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LCY 0.6¢

Ann: Investor Presentation

  1. ASX News

    80,782 posts.
    • Release Date: 29/02/12 19:59
    • Summary: Investor Presentation
    • Price Sensitive: No
    • Download Document
  2. Omorrisey

    2,407 posts.

    Seem to be really pushing the coal assets.
    More than one by the looks of it.

    Again no mention of HAW at all....

  3. zmans

    8,938 posts.

    O I agree, I too think the coal will be the big surprise out of the 3 JV's being looked at. Just look at the other Indian companies already planning to invest in QLD. Like I said a while back me thinks the Indians and coal will be in QLD what the Chinese and FE are in WA.

  4. bernardp

    1,277 posts.

    Love this part:

    Cash Position (31 Jan 2012): $18M
    Debt: $0

    And this part:

    Funding + Assets + Experience = GROWTH

    The reference to 'local knowledge' combined with 'International Network' that gives us 'Quality Assets' is a beauty.

    Can't see her staying at these levels for too much longer. The 60% earn in for Mt Bevan in April will be a nice Easter present.

    The company is being very professional and I have faith in the process.

    Enjoy the ride!




  5. Nozza8

    1,483 posts.

    $0 debt
    Was there any mention of who this Zorich is?

  6. zmans

    8,938 posts.

    Bernie in my eyes quality management means quality Company because have seen it so many times before where poor management has cost shareholders $$$$ through incompetance and greed, even though they had a quality resource.

    The Investor presentation leaves you no doubt these guys have a vision going forward and have the financial muscle, the assets and know how to realise our assets into producing ones. Secure just 1 of 3 current JV's under review and production could be alot quicker than we think.

    I have said all along fundamentals don't lie and if my amateur charting skills are correct then we could be reversing pretty quickly.

  7. bigstar

    1,192 posts.

    they will target DSO (Hematite) for H2 2012....
    Also it looks like they want to speed up the development of Mt Bevan:
    Q3 2012 : Scoping study, start BFS
    2013/2014 : start construction/ramp-up....

    Cheers,

  8. ocka

    2,377 posts.

    Hey OM can you recommend other Government controlled stocks
    worthy of investor interest?

    I've gotta get a piece of all the action I've been missing out of!

    DYOR, IMO only.

  9. Nice presentation and starting to get some of the conformation that the market has been craving.

    "1200m srilling program at Blue Peter underway."

    "Financial leverage of 15 Billion MC cornerstone investor."

    "Strategy- To continue developing OUR major asset, Mt Bevan whilst utilising access to significant capital to develop and aquire other projects."

    This is the sort of thing that makes me confident in my investment choice.

  10. zmans

    8,938 posts.

    Did anyone go to the Investor Presentation, would be interested to find out what the turn out was like...?

  11. bigstar

    1,192 posts.

    what amazed me the most is the execution plan of Mt Bevan development ....

    IMO, SP will be rerated with following events:
    - JORC resource will be changed from indicated to measured
    - potential increase in magnetite resource...
    - potential of DSO (Hematite) would accelerate Capex repayment thus de-risk the project
    - Scoping study and BFS....

    Based on my DCF valuation using JMS scoping study, LCY SP will be over $4 mark once in production....

    On the top of that you may add extra bonus for potential projects such as iron ore (extras assets), coal, phosphate, gold, base metals (copper, manganese), and REE...funds will be backed by NMDC...

    Cheers,

  12. furniture

    19,683 posts.

    bigstar 4 dollar valuation?how long do you see this taking if it all eventuates

  13. zmans

    8,938 posts.

    I agree with others projects that are nearer to production will eventually be used to fund Bevan down the track.

    Interesting that Mr Nanda met with MAK officials yesterday and is in a lock down board meeting today. News flow and further clarity is hopefully not far away.

  14. Good Oil

    3,513 posts.

    $4 LOL ... better buy some HAW then , surely their potential is $3.50 using your 'maths' and a lowly 1.3c entry (although up 18% today so maybe onto something??)

    DYOR

  15. johnnydust

    1,398 posts.

    A sp of $4 isn't unreasonable if your talking about at the production stage, anything can happen in the next 5 years. Both LCY and HAW are well below the value of their resource, just look at what happened to the market cap of SDL years ago when they were talking about a 2+ bill tonne resource. If the global economy wasn't so messed up I'm confident sp would be over the $1 mark but I do think as the drilling unfolds as well as other news the sp will hit .50c before the year is out.

  16. Omorrisey

    2,407 posts.

    Agree $4 is very achievable once Mt Bevan is producing.
    With 2 other similar sized assets in production could be much higher.
    Baby steps for next 4-5years.

  17. zmans

    8,938 posts.

    You obviously see some value in this so called Govt Stock, because you continually are positng on here. I couldn't care if LCY was owned by martians if it means we get several projects into production.

    I rate bigstars knowledge/calcs more than I do yours....and to think some years ago I thought your alternative positngs had merit, boy have times changed.

    If HAW is such a better Co then I strongly recommend you go and socialize over those neck of the woods.

  18. rabbit7777

    1,959 posts.

    For once i agree with GO. $4 would be a joke in that time frame. LOL

    I would expect more like $7.00 by then with a producing coal mine and maybe a thermal coal mine, mak, ago , Mt Bevan in our hands and further exploration on LCY other tenements.

    One thing i have learnt from GO, is he loves this company , but is hoping to buy it at .8cents which means he would have more chance of winning lotto

  19. Good Oil

    3,513 posts.

    That IS my whole point! The 'maths' is complete nonsense , might as well say $400 per share target!! DYOR

  20. Omorrisey

    2,407 posts.

    Sure it was Good Oil, wink wink.
    Keep up the entertaining posts.

  21. stipe777

    392 posts.

    Is everyone still talking to Go ,he was a little entertaining wasn't he besides the entertainment he didn't make much sense so I have him on ignore.

    Maybe tomorrow we will have an update after their meeting today hopefully .

  22. sharkiesold

    3,281 posts.

    Come on guys, every time I go to read a post I am expecting some informative posts, all I see are millions of posts telling good oil how dump he is, just ignore him and let's focus on the prize.

  23. bigstar

    1,192 posts.

    Hi "Good Oil"

    "$4 LOL ... better buy some HAW then , surely their potential is $3.50 using your 'maths' and a lowly 1.3c entry (although up 18% today so maybe onto something??)"

    An SP estimates for HAW of $3.50 would be excessive IMO, however based on your research, I'm keen to know how you could come up with these figures...

    As for my DCF valuations for HAW and LCY, you will find their contents using the following links...

    These valuations are based on assumptions taken from JMS scoping study...IMO we can use JMS Scoping Study for Mt Ida magnetite project as it showed similarities in terms of potential and quality of magnetite resources with HAW/LCY Mt Bevan project...I'll certainly revisit my valuations once I got the scoping study from LCY...

    Note that my DCF valuations for HAW and LCY are using similar assumptions, as following:

    Key assumptions
    - JORC 1.1 to 1.3b tonnes magnetite @ 30 - 40% Fe:
    - Capex = $1,582m
    - Cash cost = $62.78/t
    - FOB price for concentrate = $110/t
    - Royalty = 5%
    - LOM = 20 years, mine life @ 25Mtpa, producing 10Mtpa of Magnetite Concentrate

    - Parity US/AUD = 1

    - LCY has 60% stake in the project.
    - HAW has 40% stake in the project.

    As I said for HAW, it's unlikely that HAW will go into a final production stage with only 40% stake in the project. I guess HAW will be taken over as there is a potential consolidation in Central Yilgarn Iron ore region.

    DCF results for HAW:
    scenario 1
    --> NPV @ 8% per share = $0.06
    --> (very unlikely for HAW) : Once in production and using PE=5, NPV per share = $0.30

    ...In short, if you put a PE=5 in perspective once in production, we could end up with 30 cts for HAW, but IMO it's unlikeley for HAW...

    Note: an increase in share registry, say with a total of 2 billion shares, would have an SP = $0.05

    scenario 2
    Using full Equity with no taxes (JMS model):

    - Capex of $1,582m will require 26,367 millions shares (using NPV per share of $0.06)
    - Total shares on issue = 28,143m
    --> NPV @ 8% per share = $0.04

    --> (very unlikely for HAW) : Once in production and using PE=5: NPV per share = $0.20

    --> HAW Project IRR = 24%

    DCF results for LCY:
    scenario 1
    Assume LCY has got 500 millions shares on issues

    --> NPV @ 8% per share = $0.36
    --> (very likely for LCY) : When production --> NPV per share = $4.61 (using zero discount)

    scenario 2
    Using full Equity with no taxes (JMS assumptions)

    - Capex of $1,582m will require 4,395 millions shares (using NPV per share of $0.36)
    - Total shares on issue = 4,395m + 500m = 4,895m

    --> NPV @ 8% per share = $0.36
    --> (very likely for LCY) When production:
    - NPV per share = $1.03 (using zero discount)
    - using PE = 5, NPV per share = $5.15

    --> LCY Project IRR = 25%

    References links:
    Mt Bevan : high potential iron ore project (click here)

    HAW: We won't see the end result (click here)

    You can also have a look at my DCF valuation for HAW using following link...
    HAW: SP for today (how SP will be re-rated) - (click here)

    Other infos on Mt Bevan...
    In order for iron ore projects to be economically viable (quality Iron Ore assets), several factors need to be consider:

    1. Grade and metallurgical qualities of the resource.
    Through previous and last drilling results, HAW has a high grade magnetite, between 30% and 40% Fe, with low impurities, and where DTR and metallurgical testwork showed that they can produce a premium concentrate product @ +67% Fe.

    In the event a significant magnetite deposit is identified, a number of Chinese steel mills have indicated to the company they would consider a proposal to enter into off-take agreements, with the view to beneficiation/upgrade the magnetite content of the ore before transporting the product to existing magnetite separation and pellet plants in overseas markets.

    Also previous exploration has identified outcropping and sub-outcropping hematite mineralisation adjacent to magnetite iron formation units and ridge forming Branded Iron Formations (BIF) that extend for more than 25 km
    through the entire length of the project area.

    2. Deposit's proximity to transport infrastructure, especially power, water, road, rail transport to seaport with appropriate ship loading facilities, etc...
    Mt Bevan is considered to hold excellent potential for the definition of substantial DSO hematite and magnetite iron
    resources that are located close to existing road, a major rail line at Menzies and available deep-water port facilities at Esperance.

    3. The likely operating and capital costs.
    IMO we can use JMS Scoping Study for Mt Ida magnetite project as it showed similarities in terms of potential and quality of magnetite resources with HAW/LCY Mt Bevan project...

    IMO LCY SP will be re-rated soon ...



    Hope these will help and DYOR,

    Cheers,

  24. zmans

    8,938 posts.

    Bigstar not sure why you needed to justify yourself to people like go but I am glad you have put him in his place once and for all. Please keep posting your valued thoughts and calcs coz I know people like me appreciate them (and I am sure alot of the lcy faithful think the same).

  25. rabbit7777

    1,959 posts.

    Quality post Bigstar and much appreciate the work you have put into the valuation.

  26. zmans

    8,938 posts.

    If Nanda was serious yesterday about cranking up the drilling on RR, Hamersely and Mt Celia then we may need to revisit the LCY valuations, but one senses there will be other resources producing way before Mt Bevan and others.

  27. rabbit7777

    1,959 posts.

    Personally im thinking they are drilling the gold as part of negotiation with Haw for remainder of Mt Bevan and some cash

    At the end of the day LCY is iron ore company and HAW is going down the track of being gold company.

  28. Thanks for the post bigfoot, I really appreciate someone posting up their own calcs.

    I was wondering how you can have the same NPV per share eg
    "--> NPV @ 8% per share = $0.36"
    in both scenarios even though the second scenario has billions more shares, that doesn't seem to make sense. Also was wondering why you are multiplying an NPV by a PE of 5 if it really is the NPV then there is no reason to multiply that.

    Any more information on your methodology would be appreciated.

    Thanks

  29. bigstar

    1,192 posts.

    Hi S..

    "I was wondering how you can have the same NPV per share eg
    "--> NPV @ 8% per share = $0.36"
    in both scenarios even though the second scenario has billions more shares, that doesn't seem to make sense. Also was wondering why you are multiplying an NPV by a PE of 5 if it really is the NPV then there is no reason to multiply that."

    These are quick modeling results that I came up for scenario 1 (assumption fully debt funds with no dilution) and scenario 2 (assumption full Equity with no taxes).

    Scenario 2 introduced a gearing with ratio of equity to debt financing (100:0), in LCY valuation the DCF results gave an NPV @ 8% per share = $0.36, similar to scenario 1, and NPV per share = $1.03 (using zero discount), once in production.

    In scenario 2, the increase number of shares has been compensated by a reduction of debt on Capex due to extra funds coming from equity. As a result the NPV result increase significantly so do as the IRR.

    I have also applied an interest on debt = 10% even for scenario 2...it could be lower around @ 5% for scenario 2, but results/gains are not significant as payback period are quicker...

    In most case, it would wise to consider a gearing ratio using debt/equity 50:50, ...a debt to be financed by 50% equity/debt to offtake partner/s with dilution

    The introduction of PE is a kind of "lazy" approach, I would have done using NPVs with variation on FOB prices, similar to the one I did for SDL, which could be translated/interpreted into PE multiple...

    As a comparison, refer to my SDL valuations using example of gearing debt equity as following:
    SDL valuation updated (March 2011)

    SDL Valuation (June 2010)

    So far my DCF results for SDL are close to the current SP, ...the what-if FOB prices scenarios using debt/equity 50:50, gave SDL an NPV per share @ discount 11,3%, between $1.09 and $1.64, which could be translated into a PE between 2 and 5 from my base case scenario (NPV per share = $0.49)

    As I said before, these are quick modelings giving an idea on SP for HAW and LCY using JMS scoping study. I'll provide an update with more modelings once I got LCY scoping study...



    Cheers

  30. zmans

    8,938 posts.

    Your input is sensational bigstar imo.
    Rabbit are you thinking a swap of resources and some cash with HAW, could be a possibility. I haven't done alot of DD on HAW but from what I can tell Mt Celia AU looks very promising and I would personally like to hang onto it if our AU resource upgrade is 500,000 oz.

  31. digby218

    1,354 posts.

  32. rabbit7777

    1,959 posts.

    Correct zman. At the end of the day LCY is a iron ore company and wondering if the drilling on the gold tenements is because some sort of deal has been struck with Haw.

    Drilling Mt celia would only be for two reasons at this stage. 1- deal with haw which makes a lot of sense seeing they will be a gold exporer and 2- to get some quick cash going thru the company. Personally i dont think its for the cash and even if the resource upgrade was 500000oz that is very small in my mind. A minimum you would want would be over 1 million ounces to make the project feasable.

    With Iron ore, coal, rock phosphate on the agenda, i dont thnk they will hold onto the gold deposits at all when they are not looking at expanding this area from buying other assets in gold.

  33. zmans

    8,938 posts.

    Will be interesting what sort of upgrade out of Mt Celia will be, and if it is anything decent then maybe you could be on the money Rabbit and LCY do use it in their negotiations with HAW.
    Even though we look like advancing Mt Bevan as one of our priorities, I am not convinced LCY is in a hurry to try and get the other 40% just yet.

  34. daniel86

    378 posts.

    Zman, what do you feel their order of priorities will be?

  35. zmans

    8,938 posts.

    Daniel, personally I believe a priority for the Co will be to secure a near term producing resource, ie coking or thermal coal project whilst still meeting their targets with Bevan, Celia, RR and other the projects.

    This deal with Aquilla does sound very interesting as does the negotiations with CLR so fingers croosed the co is true to their word and we get an update very soon.

  36. daniel86

    378 posts.

    Couldnt agree with you more Zman. Hoepfully we here something shortly....alot of irons in the fire at the moment.

  37. digby218

    1,354 posts.

  38. hammo

    180 posts.

  39. zmans

    8,938 posts.

    I am not sure about HAW, if it is a leak about the rest of Bevan it wouldn't surprise me about that Co, will soon find out in coming days if the spike is genuine or just a P+D.
    I am waiting for an update from LCY and hopefully a bit more clarity on our existing and future projects. If we are in the mix to secure near term coal producing assets then I am expecting a serious re rate on our Co.

    Mr Nanda and the NMDC Finance Director didn't come to Perth this week for the surf or sun, me thinks they had another agenda in mind.

  40. myusan

    940 posts.

    Seriously guys, I sometimes wonder!!

    Why would anyone will want to sale under 0.145 at this time especially today,

    They (LCY) said they will have to put an announcement for the departing Director,

    YET they are holding it APPARENTLY that is not the only news,

    Any kind of new attempt (announcement) is expected and will activate part of 18m or even better 200m if not more AND will push SP high,

    WHY ARE WE SELLING ?

    Just my thoughts please do you own

  41. pilatus

    2,554 posts.

    The sellers are probably the buyers at 14c and 13.5c

  42. myusan

    940 posts.

    Just amazing,

    Ones opinion could be: there is nothing in this for me it does not deserve a TU,

    But why would anyone would TD (to cancel someone elses good wiew) in this message,

    He/she seems to be TD all the positive ones regardless anyway,

    That is sort of SICK,

    IMO

  43. myusan

    940 posts.

    Well just curious !!!

    I am doing my best to buy at 0.140, I did not think it is possible buy the way

    IMO

  44. bernardp

    1,277 posts.

    digby it's hard hard to say with regard to the buying mate. I tend to agree there may be a leak somewhere. LCY may offer around the 2 cent range, if that is what it relates to (imo) - as this is a nice premium to the Weighted average of trading over the previous 3 months. Perhaps they have negotiated a new term sheet, who knows.

    If you ask the HAW holders they are getting an offer of 4 cents + a 5% royalty (which is still too low in their eyes). This is ridiculous in my opinion and absolutely delusional, but provides for some lovely light reading on a Friday.

    As for our end, I am happy that our management stays tight lipped on various projects and movements (locally anyway) as it shows professionlism and a genuine care for the projects at hand not being leaked out to other potential players to swoop on.




  45. zmans

    8,938 posts.

    Bernie, LCY has never been a leaky ship another sign of quality management. As for our HAW holders I hope they don't get dissapointed about their offer on Bevan. 4 c and royalties may have happened in the bull days of 2007 when FE was smoking, but today the head thinks 2 - 2.5c absolute maximum and certainly no royalties (I would hope LCY don't offer it, if it is us that is sniffing around).

    So begs the question if us common folk think like this what do big corporate guys think...?

  46. My opinion for what it's worth.

    The .12 line wiper yesterday arvo is now unloading for a sweet 10% in 24 hours arbitrage play, smart and nice little earner for the brave.

    Another theory that LCY is buying to suppress the price doesn't add up to me but who knows?

    Or could just be a leak as details must be close.

  47. zmans

    8,938 posts.

    If it were a leak about LCY making an offer then our SP doesn't reflect it.

  48. Led

    63 posts.

    Agreed, plus if there was a leak, surely the Indian press would have told us about it :P

  49. rabbit7777

    1,959 posts.

    I think we will get an update early next week.

    I remember a article that talked about NMDC wanting to seal a deal for two Aust iron ore mine by first week in March and expect this is what the chairman was here for.

  50. zmans

    8,938 posts.

    Rabbit it does sound like Nanda was here for something else other than a ho hum EGM.

  51. rabbit7777

    1,959 posts.

    Correct zman, Thats why i mentioned earlier that LCY focus as a company is on iron ore and not gold. Makes sense to prove up Mt Celia and then use that as value to negotiate for Mt Bevan, especially when Haw wouldnt have to spend money on the drilling.

    Watch this space

  52. digby218

    1,354 posts.

    I am a bit baffled by the HAW increase in turnover & just sitting reading your comments has just given me a couple of comments to make.

    1. If there was a leak about an offer from LCY to HAW then I am sure there would be buying of LCY as well as HAW.

    2. HAW holders expecting 4c & a 5% royalty....as a HAW holder I would love a 4c offer ;-)))) But I reckon I got no hope of getting it...be very happy with 2.5c.

    3.Zman wrote "if it is us that is sniffing around"
    Well maybe the increase in turnover of HAW shares in reaction to some inside info from organisation other than LCY sniffing around or negotiating for HAW's 40% of Mt Bevvie.

    4. Watercooled could be on the right track it could be someone unloading & copping 10% in a day.

    5. Also totally agree with Water as well on the LCY buying to supress, I just dont think there is any reason for them to do so at all.

    6. Yep if it is a leak then I am pretty sure it's not about LCY.

    Cheers
    Digby.

  53. zmans

    8,938 posts.

    Agreed digs, me suspects it's either a 3rd party interested (and news has leaked out) or its a P+D.

    That Investor Presentation strongly hinted at coal projects as have LCY in the past ann's for nearly 6 months now so maybe we are close to securing a coal play.

  54. cam_cams

    959 posts.

    oh hey... guys back from my 14 day 'suspension break' and the share price is at 14c... coincidence.... hmm.. lol

    Anyway, perhaps the turnover on HAW is simply due to the 13million buyer, thinking, perhaps if I buy a significant amount of shares, people (day traders) will think something is up, and buy in.. I only raise this point as, there has been easily enough turnover for the original large buyer to exit now!..

    But then I also do think some HAW/LCY announcements are very close, and yeah perhaps wind of such announcements has leaked and are favourable to HAW, at least from a quick profit perspective to shareholders who buy in now..

  55. retire95

    146 posts.

    Interesting times... There is just so much imminent news and speculation about what news will come first... I'm in the camp that, after recent announcements, think something about coal could be soon. Will AQA be part of that? more mystery.

    I watched that line wipe on HAW and have been waiting for some kind of follow through but it really hasn't happened. If there was a leak from someone about something it doesn't seem to have spread too far. I lean to Watercooled's scenario of a ballsy trade perhaps? Volume has ground to a halt in HAW this arvo.

    And what of the new term sheet? This will have to be addressed at some point I guess? Makes me think something will happen regarding HAW's 40%. Will Mt Celia be involved?

    Sorry! I know i'm not really adding anything new to the discussion but my wife isn't really interested in the share game and with so many possibilities I had to share my intrigue with some people that would understand.

    Good luck to all I watch with fascination as the LCY story and all its various sub plots (AQA, MAK/UCL, HAW, AGO, CLR) continue to unfold

  56. LCY seem to love the Friday afternoon announcement. I think the last one was the $200m line of credit and that certainly sparked a bit of movement in the share price.

    I am hopeful that we'll get an announcement today to back up all of management's Australian talk (and Indian leaks). It has been a long time coming so come on chaps, lets get something decent happening on the back of the impressive presentation from earlier in the week.

    Good luck everyone.

  57. zmans

    8,938 posts.

    Given no ann today and Monday is a Public Holiday over here in the West I think news won't be coming until Tuesday the earliest....fingers crossed.

  58. schubox

    866 posts.

    It is interesting that recent price/vol movement at HAW coincided with Nandas visit and I believe there were board meetings yesterday? Imo it would be very brave to buy 10mill HAW shares especially if you didn't have confirmation of what's happening! A big punter maybe?

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