Lotustpsll, who contributed this article to NextInsight, worked 32 years with a global banking group before he retired. He is vested in Tawana Resources and Alliance Mineral Assets.
 This camp will house up to 150 men who will construct infrastructure for mining lithium concentrate at Bald Hill. Photo: CompanyThere are multiple near-term catalysts for the Bald Hill Project which Alliance Mineral Assets (AMA) and its 50-50 joint venture partner, Tawana Resources, are developing.The mine is set to the next producer -- No. 4 -- of lithium in Australia. |
1. Third and final off-take prepayment from Burwill is expected tomorrow (15 Sept) for the supply of lithium ore. The amount is A$8.75 million. First prepayment was A$7.5 million (April 2017) and the second was A$8.75 million (15 July 2017).
2. Off-take agreement for the supply of tantalum from Bald Hill is expected to take place soon before the mine starts production.
The Bald Hill mine is known to be rich in tantalum, which can be mined together with lithium. Tantalum prices have recovered from their lows in 2015 and 2016.
3. Resource upgrade for the Bald Hill mine is expected to be released next month. The upgrade follows on extensive drilling to determine the lithium reserves in the mine, and is expected to extend the life of mine from 3.6 years (based on an earlier maiden resource estimate in June 2017) to more than 10 years.
4. China’s New Economic Policies should be announced in October and are likely will have a positive impact on the electric vehicle (EV) industry.
If China pushes for faster adoption of EV targets, the impact on the lithium industry will be immediate and huge – so watch the space.
5. The as-yet-unresolved debt issue between AMA's CEO and Jonathan Lim should, over time, be erased. The issue -- and online trading curbs by brokers UOB KH, Maybank, OCBC, CIMB and Phillips -- have artificially depressed its share price.
(Only DBS Vickers doesn't have an online trading curb on AMA.).
In the past month, the share price has fallen from 31 cents to 21 cents.
It is logical to assume that this has also impacted, rather unfairly, on Tawana's share price.
I expect that when the debt issue is resolved, there will be an announcement made on the SGX website with regards to the number of the CEO's shares that were sold and the unsold quantity returned to him.
I have recently added positions in both AMA and Tawana – the investing metrics are too good to ignore at current low prices.
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Tawana - Strong Investing Metrics
Notes: - Projections on EBITDA and FCF by Canaccord Genuity, an Australian broker. - Assume all share options will be exercised. - Total assets and shareholder funds as at 31 Dec 16.
Although I may not be familiar with the technical aspects of the Bald Hill project, my banking background tells me the financial estimates on IRR, payback period, EBITDA and FCF projected by Canaccord are incredible and certainly merit an investing review. (Click for Canaccord report dated 26.7.17).
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