Plenty of things happening Plenty of things happening for sure. The big change is that Tungsten prices have bottomed and rebounded sharply, now consolidating. Remains to be seen if consolidation holds and prices keep going up or start dropping again. Answering Mr. Chizzles: I do follow the board when I can (weekends mostly and not always these days - due to big changes at work). Overall I think the company has been riding the bottom of the commodity cycle as well as can be done, containing costs and picking up properties at low prices which is the right thing to do at this time. I like the approach. Looking at financials, company has plenty of debt to service for sure, but also financial backers that seem to be supportive without being overwhelming. and there is insider presence that is very solid and keeps growing in terms of real share ownership.
- In Q2 price of Tungsten was still very low. Prices recovered sharply in March - April with consolidation in May. so the positive impact is not yet reflected on the balance sheet. CEO Black believes he has a sense where the bottom in price is (was), and he is acting accordingly. Almonty just increased its ownership of Valtreixal to 51% (low cost mine to replace Los Santos production by 2020). to complete purchase will require 2.5M US$ by 2018. It helps to have the financial backing of German DRAG, a clever company that looks like has guessed the commodity bottom correctly.
- The Australian mine operations have been suspended, which is good, with only circuit optimization work now being performed. Tungsten price is still too low to support the mine. Almonty seems it has figured out a way to run the mine profitably as a feed to the ferro-tungsten plant in Vietnam. But I want to see what is actually needing to be done to the plant and the mine to make the combination profitable.
- Panasqueira mine seems to be working out ok. The all in cash costs were better than I had expected and this mine could be profitable in the second half of the year.
- Concerning Sangdong: a large EPC with substantial mining expertise (POSCO E&C) is now under contract. Black says the mine will be commissioned first half of 2017. If he is right about APT prices and Almonty has the off-take for Sangdong with TaeguTec (maybe reason the IMC loan payment was deferred to the end of 2016?), then the mine will be up and running at what should be a favorable price point (second half of 2017). Sandong is my strong interest of course. I would like to see more frequent updates, from Korea especially now that POSCO is on-board.
- Tungsten market is a state of change. Oil is back to US$50 and exploration activity (big user of tungsten) should ramp up again after a 2-year decline. Construction and steel utilization in China will probably never be what they were 5-10 years ago, but they should start recovering soon if have not already and the next large growth story is going to be India. The incandescent lightbulbs are disappearing fast and not at all likely to come back, but there are new use for tungsten that were not there before, like new long-range projectiles for the EM guns that US (and very likely others) are developing. The large Chinese tungsten producers are still looking to further cut their production, which indicates demand is not yet back to where it could be, but in my opinion prices will not drop to where they were three months ago.
- Last private placement was at 25c and mostly bought by insiders and was cut short (about 50% of allotted) because the IMC loan repayment was postponed. That was to be a substantial dilution that did not quite happen as feared. today the first private placement for the ATC acquisition was at 30c and the next PP to complete the ATC acquisition if it happens will be at 40c. these are still low prices, but maybe the worst is over?
- Projections: The valuations of tungsten properties change with APT prices in non-linear ways. In December-January the cumulative value of all tungsten mines In the world was zero. In March-April APT prices went up 25%. Prices did not go up in May, but have not crashed either. A few mines are now profitable and worth something, others are getting there, others are still worthless. The Chinese large producers continue to cut their output, which means they are still suffering at the current price point where Almonty could be actually starting to make a profit. The key to survival and long-term success in the Tungsten business is of course to be able to produce the material at costs that are lower (even fractionally lower) than the Chinese producers.
- Throwing out really rough numbers: at APT 200 Los Santos and Valtreixal are probably long-term viable; at APT 250 Panasqueira should be ok. At APT 300 Wolfram Camp /ATC may finally be viable. Sangdong is expected to be as good or better than Los Santos, with throughput as large as the other mines combined. My expectation is for the share price to be above 200c if operations at Sangdong are validated and APT is stable at US$300.