AUZ 0.00% 1.1¢ australian mines limited

To many post to respond to so I'll just go this one :-O.K Folk's...

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    To many post to respond to so I'll just go this one :-

    O.K Folk's - so having just returned from my Business / Ski Trip in N.Z , I'm going to throw a few extra thoughts into the ring in the hopes to set some minds at ease and ahead of any potential outcomes on Wednesday. Before I do , I would like preempt the discussion points with a summary of my recent foray into AUZ which saw me net in excess of 40 K in additional gains due to my accumulation strategies on this AUZ ticker which began from previous CR of 2.9 to the lows of 1.8 cents and back through the CR of 2.9 and beyond to the lofty heights of 3.8 - 3.9.

    As you may be aware , I had mentioned the previous CR a number of times in earlier posts and my thoughts that price movements would trend and gravitate back to this price point. I don't think we can dismiss the importance of this previous 2.9 cent price point and the potential reasoning's it was originally selected by the BOD.

    You can say what you want about Directors and BOD's not being particularly interested in the daily monitoring's of their SP's , however one could equally argue that they not only acutely aware of the daily movements , but also have the control over selecting a predetermined price point of a CR. In addition, they also they have a certain amount of flexibility over the discount they can apply to any these proposed raises and placements in accordance with Company constitutionally stated and mandated rules.

    When you look at the last raise , you could also argue they didn't particularly need to execute the raise when they did , and perhaps was more the statement and/ or opportunity that left the door opened 7 days following the expiration of the SKI 3 month option period ending 20th Feb 2019. So why the ' modest ' discount of 3.33 cents to the more even 3 cent level which at 2 x = 6 cents , and by 2 again equaling the ' Convenient .12 cent level.

    So where does that leave us , and what then should we expect from this potential CR. It's been mentioned here that previous wording in all other CR announcements have preempted with ' Regarding ' a CR , however in this instance it has leaded in with ' Concerning ' a capital raising. In my interpretation , this could only imply that there is more ' detail's ' associated with this CR as against a more plain and simple vanilla placement and / or capital raise.

    So what then can we expect folk's on Wednesday ? Well if it is more complicated and involved , I would first go with the view that the SP will be suspended while further details are ironed out. However , and on the other hand with Marcus speaking on the Wednesday , I would think that this was pre-planned with the view to him having his ' Black Swan ' moment in selling and communicating the wonderful and creative financing they have been able to achieve in an otherwise difficult to a wider industry audience. This would make sense as should the news be exceptional ( which I think it will ) , the political exposure for the project would be both opportune and advantageous.

    I certainly do not think the timing is a fluke. It has definitely been chosen as we all now the money is not specifically required at this particular time. We should also come back to this wording as presented in the following announcement earlier in the year as follows :-

    3 January 2019

    SK Innovation and Australian Mines: committed partners developing the Sconi Cobalt-Nickel-Scandium Project in North Queensland


    “ Although we appreciate the extension of the financing condition to September, given the progress we have been making on these negotiations since the Bankable Feasibility Study was released, we plan to have the entire project funding package in place during the second quarter of 2019. "


    So it would also make perfect sense then that NAIF , being a Government Body would also have to at least declare its expenditure for projects out of its budget for 2018 / 2019 and before it is granted fresh funds for further or continuing projects moving forward into their 20019 / 2020 fiscal budget period. So , I would think it perfectly conceivable that should it have funds available and unspent this year , that it would be possible to preempt their intentions for this project commencing in the final month of this current budgetary period.

    So coming back to the CR. Lets just hypothesis for a moment in exploring the BOD's current options and possibilities. So under our current capital raising capacities , we currently have under 7.1 a further 260,722,623 shares which could be issued , while under 7.1 A we have 279,924, 277. So together this could potentially see our existing 3,083,406,567 SOI grow by a further 540,646,900 to 3,624,053,467. So then what they do is announce that there will be an SPP which at the same will include the invitation / participation of SKI with their additional 666,666,667 shares at .12 cents. As part of the CR announcement , the Company also advises the re-construction of the share capital on a 4 for 1 basis and a pre consolidation pricing of 2.9 cents a share. Following the time table and any special resolutions required , SKI will end up with 166,666,667 shares or 15.5 % of an expanded capital base pre-consolidation of 4,290,720,134 ( post consolidation 1,072,680,034 ). So , under this scenario , AUZ still gets their $80 million and the company get recapitalized at .12 cents per share which is a great starting point for a valuation which commensurate's with the community and economic stature that a project of this size deserves. And whether it is SKI or a similar behemoth like WES , either way an $80 million contribution to the project's funding is a very cheap entry into the future growth of this company and the industry in which it will operate.


    A lot of comments have also been made in regards to the ' Post Tax ' IRR of 15 % and how perhaps this is on the low side of comparisons. In rebuttal to these comments , I would like to point out that it is the ' Pretax' rate of return which is the measure most commonly cited for investments in the financial world , and that in particular reference to AUZ , the post tax 15 % is simply a notional amount for referencing obvious budgeted corporate tax rates . However in the real scheme of things it is quite irrelevant as AUZ will most definitely be paying as little as between 6 - 13 % tax mainly on account of the immediate write-offs together with the huge amortization's and depreciation write downs. In the early years these look set to be somewhere around the $40 million per annum. In addition to this, there is also the matter of $49 odd million and counting of tax losses carried forward which will also be applied to any pretax earnings. How Marcus weaves his magic around these issues is obviously in his ' wheelhouse ' , and so would expect to see the relevance of this come increasingly into the fore.

    One final comment I would like to debunk is one which was made in regards the relevance to NSW and which came at the expense of a comment in regards to CLQ. I don't hold CLQ so don't care one way or another , however the comment was something to the effect of it being located in boring old NSW However this ' boring old ' NSW ....particularly around Dubbo and Parkes and surrounds ( ie Flemington ) is set to become increasingly industrious and productive over the coming years. I am particularly referencing the benefits which will flow through from the massive ' Inland Rail ' development project from Brisbane to Melbourne which will stand to put Parkes at the exact ' HUB' connecting the Sydney -Perth and Melbourne - Brisbane lines. The project is huge by any stretch and will transform the Australian Economy and productivity for years to come. So we cannot underestimate the benefits and gains that projects will receive directly or indirectly from this massive endeavor.

    Time will only tell now whether it was another clever decision of ' Moi ' to have bought back my 2.5 million shares in AUZ at 2.9, 2.8 , 2.7 and 2.6 ......or whether in fact it will see me having to give back some or near all of my recent gains on this ticker. Eitherway , I am extremely pleased with my annual contributions from AUZ as I head into wrapping up this final month of trading this financial year. Best of Outcomes to you all come Wednesday morning ....wink.png
 
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Last trade - 16.10pm 28/03/2024 (20 minute delay) ?
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