RE: RE: National bank target $0.35 The most recent National Bank writeup (target for SND increased to $0.45) is excellent. Actually, now that I pay closer attention to NB's analysis, I see that their NAV is ~$140 mm whereas mine was ~$165 mm, and it's almost exactly the $25 mm I guesstimate we recover from the 3 bad investments we made. I guess I am on the same page as them, although I haven't seen the discount rates they are using. Anywhoo.
RDA first. I thought these properties would retain some measure of value. After doing a little due diligence on thermal coal yesterday, I have to rescind any presumption that they can recover 50% of their $14 mm investment. Thermal coal is in the dumps and likely to stay there. $2-3 mm is my best guess as to what they'd get for RDA's properties plus the thermal coal terminal today, in other words, next to nothing.
I don't foresee NDX obtaining financing. As Nolan suggested, they need $15 - $20 mm. The Company is valued at $5 mm, suggesting that current shareholders would suffer 75% - 80% dilution to obtain the necessary funding. Not to mention, if you were an investor, would you really want to throw your cash in with a management team that ran the company into the ground (eg CEO of NovaDX who I have heard many people on the street have issues with). So I think the most likely scenario here is SND taking ownership of NDX's assets and auctioning them off. Unlike RDA, I see SND being able to sell the properties for a nominal amount, but keep the streams intact. These streams are still quite valuable, even with met coal at $150 (our purchase price is $75, so even at our lower purchasing rate of 16%, on 500kpa production, we are talking 80,000 x $75 = $6 mm / year for at least 20 years). So yes I agree that NDX is not a complete write off at this point.
TER, who knows. They aren't like NDX, they are literally broke. They can't raise money. And they didn't even get to the point where they were implementing the EOR technology. They sunk $14 million into the property doing who knows what (paying management?) and now they're broke. As far as the question, is there value in the property... well they were modelling 1,000 BOPD production from each of their oil pools. Value that at a conservative $50,000 per flowing bopd we are talking a company that is worth $100,000,000. So if these numbers are accurate, that with EOR technology the two pools can increase production to 1,000 bopd each (plus natural gas that is not accounted for), SND could probably take ownership of this asset and literally give it away while keeping their stream intact. The acquirer gets an asset worth a lot of money, and SND gets their stream into production.
Who knows. Maybe there is more upside to TER than we think. Oil is not a thermal coal. Maybe we take TER over, increase our ownership of the stream to 40%, and give away the remaining 60% to someone else for free, with the 60% participant funding all remaining CAPEX.
What we do know is that, as of today, SND isn't a 5 bagger. We aren't another SSL that is going to triple over a couple years. But Nolan went on record saying that he thinks he can turn SND into the biggest streaming/royalty company in the world. We are off to a rough start but in a couple years time we may be back on track. Especially if Nolan keeps doing package deals with SSL, so we can participate with larger, more legitimate projects, rather than dealing with these junior miners.