Johandesilva
10 Feb 2017
Re: Gearing to copper Reminds me of my posts here back 2011. I knew how to ramp back then I am a bit wiser now. The risk-reward profile of WTI looks good but I wounder what would happen to copper prices when Trumps forcast for growth fails.The cost of copper is something we have no control over, however the cost of production is something WTI can try and reduce. This should be around 2p.
trickler
08 Feb 2017
CAF + 30% WTI has a 25% stake in CAF I believetclr
Free Option
08 Feb 2017
Gearing to copper Weatherly has got to be the most geared copper stock in the world. Current market cap. c. USD10m with net debt of c. USD100m and 2017 production of around 20kt copper. Assuming tax rate of 25% if copper averaged USD8000/t for a 12 month period and average operating costs USD4000/t and overheads/ interest costs c. USD8m pa, Weatherly would be capable of making c. USD54m net and debt would be paid of in less than 2 years. If copper did average USD8000/t the market would likely value the company on a P/E of 3-6x (low because of debt level, low reserve position and because copper would be assumed to be near a cyclical high). This would indicate a market cap. of c. USD162-USD324m or upside of 16-32x.Weatherly is a low cost option on a higher copper price but with the global supply/demand balance tightening, it is possible copper will be one of the better performing base metals over the next two years providing global growth is able to move higher than the last few years.Quite a few ifs and buts and I am sure many punters will chime in on the assumptions made but at USD8000/t Weatherly really is one of the best global plays on copper.
Johandesilva
08 Feb 2017
Re: Hedging = Future Revenue WTI should hedge more I as I expect the rise in copper is due to over inflated global growth expectations from Trump and copper could be due a fall, and not completely supply demand.
charlieeee
01 Feb 2017
Re: Hedging = Future Revenue SBTWell, as "we" tend to be picky, it should be pointed out that the Orion hedge ends in May and so only covers 5 of the 6 months (and in fact only 4 months from now)."As a loan rescheduling fee, Orion will receive, inter alia, the right to buy 700 tonnes of cathode each month from Ongopolo Mining Limited for the period from 1 July 2016 to 31 May 2017 at a price of US$5000 per tonne (the "Updated Offtake Terms"
.Plus there may be a small amount (depending on production) which is neither hedged nor pledged to Orion.Realistically, the actual costs for this quarter may significantly affect any calculation of free cash flow and from what I can see those have a high fixed component and so could come in lower if production is high: management seem to be determined to meet or beat forecasts and no credible explanation was given for the cost increase.. This is leveraged to copper and highly geared and as pointed out, in years to come the risk may well be rewarded.
SuperBobTaylor
01 Feb 2017
Re: Hedging = Future Revenue You need to add the Orion offtake into your model. 3500 more tonnes @ $5000 which wipes out the $10.4M for the next 6 months. Wont make any difference to your calcs for next year.Thanks,
amalthaea
31 Jan 2017
Hedging = Future Revenue WTI has a commitment to 3,400 tonnes this year (@$5000/tonne) and 450 tonnes next year (@$5102/tonne).So the next 6 months production will be selling part of the production at a margin of $400/tonne ($5000/tonne -$4600/tonne). So, $1.36M revenue.However, there is still the rest of the next 6 months production to sell at the current market price (currently 7600 tonnes at very nearly $6000/tonne). This will generate $10.4M. And that's not the end of it. Come next year, (even given the current low production figures of 5,500 tonnes per quarter) there will be 22,000 tonnes to sell at a margin of $1352/tonne i.e. £29.7MAt that rate, the debt will be gone in no time.Given the figures above, the business will actually be getting an equivalent copper price for the next six months of $2.58/lb. That is worth over 0.9p a share of anyone's money.If the copper price remains at this level, by July, 1.25p a share is a minimum.(And don't forget, we are "hedged", so we are protected against any large drop in the copper price. If the BoD are worth their salt, they will fulfill the hedge as near to the end of the year as possible.)
charlieeee
26 Jan 2017
Re: $2.70/lb again. SBTYes, I agree that the guidance for ATYM is 34k to 40K tonnes pa and as you will know from my ATYM posting, I have immense respect for AL's ability and he has put in an extra ordinary performance to get the ATYM show on the road.To be fair to WTI management, with whom I am less familiar, at least they seem to have got on top of the production issues very quickly and once out of the hedging/Orion offtake ( if copper prices are steady at these levels) WTI, like ATYM, will be a decent investment and even the LTHs in both companies may be rewarded in due course.
SuperBobTaylor
26 Jan 2017
Re: $2.70/lb again. charlieeee, I don't want to be seen to be trashing WTI on this board so no more posts from me here.Just one point from you post which I know is factually incorrect without having to do any checking - ATYM guidance on Cu production for 2017 is 34k to 40k. (And we both know that AYTM will likely come in at near the top of the range)Good luck with WTI.SBT
charlieeee
26 Jan 2017
Re: $2.70/lb again. SBTIf ATYM lose the Astor case, then the debts will be similarATYMs are mostly stated in euros, as follows34m euros (balance sheet difference between current assets of 37m and liabilities 71m)53m euros basic claim15m euros additional if copper rises(plus interest, cost s and damages damages)That is 102m euros and counting compared with WTI's US$ 96 m If ATYM lose the Astor case, their debts will exceed WTIs as I said in my post on ATYM but you now have the back up calculations to check for yourself.On production, ATYM are guided at 30k to 40k tonnes pa. "Double" is not the conservative view and it is possible that the low end guidance has been given for a reason.The costs are not so easy to compare ongoing as currency fluctuations could affect both for better or for worse, but the grades at WTI are much better and grade is always king when it comes to long term costs.The hedging is short term and I was not pleased.The reason that I posted the comparison on ATYM is because the risk is priced in at WTI and reflected in a market cap that is one twentieth of that of ATYM and it makes a useful comparison for ATYM investors if Astor goes against ATYM.My view remains that both ATYM and WTI are leveraged plays on copper and as it stands at the moment, WTI are also highly geared and will see the full rewards and ATYM might also shortly become equally highly indebted, but without the positive gearing effect.
banner20
26 Jan 2017
Re: $2.70/lb again. Hi SuperBob,Appreciate your efforts here but I think you'll find most WTI investors are so under water that they have no choice but to hold on to WTI until/if it comes good. But if your posts are aimed at potential new investors certainly food for thought. I've got to say given the history and performance of the vast majority of natural resource shares over the past several years I would steer all new investors away, you might as we stick your money on the 2.40 at Aintree. These companies are full of rogues peddling half truths (as are these BB's)!
SuperBobTaylor
26 Jan 2017
Re: $2.70/lb again. Completely lost me there amalthaea. What has the AYTM price per share got do with any comparison? MCap of AYTM = 170M, WTI = 10M. If we include the debt (enterprise value) AYTM = 170M, WTI = 90M.Take your choice.SBT
SuperBobTaylor
26 Jan 2017
Re: $2.70/lb again. In comparison with AYTM I would point out that:1. AYTM would (IF they lose) have around 1/2 the debt of WTI.2. They have around twice the annual Cu production of WTI3. They have around twice the life of mine in which to pay off this debt4. They have lower C1 costs, in fact quite a bit lower gong this mornings RNS vs AYTMs last quarter costs.5. They are not giving Cu away to Orion and in badly timed hedging contracts.That is why AYTM are worth so much more. I wont comment on the results this morning.SBT
amalthaea
26 Jan 2017
RNS. Todays RNS shows the progress being made. The equivalent of 2 months more production should see the end of the hedge price and then revenue will increase by nearly 20% (though it is more likely that they will spread this over the last 6 months of the financial year). If copper reaches $3/lb this will fly.
charlieeee
25 Jan 2017
Re: $2.70/lb again. A highly leveraged play on copper prices.At $1.75 per lb costs (and $1.72 with the expansion to 20k tonnes per annum) this should start to be cash generative and the debt route (as opposed to the ATYM equity route) really pay dividends.ATYM and WTI make for a very interesting comparison, particularly if ATYM do not win the Astor case: their indebtedness would be quite similar to that of WTI.Both companies need high copper prices, but once WTI can demonstrate that it can handle the short term debt, the market cap, at a twentieth of that of ATYM, has greater scope for a re rating.A lot depends on Orion's continued support and they wear two hats, as the major shareholder as well as financier.
