JLL - Jindalee Lithium
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the current state of play on JRL with regards to liquid assets and allowing that a corporate advisor has been appointed to EME and it is more likely than not JRL will deliver control of EME to the highest bidder.
EME 33,900,000 @ $1.35 = $45,765,000
EMEO 9,100,000 @ $1.25 = $11,375,000 (intrinsic value)
GTE 2,249,612 @ $0.054 = $121,479
AHR 1,200,000 @ $0.10 = $120,000
ALY 10,000,000 @ $0.09 = $900,000
URA 2,542,000 @ $0.18 = $457,560 (about 1.4c per share)
Cash = $1,936,000
TOTAL = $60,675,039
total shares on issue 31,944,775
so about $1.90/share after the metallurgy on Bigrlyi was released and perhaps a little more to come in the near term with the scoping study mk II.
last trade 90c.
EME 33,900,000 @ $1.35 = $45,765,000
EMEO 9,100,000 @ $1.25 = $11,375,000 (intrinsic value)
GTE 2,249,612 @ $0.054 = $121,479
AHR 1,200,000 @ $0.10 = $120,000
ALY 10,000,000 @ $0.09 = $900,000
URA 2,542,000 @ $0.18 = $457,560 (about 1.4c per share)
Cash = $1,936,000
TOTAL = $60,675,039
total shares on issue 31,944,775
so about $1.90/share after the metallurgy on Bigrlyi was released and perhaps a little more to come in the near term with the scoping study mk II.
last trade 90c.
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Thanks for that Wolverine.
I think everyone has converted the options to physical shares...JRL now hold 41% of EME.
A lot of uranium stocks are rallying lately. Many of fund managers start to find value in uranium producers such as ERA and PDN...other hopefuls, smaller explorer companies with proven assets such as EME follow suits for its increasing takeover appeal.
The logic behind this is uranium is the best available alternative energy to oil to satisfy the world's demand.
Uranium spot price is moving around $60 at the moment. It has been $140 in the past....
Assuming the demand of uranium increase and the uranium market maturing like other commodities...if we just use the average of $90-$100 spot price, many uranium companies are undervalued by at least 30-40%.
We still have not taken into account the possible upside of Yilangi gold tenement (partner with NCM). They made an announcement of "encouraging result from Yilangi" last year...any opinion on this one?
I think everyone has converted the options to physical shares...JRL now hold 41% of EME.
A lot of uranium stocks are rallying lately. Many of fund managers start to find value in uranium producers such as ERA and PDN...other hopefuls, smaller explorer companies with proven assets such as EME follow suits for its increasing takeover appeal.
The logic behind this is uranium is the best available alternative energy to oil to satisfy the world's demand.
Uranium spot price is moving around $60 at the moment. It has been $140 in the past....
Assuming the demand of uranium increase and the uranium market maturing like other commodities...if we just use the average of $90-$100 spot price, many uranium companies are undervalued by at least 30-40%.
We still have not taken into account the possible upside of Yilangi gold tenement (partner with NCM). They made an announcement of "encouraging result from Yilangi" last year...any opinion on this one?
prawn_86
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SeekSuccess,
Instead of posting the same generic thing on every thread why dont you give some actual reasons why each stock is undervalued.
Also, why are you using $100 as the spot price. Isnt it back to about $60 at the moment.
Some actual analysis would not go astray. Any more generic posts will be removed.
prawn
Instead of posting the same generic thing on every thread why dont you give some actual reasons why each stock is undervalued.
Also, why are you using $100 as the spot price. Isnt it back to about $60 at the moment.
Some actual analysis would not go astray. Any more generic posts will be removed.
prawn
I'm going to take a stab at valueing JRL, what else would I do on a saturday night 
1) ONLY taking into account its 40% value of its share in Bigrlyi, with the following assumptions
- Uranium @ $60 AUD/lbs
- Ignoring the Vanadium
- Operating costs to extract/process Uranium of 25% (complete guess, I have no idea of operating costs)
- Uranium extraction percentage of 80% (quoted by EME as > 90%)
- Paladin pay 50% of the estimated worth of the resource (well my estimation anyway
- Cash of $45 Mill (as quoted in latest QR)
2) COMPLETELY ignoring its other assets, notably
- Yilgangi (20% carried) 8m @ 0.52 g/t Au (Avg of 17 drills)
- Bow River (100%) 7.3m @ 0.98% Ni and 0.84% Cu (Avg of top 2 drills)
- Joyners Find (40%) 7m @ 58% Fe (Best drill)
23 Mill Lbs x $60 AUD = $1380 Mill
$1380 Mill x 0.54 (% EME) x 0.8 (Leaching) x 0.75 (Operating Costs) x 0.4 (% JRL) x 0.5 (Paladin) = $90 Mill + $45 Mill (Cash) = $135 Mill
Current MC = 30 Mill
135/30 = x4.5!
Which is incredible, surely i'm missing something. Somebody with more experience care to critique?
Anyone know the price of Vanadium?
Disclosure: I don't hold (but soon will be
1) ONLY taking into account its 40% value of its share in Bigrlyi, with the following assumptions
- Uranium @ $60 AUD/lbs
- Ignoring the Vanadium
- Operating costs to extract/process Uranium of 25% (complete guess, I have no idea of operating costs)
- Uranium extraction percentage of 80% (quoted by EME as > 90%)
- Paladin pay 50% of the estimated worth of the resource (well my estimation anyway
- Cash of $45 Mill (as quoted in latest QR)
2) COMPLETELY ignoring its other assets, notably
- Yilgangi (20% carried) 8m @ 0.52 g/t Au (Avg of 17 drills)
- Bow River (100%) 7.3m @ 0.98% Ni and 0.84% Cu (Avg of top 2 drills)
- Joyners Find (40%) 7m @ 58% Fe (Best drill)
23 Mill Lbs x $60 AUD = $1380 Mill
$1380 Mill x 0.54 (% EME) x 0.8 (Leaching) x 0.75 (Operating Costs) x 0.4 (% JRL) x 0.5 (Paladin) = $90 Mill + $45 Mill (Cash) = $135 Mill
Current MC = 30 Mill
135/30 = x4.5!
Which is incredible, surely i'm missing something. Somebody with more experience care to critique?
Anyone know the price of Vanadium?
Disclosure: I don't hold (but soon will be
prawn_86
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Hey Woltage, good to see new members contributing so early.
I must admit i havnt even looked at a chart of JRL let alone read the announcements, so these are just some general tips/pointers/observations.
The figure you have calculated seems to be a cross between in-ground value (IGV) and potential earnings.
You have come up with 1.3bill IGV. Depending on market conditions and sector, conservatively you can say that firms should trade around .5 - 1% of IGV in a bear market. This is very loose approximation and is not backed by any form of theory whatsoever, more just an observation of various fundamentalists. So at 1% of the figure you calculated that would put their MC at about $14mill.
From an earnings perspective, you would need to break that 135mill you calculated, up into yearly amounts and work out an EPS value. If you were going to get right into it you would assume they would start a small operation 1st and then ramp up production.
So using the 135mill say over a 20 year mine life gives a very loose/innappropriate value of 6.75mill per year. Put a PE of 10 on it and it would suggest the co should be valued at about $70mill MC.
Notes to the earnings (which i have not done) are that you really should discount for time value of money, money today is worth more than money in the future. And you should include likely dilution to the shares on issue, ie - the firm is going to need to raise capital (usually by share issue) in order to get into production, which would then bring the EPS down as there are more shares.
Like i said these are just a few pointers on what i would do, but your figure of 4.5x is probably not a realistic SP target.
Always like to see new fundies here though, too many of those chartists floating around...
I must admit i havnt even looked at a chart of JRL let alone read the announcements, so these are just some general tips/pointers/observations.
The figure you have calculated seems to be a cross between in-ground value (IGV) and potential earnings.
You have come up with 1.3bill IGV. Depending on market conditions and sector, conservatively you can say that firms should trade around .5 - 1% of IGV in a bear market. This is very loose approximation and is not backed by any form of theory whatsoever, more just an observation of various fundamentalists. So at 1% of the figure you calculated that would put their MC at about $14mill.
From an earnings perspective, you would need to break that 135mill you calculated, up into yearly amounts and work out an EPS value. If you were going to get right into it you would assume they would start a small operation 1st and then ramp up production.
So using the 135mill say over a 20 year mine life gives a very loose/innappropriate value of 6.75mill per year. Put a PE of 10 on it and it would suggest the co should be valued at about $70mill MC.
Notes to the earnings (which i have not done) are that you really should discount for time value of money, money today is worth more than money in the future. And you should include likely dilution to the shares on issue, ie - the firm is going to need to raise capital (usually by share issue) in order to get into production, which would then bring the EPS down as there are more shares.
Like i said these are just a few pointers on what i would do, but your figure of 4.5x is probably not a realistic SP target.
Always like to see new fundies here though, too many of those chartists floating around...
the new scoping study should help answer a few of these questions if the JV partners allow the release of the finer detail. (ie PDN are likely to try to block or reduce the level of detail).
i would work more with a price that say halves the difference between the quoted spot price and long term price. so maybe using USD$75/lb or say AUD $80 might be appropriate.
the old scoping study is superceded but roughly speaking EME was predicting 1m lbs p.a. U308 and V205 (i have rounded up for simplicity).
1m lbs U308 @ $80 = $80m p.a.
1m lbs V205 @ $15 = $15m p.a.
8 yr mine life (likely to have been extended with recent drilling and/or higher mine throughput maybe 1.5m -2mlbs p.a.)
from memory they flagged capital costs of around $70m but the recent metallurgy might point to savings of around $5m-7m as acid leach. nevertheless EME cap costs should be about $35m.
now again roughly speaking the cash costs should be in the order of $20-22/lb maybe lower given the excellent recoveries with acid leaching.
with a $15/lb credit for the vanadium the uranium leg should be quite robust even at lower prices but higher (ie long term contract prices) they appear to be fairly attractive.
EME will be sold by JRL soon enough then the value will be released.
we still don't know what the strip ratios (high!?!) will be at Bigrlyi and whether PDN continue to 'slow play' their hand.
i would work more with a price that say halves the difference between the quoted spot price and long term price. so maybe using USD$75/lb or say AUD $80 might be appropriate.
the old scoping study is superceded but roughly speaking EME was predicting 1m lbs p.a. U308 and V205 (i have rounded up for simplicity).
1m lbs U308 @ $80 = $80m p.a.
1m lbs V205 @ $15 = $15m p.a.
8 yr mine life (likely to have been extended with recent drilling and/or higher mine throughput maybe 1.5m -2mlbs p.a.)
from memory they flagged capital costs of around $70m but the recent metallurgy might point to savings of around $5m-7m as acid leach. nevertheless EME cap costs should be about $35m.
now again roughly speaking the cash costs should be in the order of $20-22/lb maybe lower given the excellent recoveries with acid leaching.
with a $15/lb credit for the vanadium the uranium leg should be quite robust even at lower prices but higher (ie long term contract prices) they appear to be fairly attractive.
EME will be sold by JRL soon enough then the value will be released.
we still don't know what the strip ratios (high!?!) will be at Bigrlyi and whether PDN continue to 'slow play' their hand.
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Hi Prawn,
If you carefully read my post, I said "assuming the demand of uranium increase"
I am also very well aware that the spot price is around $60/pounds TODAY.
It is only my OPINION it will go up IN THE FUTURE
This is what I found from Macquarie:
Macquarie ups uranium supply forecast following mine site visit at Uranium One's majority owned Kazakhstan mine; Kazakh production to rise strongly in short to medium term, should be enough to keep underlying market roughly balanced in 2008, at least 1H of 2009. Beyond that market expected to gradually tighten through 2012, as expected reactor forward orders more than account for global mine supply growth.Expected spot price at $65 per pound for 2008, down from $99/lb in 2007, for next year at $88/lb.
Macquarie's OPINION is that the spot price will likely to go up than down due to new reactors being built and hence, increase demand.
Nobody can possibly know the exact price of uranium spot in the FUTURE...we all can give our OPINION just like you or Macquarie
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EME and JRL (Parent company) are in trading halt today! I wonder if it is a takeover announcement? Let's hope so
Denison to draw the first blood in the takeover saga and PDN with a counter offer valuing EME at $2/ share ****wishful thinking****
Denison to draw the first blood in the takeover saga and PDN with a counter offer valuing EME at $2/ share ****wishful thinking****
Could be intresting Seek.
I am fairly confident the trading halt, referred to as 'pending corporate transaction on EME', is either of the following:
1. TKO offer for EME
2. JRL have finally found a buyer for their EME stake (refer Nov 2008 chairman's address where they flagged this occurring this year).
Obviously I would prefer the first scenario, since that would be a significant TKO premium.
TKO premiums average around 20% to 25%, however given how many EME shares are controlled by EME directors, and JRL, you would think they could squeeze quite a bit more out of any suitor if they negotiated a price at which they would agree to the TKO.
Either way, if any of the above two eventuate, I would expect a significant amount would be returned to JRL shareholders, again as flagged in Nov 08 chairman's address.
BJr
I am fairly confident the trading halt, referred to as 'pending corporate transaction on EME', is either of the following:
1. TKO offer for EME
2. JRL have finally found a buyer for their EME stake (refer Nov 2008 chairman's address where they flagged this occurring this year).
Obviously I would prefer the first scenario, since that would be a significant TKO premium.
TKO premiums average around 20% to 25%, however given how many EME shares are controlled by EME directors, and JRL, you would think they could squeeze quite a bit more out of any suitor if they negotiated a price at which they would agree to the TKO.
Either way, if any of the above two eventuate, I would expect a significant amount would be returned to JRL shareholders, again as flagged in Nov 08 chairman's address.
BJr
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Hi Buffet,
CONFIRMED!! A takeover $1.02 bid from a Chinese company for 70% of the company.
I really think PDN will not sit still. They have HUGE stake in Birqlyi to just keep quiet, let's the auction bidding begin!!
I own shares in JRL.
CONFIRMED!! A takeover $1.02 bid from a Chinese company for 70% of the company.
I really think PDN will not sit still. They have HUGE stake in Birqlyi to just keep quiet, let's the auction bidding begin!!
I own shares in JRL.
Do I have this right???? JRL should be nearer $1.50/share?
I am calculating that Jindalee's shares are worth in the region of $1.54 each based only on the value of the company's holdings of Energy Metals shares at the $1.15 EME hit today. JRL is trading at $1.04 as I type. That is a 50c/share discount and excludes JRL's other shareholdings and properties!!!!! Do I have this right???? I took the $1.15, multiplied it by the approximately 47,000,000 EME shares I believe JRL holds and divided that value by the approximately 35,000,000 shares of JRL that are outstanding (fully diluted). Has anyone else done this and come out with similar results? Am I in error?
I am calculating that Jindalee's shares are worth in the region of $1.54 each based only on the value of the company's holdings of Energy Metals shares at the $1.15 EME hit today. JRL is trading at $1.04 as I type. That is a 50c/share discount and excludes JRL's other shareholdings and properties!!!!! Do I have this right???? I took the $1.15, multiplied it by the approximately 47,000,000 EME shares I believe JRL holds and divided that value by the approximately 35,000,000 shares of JRL that are outstanding (fully diluted). Has anyone else done this and come out with similar results? Am I in error?
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You are not in error
I also hold JRL for almost 3 years...my average entry was 1.90...this is back when uranium price was skyrocketed
JRL always trade at discount to its NTA (huge discount), your calculation of JRL's NTA is accurate
I think market is giving discount due to risks. Takeover could fail for whatever reason
But when it is succeeded, JRL will hold CASH worth 1.50/ JRL shares...that would bring the price closer to 1.50 or slightly more than 1.50 to reflect JRL other assets and potentials
With or without counter bid...I believe JRL could give capital return of $1/ share to shareholders
I also hold JRL for almost 3 years...my average entry was 1.90...this is back when uranium price was skyrocketed
JRL always trade at discount to its NTA (huge discount), your calculation of JRL's NTA is accurate
I think market is giving discount due to risks. Takeover could fail for whatever reason
But when it is succeeded, JRL will hold CASH worth 1.50/ JRL shares...that would bring the price closer to 1.50 or slightly more than 1.50 to reflect JRL other assets and potentials
With or without counter bid...I believe JRL could give capital return of $1/ share to shareholders
Pictish
I have a spreadsheet for JRL's assets (incl its EME shares, cash and its other various shares).
At EME SP of $1.02 and all its other assets, the NTA per JRL share is exactly $1.50.
Today I added a 'if TKO approved' section, and then assumed an ongoing EME SP of $1 per share. That worked out to an NTA of $1.60 per JRL share.
As seek stated though JRL has always traded at huge discount. And a very unfair discount...no other company I know of suffers from a discount THIS deep.
Important think to note though is tha this discount is due to risk of the EME shares plunging. If the TKO happens, this is largely derisked since most of their asset will be cold hard cash! So the discount to NTA should reduce.
At least thats my theory...
BuffetJr
PS: If you are interested in another asset play, take a look at Platsearch (PTS) and particularly its investments in EFE and WPG (and shortly another spinoff Thompson Resources hopefully). Nowhere near the same arbitrage value as EME/JRL but then again these once in a lifetime opportunities are just that, once in a lifetime:
I have a spreadsheet for JRL's assets (incl its EME shares, cash and its other various shares).
At EME SP of $1.02 and all its other assets, the NTA per JRL share is exactly $1.50.
Today I added a 'if TKO approved' section, and then assumed an ongoing EME SP of $1 per share. That worked out to an NTA of $1.60 per JRL share.
As seek stated though JRL has always traded at huge discount. And a very unfair discount...no other company I know of suffers from a discount THIS deep.
Important think to note though is tha this discount is due to risk of the EME shares plunging. If the TKO happens, this is largely derisked since most of their asset will be cold hard cash! So the discount to NTA should reduce.
At least thats my theory...
BuffetJr
PS: If you are interested in another asset play, take a look at Platsearch (PTS) and particularly its investments in EFE and WPG (and shortly another spinoff Thompson Resources hopefully). Nowhere near the same arbitrage value as EME/JRL but then again these once in a lifetime opportunities are just that, once in a lifetime
:Pictish
IF the TKO happens, then I believe JRL will at some stage return a LARGE chunk to shareholders. And they have previously flagged this will be in the form of a fully franked dividend...which is of course because they will no doubt have to pay tax on the profit of their EME sale, so they will have franking credits to pass on.
We will then be left with a company with around 14M shares in EME still (which should still be worth around $14M...and a bundle of other investments (worth around $5M at the moment), and probably quite a bit of cash (Assuming they dont distribute the entire EME sale proceeds).
So a company with a min asset amount post TKO of around $20M...and their market cap is around $33M. So it could fall quite a bit, but the point is the fall will not be as big as the cash distribution they make.
So its now an arbitrage play in my view...however, with the risk of the govt not approving the TKO.
I cant imagine them not though, i mean, firstly its not a full TKO, only 70%, and secondly, EME only have around 50% of the project...so technically the Chinese are only taking 35% interest in the project!
But who knows how these politicians' minds think.
BuffetJr
IF the TKO happens, then I believe JRL will at some stage return a LARGE chunk to shareholders. And they have previously flagged this will be in the form of a fully franked dividend...which is of course because they will no doubt have to pay tax on the profit of their EME sale, so they will have franking credits to pass on.
We will then be left with a company with around 14M shares in EME still (which should still be worth around $14M...and a bundle of other investments (worth around $5M at the moment), and probably quite a bit of cash (Assuming they dont distribute the entire EME sale proceeds).
So a company with a min asset amount post TKO of around $20M...and their market cap is around $33M. So it could fall quite a bit, but the point is the fall will not be as big as the cash distribution they make.
So its now an arbitrage play in my view...however, with the risk of the govt not approving the TKO.
I cant imagine them not though, i mean, firstly its not a full TKO, only 70%, and secondly, EME only have around 50% of the project...so technically the Chinese are only taking 35% interest in the project!
But who knows how these politicians' minds think.
BuffetJr
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Hi Buffet
Do you mean post TKO, JRL STILL hold 14M EME shares? I thought they intend to sell their 40% stake (ALL holdings)
Scenario 1:
If JRL only sell 70% of their holdings in EME (around 40 odds Mil shares) then they will be left with 12 -14 Mil shares like you said
Scenario 2:
But if JRL sell ALL...shareholders will be left with cash only (at this stage I dont consider the other assets/ projects)
I prefer 1st scenario 1
I believe Birqlyi has more potential than meets the eye... PDN have inside information and I pray that PDN will counter offer...but either scenario, shareholders will get good capital return or franking dividends
Questions:
What happens to the EME options? EMEO? are they trading in the open market? I think most of them are expired already but please shed some light on this matter
Do you mean post TKO, JRL STILL hold 14M EME shares? I thought they intend to sell their 40% stake (ALL holdings)
Scenario 1:
If JRL only sell 70% of their holdings in EME (around 40 odds Mil shares) then they will be left with 12 -14 Mil shares like you said
Scenario 2:
But if JRL sell ALL...shareholders will be left with cash only (at this stage I dont consider the other assets/ projects)
I prefer 1st scenario 1
I believe Birqlyi has more potential than meets the eye... PDN have inside information and I pray that PDN will counter offer
...but either scenario, shareholders will get good capital return or franking dividendsQuestions:
What happens to the EME options? EMEO? are they trading in the open market? I think most of them are expired already but please shed some light on this matter
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Dear all,
This is the latest audio from Lindsay Dudfield
http://www.brr.com.au/event/60617
good luck to all
This is the latest audio from Lindsay Dudfield
http://www.brr.com.au/event/60617
good luck to all
Seek
The EME options (EMEO) expired in 2008...there are only some unlisted options left (held by EME directors i assume).
JRL are taking up the TKO offer...ie selling 70% of their stake. They have 46.8 million shares in EME at the moment . So if they offload 70% of these they will have 14.04 million shares left.
I assume they will take up the 1 for 9 rights issue, which means they will then buy 1.56M EME shares at 90c each...thats assuming they are able to partake in the rights issue (not sre if there is a clause precluding them from doing so...cant see one).
BufferJr
The EME options (EMEO) expired in 2008...there are only some unlisted options left (held by EME directors i assume).
JRL are taking up the TKO offer...ie selling 70% of their stake. They have 46.8 million shares in EME at the moment . So if they offload 70% of these they will have 14.04 million shares left.
I assume they will take up the 1 for 9 rights issue, which means they will then buy 1.56M EME shares at 90c each...thats assuming they are able to partake in the rights issue (not sre if there is a clause precluding them from doing so...cant see one).
BufferJr