Some thoughts
Some thoughts...There may have been reasons thay they increased the authorized share float and the employee options. I hope my thoughts are not taken negatively, as I'm here to profit also.
Whats below considers possibilities. It assumes proven and probable reserves at production, presently, the ore is in the resource category for both the Graphite and V2O5.
After the pilot plants connected to the Full Feasibility Study successfully check the contribution of the Large and Jumbo flake, its assumed that a merger with Malagasy occurs.
On 04/12/2013
Malagasy at 0.05 AUD, $0.053 CAN on 157.3M shares
Energizer's at $0.225 CAN, on 175.6M shares
It's assumed over time the above share prices and float ratio between the subject companies holds and Energizer and Malagasy agree to a merger. If so, the New Company could have 175.6 + (0.053/0.225) 157.3, or from 212.6M to 225M shares at the merger. Lets round the float up to 250M shares after considering cash needs and DRA's interest.
In this case, the New Company would have a 100% interest in the Molo Graphite and the Green Giant V2O5 mine which is presently 100% owed by EGZ, but its extension on Malagasy's property is 75% owned. In addition the larger Malagasy property containing further graphite, vanadium and other minerals would be part of the New Company's combined assets.
With data from the Full Feasibility Study pilot plant test tests in hand relating to the contribution of the Large and Jumbo flake plus the 3 year tax holiday, lets assume the New Company decides to start production to 150,000 tonne made up of 84,000 tonne of various flake sizes below large flake and 66,000 tonne of Large and Jumbo flake. In addition the New Company decides to seek a large partner or partner(S) who will purchase an agreed upon percentage interest (lets say 40% maximum) in the New Company and then negotiates debt financing for the project. Lets assume that the after the partner(S) 40% interests the New Company has 350M shares held by the New Company, DRA, the partner(S) and the then existing shareholders.
About Vanadium: Refer to this August 19, 2011 news release. https://www.energizerresources.com/2011/450-energizer-resources-inc-initiates-process-for-mine-permit-and-provides-update-on-preliminary-economic-assessment.html which covered Energizers plan of developing the Green Giant Vanadium Property.
The Company’s engineering group DRA Mineral Resources (DRA) of South Africa, armed with this positive outcome, has now evolved to where it has begun to layout the mine facility, which will include a residential village to support the future mine, with acomodations and infrastructure for a full 550 personnel.
Craig Scherba and the Company’s Vice President of Business Development, Brent Nykoliation, will visit Madagascar next week to initiate the permitting process for mine development.
PEA Progress To Date
Some of the key parts of the presentation being made to the Ministers will include:
- Building Layouts are 98% complete with minor adjustments required for the laboratory, Canteen/Shop and an additional building added for the Power Plant Offices
- Preliminary Layouts for the buildings have been prepared and are under review, with layouts for each building sent out for pricing
- The residential village plan is complete – designs, layout and costs. The layout formed part of the drawing pack issued for comments / approval. The residential village will cater for the full 550 people and will have executive, white collar and blue collar dormitories, a general kitchen / canteen / laundry block, a recreation block and a small all-purpose shop
- A tool list for all mechanical equipment required in the various workshops has been compiled with costs
- The fire fighting system is being designed and costed and is expected to be complete in early August 2011
- The preliminary block plant layout is expected to be complete by the end of the first week of August 2011
- The water demand and supply has been estimated and a trade off study will be completed to determine the best option
- The water treatment plant and sewage treatment plants have been sized and are being designed and costed including all water/sewage storage tanks
- A logistical study to determine costs and the best options regarding shipping and transportation to and from site and to and from Madagascar is currently underway
- Environmental and socio-economic studies are ongoing by local company, AGETIPA.
Metallurgical Update
The main component of the PEA study currently underway is the continued optimization of the metallurgical process. SGS Mineral Services (Lakefield) continues the advanced metallurgical test work as part of the PEA to optimize the vanadium extraction process confirmed by SGS Lakefield in 2010 under the direction of George Annandale, a consultant to the Company and a vanadium expert with over 30 years of international experience.
George Annandale stated, “We are well underway in optimizing the alkaline pressure leach process, which resulted in up to 82% vanadium extraction, and is a well-established and proven technology that is in use today, in particular, in connection with the treatment of uranium ores."
The above release was very positive on the Vanadium side which was temporarily shelved for the Graphite, but the New Company and a large partner might consider placing both the graphite and vanadium mines into production at the outset, assuming Vanadium Demand is positive.
Let's put the cost of placing the 7,500 TPD Vanadium Mine into production at $500M, which when added to the cost of the Molo Graphite Mine at $290M would come to about $790M for both.
Note that Objective Capital had earlier estimated $350M.
Assuming annual sales figures at an average of $2,000 tonne on 150,000 tonne of various grades of graphite would bring about $300M in sales for the graphite. A 7,500TPD Operation having a grade of 0.70% V2O5, with 82% recoveries grade could produce 34.6M lbs of V2O5. At $17.25/lb sales would be $598M. So now we have potential annual sales of about $900M, or approximate sales of ~$2.60 per share based on 350M shares. After successful production the company could consider a reverse split to obtain further funds for expansion.
The $17.25/lb vanadium price is based on 2010 prices from the Ocean Equities and is at the ¼ point of the high and low prices given in their report.