Great analysis by aatozz, lbe vs ismWhat aatozz has done below is present the reality of both companies financial situation. In short LBE is screwed, which is also obvious by them having to borrow yet even more money from the Chinese. Good stuff aatozz.
LBE has a total capacity to produce 51,220 tons of nickel (Redstone -- 20376, McWatter -- 6104 & Hart -- 24740) that has a RETAIL value of $632 million dollars (assuming 80% recovery rate). That is their total capacity for revenue for LBE and then we have to engage costs. Open-Pit, Sub-Caving & C/F cost $4.56, $45 & $55/ton to extract respectively. The balance of the costs such as milling, transportation, administration are the same regardless of the extraction method. These costs appear to be $25/ton. In the case of LBE, 20% is Open-PIt and 80% Is Sub Caving/CF. Cost of processing 3,884,000 tons of NI Ore is (.20*3884000*4.56)+(.80*3884000*50) +(3884000*25) = ($4,427,760) + ($145,650,000) + ($116,520,000) = $267,000,000. Lets add 25% for mining taxes, income taxes, environmental, capital, financing, etc that would be an additional $66,750,000. Total cost for processing is $333,750,000. If we now take out total revenue, and apply the cost, we have a gross profit potential of (632,000,000-333,750,000) = $298,250,000. That is how much profit LBE can make given that all of their mines are processed to 100% $298,250,000 divided by number of shares (186,000,000) and the profit potential per share is $1.79 per share (This value is halved if JJ converts their preferred shares). This is a yield per share for the next five years (not per year) not taking into account future exploration, debt to JJ, financing costs, etc.
ISM has a total capacity to produce 42,134 tons of nickel (L North -- 33296, L #1 -- 8838) that has a RETAIL value of $520 million dollars (assuming 80% recovery rate). MICON believes that there is a potential for 2 - 4 times that amount that is being explored now. For arguments sake, I will do the calculated on the indicated resources and then apply these potentials as MICON believes that it is of similar grade. Open-pit costs $4.56 to extract and this is an open-pit model. MICON believes that previous exploration for Open-PIt was not done because NI prices were too low at the time justify it. Now the calculations, we have (8,324,000@.4% & 1,733,000@.51% = 10,000,000 tons @.41%). Cost of processing 10,000,000 tons with Open-Pit = (10,000,000*4.56)+(10,000,000*25) = (45,600,000)+(250,000,000) = $295,600,000. Lets add 25% for mining taxes, income taxes, environmental, capital financing, etc that would be an additional $73,500,000. Total cost for processing is $367,000,000. If we now take the total revenue, and apply the cost, we have a gross profit potential of ($520,000,000 - $367,000,000) = $153,000,000. If the additional 20 - 40 tons of NI ore (similar grade) is found as is strongly indicated by MICON, the $153,000,000 becomes $459,000,000 with 20 tons and $765,000,000 with 40 tons of gross profit. If we then divide number of shares into the various levels of gross profit we get 10M tons = (153,000,000/72,400,000) = $2.00/share, 10M+20M tons = ($459,000,000/72,400,000) = $6.25/share, and, lastly, 10M + 40M tons = (765,000,000/72,400,000) = $10.25/share. Again, no long term debt, $24M in the bank, book value of 62 cents/share and not beholding to creditors. What we need now a an economic feasibility study to confirm the value in the indicated resources and more evidence to support the additional 20 to 40 million tons.