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Pensana Rare Earths

spasmodicus
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Re: Pensana Rare Earths

#499791

Postby spasmodicus » May 11th, 2022, 10:54 am

The latest (May 6th) puff on Pensana’s prospects is here at
https://pensana.co.uk/wp-content/uploads/2022/05/Pensana-Plc-Corporate-Presentation-Indaba-FINAL-060522.pdf


highlights include
UK Trade mission to Angola
https://www.miningweekly.com/article/uks-dit-pensana-host-mining-trade-mission-to-angola-2022-04-11

results from borehole samples at Coola prospect
22 samples from 4.2km diameter ring structure at
Sulima West reported up to 10.6% TREO, av 4.2%
TREO (NdPr = 0.86%)
Sampling of 0.9km diameter Coola carbonatite ring
dyke reported up to 4.9% TREO (average 2.6%) with
soils reporting up to 13.18% TREO (average 3.21%)

There’s a lot of dross about potential usage for the rare earth production (Neodymium and Praseodymium), which anyone interested in magnet technology will know about already. Adamas Intelligence (who they?) and others predict a significant global shortfall from 2024 onwards. Before worrying/jumping for joy about that, the main thing is to get the stuff into production.

Financials (from table on P 19 of presentation)
Capex is forecast to be $494M for both Angola (Longonjo mine) and UK (Saltend refinery).
Opex is stated as 15$/kg TREO (Total Rare Earth Oxide)
Annual production is given as 12500 Tonnes(?) per year TREO / 4500 tonnes NdPr

For the stated annual production and Opex that should give annual Opex of 15*1000*12500 or $187M.

They state revenue (average steady state) USD 893M (Average per annum based on first five years).
Eyeballing the graph on Page 15, we see that the average price for the middle (white) price prediction from 2024 – 2029 is about $180,000 per tonne, giving revenue of 4500 * 180,000, i.e. $810M/annum, i.e. not far from their figure of $893M. Subtracting Opex from revenue, EBITDA would then be about 810-187 = $623M, which agrees pretty well with their figure of $610M

All this assumes of course that
- Capex will be as forecast
- Production volume will be as forecast
- Opex will be as forecast (energy costs?)
- World NdPr price will be as forecast
- they get the plant up and running in a timely fashion
- they can raise the necessary $500m (interest rates, cost of financing?)

If all this comes to pass, then
Current market cap is £183M at share price around 75p. Cash (£16M) and borrowings (small) are negligible, so they need to raise about $500M for the CAPEX.

There’s recent another take on all this here at
https://masterinvestor.co.uk/commodities/two-footholds-in-the-rare-earths-industry/?mc_cid=ec725e4548&mc_eid=288f0b71de

where they paint a similar (but 20% lower) upfront cost for the project, i.e.

The company has published its financial projections, which at this stage must be somewhat speculative even though undertaken by world-class consultants and engineers, and unsurprisingly look extremely good with a 50% irr and a $2.1bn NPV8 (scaled down – as is par for the course – from previous estimates) in return for what is now $400m or so upfront cost.

They add
A report late last year said the government had doubts about Saltend’s viability and, whatever the reason, a mooted government grant has still not materialised.
If funding does arrive, Pensana expects it to be a mixture of offtake agreements (paid for up front) and various levels of debt, and fresh equity including from the Angolan sovereign wealth fund for Longonjo.



So there you have it. My optimism in buying a modest holding of PRE a couple of years ago has not so far been justified by the subsequent share price fall and my initial modest punt is down about 45%, but that’s water under the bridge. I think that the outlook for rare earths will pick up when everyone stops worrying about the price of gas and starts thinking about renewables again. Think of all the wind farms they are going to need in Germany. I did a modest top-up today and also on rival rare-earther RBW to keep things balanced in my dodgy miners department.

Keep on truckin’! (preferably in an electric truck)
S

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Re: Pensana Rare Earths

#500010

Postby everhopeful » May 12th, 2022, 9:16 am

Thank you spasmodicus. The constant pr output from PRE becomes ever more wearing. I get emails regularly from them crowing about something or another but never really anything concrete. I agree absolutely that the case for rare earths is compelling but I am not sure this lot will deliver. I continue to have a small holding having fortunately sold the bulk at a 90% gain a year or so ago.

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Re: Pensana Rare Earths

#515511

Postby Eft2 » July 19th, 2022, 7:11 am

It’s been a long and wretched 14 months but in 2 days it may be put behind us. Are you still holding Dynamo1?

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Re: Pensana Rare Earths

#519514

Postby spasmodicus » August 3rd, 2022, 3:33 pm

Hi Eft2, responding belatedly to
It’s been a long and wretched 14 months but in 2 days it may be put behind us

I have to admit that I had relegated PRE some time ago from "interesting prospect with seemingly a lot going for it" to "at best over optimistic self deluders or at worst a bunch of incompetents". So I haven't been following what was going on, also relaxing in the S. of Fr., my deres.

I had a look at LSE share chat about PRE from 18th July to figure out what this is all about....
https://www.lse.co.uk/ShareChat.asp?ShareTicker=PRE&share=Pensana-Plc&page=11

Ah yes, lots of excited chatter about raising equity, green bond certification, £50 million, we're all gonna be rich when the share price goes shooting up. And sfa happend as per usual and I doubt that Dynamo1, clearly an experienced PRE watcher, even raised an eyebroe.

S

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Re: Pensana Rare Earths

#521673

Postby Dynamo1 » August 11th, 2022, 3:36 pm

Eft2 wrote:It’s been a long and wretched 14 months but in 2 days it may be put behind us. Are you still holding Dynamo1?


Hi Eft2,
Apologies for the long delay in replying, I rarely use Lemon Fool these days as I got fed up being reprimanded about posting links etc.
Yes, I am still in Pensana BUT I reduced my holdings by 75% because they missed so many deadlines. I still hold about £25k worth as a rare earth investment. I am still convinced that Pensana will come good but the timescales have moved on since Saltend planning got altered plus a lack of momentum in Angola. So for me the shares are on the backburner. I hope they get more backing as they were expecting £150m from the UK Govt but only received a grant of £4m (so my broker advises)...Have moved funds into #ALL as it is fully funded to lithium production and there is a decent chance it will be bought out. All the best - regards D1

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Re: Pensana Rare Earths

#593330

Postby spasmodicus » June 5th, 2023, 10:52 am

Pensana Rare Earths - the Hurricane Energy of the UK mining industry?
viewtopic.php?f=16&t=796&start=1500#p577082

Nothing has been posted here on the Pensana thread since August 2022. Around that time I said
that
I have to admit that I had relegated PRE some time ago from "interesting prospect with seemingly a lot going for it" to "at best over optimistic self deluders or at worst a bunch of incompetents"


Unfortunately, I did not act on my own instincts and dump the lot at the time. So, when PRE share price halved last March, due to abject failure to raise capital for their processing plant at Saltend (shades of Britishvolt?), I was left sitting on a loss of 75%. Fortunately, I did not bet the farm on this, so I am down a modest 3.8 grand, but that nevertheless more or less wipes out all the gains in my "dodgy miners" portfolio.

It's fair to say that the rare earths sector has not been doing brilliantly in the last couple of years. REGB (VanEck UCITS ETFs plc Rare Earth And Strategic Metals UCITS ETF) which I also hold is down about 14% over the last year. The shortages and problems due to China's near monopoly on supply have failed to materialise, so far. See, for example
https://www.nationaldefensemagazine.org/articles/2023/2/10/us-begins-forging-rare-earth-supply-chain

In April, Mining.com commented
https://www.mining.com/pensana-taps-major-uk-investor-to-fund-rare-earths-project-in-angola/
Pensana has started to build a $195 million plant at Saltend in the port of Hull in northeast England that would be fed with ore from a $305 million mine in the southwest African country more widely known for diamonds and oil than rare earths. The refinery would be one of only a handful of its kind outside China if it starts as planned in 2026.

A "would be" and an "if" in adjacent sentences do not inspire much confidence. It's also not at all clear how much ordinary shareholders are being diluted by all this and what the upside might be if everything comes good.

But, unlike Hurricane, or indeed Britishvolt, they haven't yet sold the lot to some chancer willing to take the whole lot on, so we are stuck with the same management team.

I remain optimistic about the sector in general, but not about PRE in particular. I should probably dump it and invest the proceeds in REGB.

S
(sigh)

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Re: Pensana Rare Earths

#600301

Postby spasmodicus » July 6th, 2023, 11:29 am

Well, here we are again. I inadvertantly followed my own advice, see previous post. Pensana's share price has continued its relentless and almost perfectly exponential decline from 175p about two years ago and today triggered a long forgotten stop-loss, which I set during rosier times at a SP of 19.8p. This has rid me of the lot.

My original optimism was partly based on a desire to see a locally based operation to make rare earth production a reality here in the UK, against a background of global shortages and a near monopoly by China on that commodity, which is essential for the transformation to green energy. That is, something in the UK to be proud of, as well as contributing positively to the small-but-risky department of my share portfolio.

The most recent RNSs for Pensana on 27th June indicated that
a) they issued 15million ordinary shares of £0.001, plus about 12.5million "subscription" sharea which will rank pari-passu with ordinary share, bringing the total number of shares issued to 285million. The new issue thus represents an approx. 10% dilution, which values the company at about £57million.

b) a second RNS gave an update on the Longonjo mine in Angola. Read all about it here

https://www.lse.co.uk/rns/PRE/update-on-longonjo-financing-and-development-plt6psz34bup53h.html
To cut to the quick, first production targeted in 2025 and they have a $200million loan facility to do it.

And what of the much-hyped Saltend processing plant? An RNS of November last year dishes the dirt, indicating that precious little of said dirt has yet been shifted,
https://www.lse.co.uk/rns/PRE/operational-update-for-saltend-and-longonjo-mubdphv6pf7bm68.html

Of course, everybody is having a hard time at the moment, but Pensana's failure to secure proper finance, or to make any reasonable amount of progress either in Angola or in the UK speaks for itself. Yes, mining is difficult and Angola is difficult and probably the local council at Saltend are difficult, but I always thought that Pensana had a great proposition which ticks many investment boxes.

Maybe at some point in the future everything will come good. It's either going to go bust, be bought out by someone with the nous and the financial clout to make it work, or reach a nadir before miraculously transforming itself into a money spinning green operation. I would like to think that the latter could still be the case, but the omens are not good, so I will be content to watch from the sidelines.

S

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Re: Pensana Rare Earths

#600303

Postby BullDog » July 6th, 2023, 11:37 am

spasmodicus wrote:Well, here we are again. I inadvertantly followed my own advice, see previous post. Pensana's share price has continued its relentless and almost perfectly exponential decline from 175p about two years ago and today triggered a long forgotten stop-loss, which I set during rosier times at a SP of 19.8p. This has rid me of the lot.

My original optimism was partly based on a desire to see a locally based operation to make rare earth production a reality here in the UK, against a background of global shortages and a near monopoly by China on that commodity, which is essential for the transformation to green energy. That is, something in the UK to be proud of, as well as contributing positively to the small-but-risky department of my share portfolio.

The most recent RNSs for Pensana on 27th June indicated that
a) they issued 15million ordinary shares of £0.001, plus about 12.5million "subscription" sharea which will rank pari-passu with ordinary share, bringing the total number of shares issued to 285million. The new issue thus represents an approx. 10% dilution, which values the company at about £57million.

b) a second RNS gave an update on the Longonjo mine in Angola. Read all about it here

https://www.lse.co.uk/rns/PRE/update-on-longonjo-financing-and-development-plt6psz34bup53h.html
To cut to the quick, first production targeted in 2025 and they have a $200million loan facility to do it.

And what of the much-hyped Saltend processing plant? An RNS of November last year dishes the dirt, indicating that precious little of said dirt has yet been shifted,
https://www.lse.co.uk/rns/PRE/operational-update-for-saltend-and-longonjo-mubdphv6pf7bm68.html

Of course, everybody is having a hard time at the moment, but Pensana's failure to secure proper finance, or to make any reasonable amount of progress either in Angola or in the UK speaks for itself. Yes, mining is difficult and Angola is difficult and probably the local council at Saltend are difficult, but I always thought that Pensana had a great proposition which ticks many investment boxes.

Maybe at some point in the future everything will come good. It's either going to go bust, be bought out by someone with the nous and the financial clout to make it work, or reach a nadir before miraculously transforming itself into a money spinning green operation. I would like to think that the latter could still be the case, but the omens are not good, so I will be content to watch from the sidelines.

S

Well if it follows Hurricane Energy trajectory you already know the outcome. To be bought dirt cheap by a bunch who no doubt will do very well out of the previous shareholders disaster. Or it will enrich a small number of people and leave everyone else with nothing but losses.

I'm afraid to say the chance of anyone manufacturing anything here in the UK like that is virtually negligible.

I spent my working life in the process and energy industries. Probably 99 per cent of it has closed and moved elsewhere.


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