positive catalysts in the foreseeable future and any buyers hoping to buy this option value certainly have a loooong time to get set. Putting myself in the shoes of a long term investor, I could not justify sitting in this for 6+ years waiting. I would be selling now, getting the tax credit prior to June 30 and then keeping it on a watchlist.

This has been in a range of $1.10-$1.40 (with a few failed breaks either way) since 2012. That's a pretty long time to consolidate...

Looks like their was a bit of covering on the close yesterday. Shortman only shows 2.2% shorts, so holders shouldn't really be holding their breath for a squeeze...the spurt on the close could have been some of the prop guys covering their intra-day plays :

Good article from AFR. May be the option value should be a lot closer to zero too.

http://www.afr.com/business/mining/rio-tinto-signs-ranger-uranium-mine-death-warrant-20150612-ghmp9j

Rio has signalled the end for Australia's most productive uranium mine by telling ERA that it will not invest in the 35-year-old operation's proposed lifesaver, the Ranger 3 Deeps underground project.

That pudding has been put to proof with Rio offering ERA a "conditional credit facility" should existing or future cash reserves fail to cover the required rehabilitation effort. The condition is telling. The credit will come only if ERA does no more work on R3D.

Importantly, given current low uranium prices persist, it looks like that support will be needed. ERA is presently sitting on $293 million in cash and has $63.9 million invested in the Ranger rehabilitation trust. ERA's most recent annual report puts the future rehab liability at $525 million and its potential unfunded liability at $461 million.