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toly

toly
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  • REE / Strategic Minerals Concentrator, October 6, 2011 [View instapost]
    Any thoughts on how GWM will compensate DRA Mineral Projects for it's planning and engineering of the new concentration and separation facility. If this firm can really plan, design, build and ready a 5kmt separation plant for ~$60m, it would seem that they should command a healthy price for their services.

    They must be using a new technology that has completely escaped Lynas who is building a plant only ~half as large for nearly 10 times the cost of Steenkamp…

    I can't find anything on the DRA contract… Comments?
    Oct 10 03:36 PM | 3 Likes Like |Link to Comment
  • REE / Strategic Minerals Concentrator, October 6, 2011 [View instapost]
    Maybe they need to change their strategy and "drill down" (pun intended) to their core strengths which is apparently developing Steenkamp. LCM/SX is costing them significant operating cash that could be much better employed in exploration and development at Steenkamp. The same is true for their other real estate which they an ill afford to pursue at this time.

    Good business decisions are just that and everyone from Jeff Imelt to Michael Dell have successfully divested unprofitable segments of their companies...
    Oct 10 02:35 PM | 1 Like Like |Link to Comment
  • REE / Strategic Minerals Concentrator, October 6, 2011 [View instapost]
    Hi aqwert, I guess I am one of those speculating on the sale of LCM and I think it makes sense to do just that.

    LCM is unprofitable and even though last quarter they seemed to be headed towards positive cash flow they may have a hard time repeating that performance.

    Last quarter's income statement benefited from the significant rise in REE prices. It may be very difficult to repeat that performance during a quarter of REE price declines. Of course it depends on when they bought the feedstock and what price they paid.

    Spinning off the negative entities probably would be a good business move. This could even include the Steenkamp mine allowing GWM to pursue the "performance" metals space.

    Anyway, here is a link to a slide show with pictures of Steenkamp. It appears to have little in the way of development and it is my understanding that a couple of prefab buildings and SOME mine refurbishment has been accomplished. It doesn't seem to be a good vacation spot :)

    http://bit.ly/ndzSGG


    (scroll to bottom)
    Oct 10 01:59 PM | 2 Likes Like |Link to Comment
  • Molycorp: Rare Earth Leader Now Dirt Cheap [View article]
    farwest writes;

    "Rare Earths aren't rare. The only reason so little supply is available is because prices were so low for so long due to minuscule demand. And voila, as soon as the slightest whiff of demand pops up, we see a slew of mines being developed and lots of exploration efforts to find new deposits (which has already begun to bear fruit)."

    Of course I will not argue with Adam Smith or efficient markets, but the REE price curve is elastic and will remain so until there is adequate supply in the market place.

    To assume that REE processing facilities is an indication of lack of understanding that REE's are a technology, not a mining play. Both Moly and Lynas expect to, or have spent over a half a billion dollars to plan, engineer, construct and operated separation plants. This is a fact and obviously paces a significant barrier of entry into this space.

    In fact, the knowledge that REE processing is difficult and expensive is so widespread, it just may be that you are trying to agitate the posters on this board… JMHO...
    Oct 9 04:00 PM | Likes Like |Link to Comment
  • REE / Strategic Minerals Concentrator, October 6, 2011 [View instapost]
    I'm wondering if GWM may try and divest it's LCM assets. It would be a quick way to raise some cash and more importantly reduce the liability it brings to the bottom line… Also it would buy some time in terms of negotiations if for nothing else than to muddy the waters and reset investor thinking...

    Thing is, LCM while showing negative cash was trending towards a break even or even a positive cash flow scenario. However, this trend occurred during the quarter of substantial REE price increases and was probably, at least in part, a result of that. This quarters performance may well depend on what price was paid for feedstock, and when the feedstock was purchased…

    Food for thought anyway...
    Oct 6 11:09 PM | 2 Likes Like |Link to Comment
  • REE/Strategic Minerals Concentrator, October 3, 2011 [View instapost]
    Heard on CNBC this afternoon by one of the "savvy" comentators…

    "I wouldn't invest in rare earths because the really aren't that rare and who knows that another big batch will be discovered and there goes your money."

    May not be well informed, but sure is not technical...
    Oct 4 09:20 PM | 6 Likes Like |Link to Comment
  • REE/Strategic Minerals Concentrator, September 27, 2011 [View instapost]
    Hi Chi, Options girl...

    I guess I wasn't thinking the share split situation through although is does leave a question in my mind as to why all companies don't reverse split their shares whenever they dilute through any offering... (Options on GWM or Lynas is a scary thing :)

    Anyway I guess my point is that a share split has no affect on a companies financial fundamentals. The basic metrics on the balance sheet stay the same, other than functions tied to the share count such as equity per share and so on. The SH equity, book and current assets stay the same.

    The only reason I choose to use GWM as a comparison to Lynas is because it seems that everyone from Jack Lifton to the Lynas down rampers on the various boards use the very same comparisons.

    I guess the REE juniors business is a new frontier that has it's own rules. I look at the financials of some of these juniors and I wonder where their next exploration drills will come from. And then I look at possible M&A or even potential TO or JV agreements and I wonder how they are going to pull it off. Of course many of these agreements are inked only to be rescinded, probably for the press exposure. It does appear that the advantage will be in the hands of the acquirer or venture prospect.

    However, I have to think that at some point the "rubber will meet the road" and the lack of money in the bank, or the fact that so called profitable entities are not so profitable will ring in reality.

    About a year ago I watched a solar prospect (PBEC), with much the same story as some of these juniors, tout it's future prospects. It had the same problem with very little equity and a LOT of press noise. It's true that shareholders were willing to pay a substantial premium but one day reality set in and that company did go to 0 bid... It hurt a lot of "junior" shareholders however, it was an interesting study in investing.

    I may be totally wrong about GWM and I hope I am. It will be good for the REE space for them to succeed. I'm just expressing my perception of the fundamentals and factors surrounding this and other companies. As they say, it's just my opinion...
    Sep 30 01:40 AM | 3 Likes Like |Link to Comment
  • REE/Strategic Minerals Concentrator, September 27, 2011 [View instapost]
    Gloria Rodgers (Lynas) returned my email to concerning the LYSCF vs LYSDY issue. I think it give a pretty definitive answer to the CF, DY question. I see no advantage to owning CF over DY...

    Dear XXX (toly)...

    Thank you for your recent email. As you are aware, in May 2010 Lynas announced the establishment of the ADR program in the OTC market with the ticker symbol LYSDY.

    If you are proposing to trade in Lynas ADRs, then the approved sponsored program has the ticker symbol LYSDY. It is possible that some other financial institutions may make a market for Lynas securities, and that would explain why some other ticker symbols may still be in use; such as LYSCF and LYSCY.

    Kind regards

    Gloria Rodgers
    Executive Assistant

    Lynas CORPORATION LTD
    Level 7, 56 Pitt Street Sydney NSW 2000 Australia
    W: http://www.lynascorp.com

    I will keep you updated on any other developments in this issue...
    Sep 29 11:07 PM | 5 Likes Like |Link to Comment
  • REE/Strategic Minerals Concentrator, September 27, 2011 [View instapost]
    OK, a couple of comments here.

    First of all a reverse split, a forward split or split of any kind does nothing for a stock. It does not change market cap, shareholder equity or the value of a company in any way. 10 shares @ $1 is exactly the same market cap as 1 share @ $10.

    I hear down ramping on Lynas because they have 1.7B shares out standing common (which is only about 3.5 times more that GWM's 500m)... This is ridiculous, worrying about the outstanding is like a poster on another board lamenting that the authorized shares for Lynas is around 2.7b shares. Who cares, it is meaningless how many are authoized...

    Next, the fact that GWM has little in the way of book (or shareholder equity) means the company has little value. Quite simply, they don't own anything other that some real estate that is in the exploration stage and a performance metals company that is a proven liability...

    It has been predicted that LCM will be profitable but IMO the profitability will be a function of REE prices and the last quarter most likely was profitable due the the rapid RE metals they manufacture. This quarter may be a different animal depending on what they paid for feedstock... The PP&E on the balance sheet of $3.2m makes the book on LCM less than $3m. Probably significantly less. Their only other asset is Steenkamp where ownership is 74%. BEE owns the other 26%.

    It's like buying a new house. OK, the foundation is poured and an architect is drawing up plans for the rest of the house ( the Steenkamp planners). I come in and I am offered 25% of the completed house for a substantial cash infusion from MY wallet. So I now own 25% in a venture that owns a foundation and some other vacant lots that may or may not be in a good location. And I still need to pay the architect...

    The working capital is what I have put into the bank which in the scheme of things is a drop in the bucket compared to what is needed ($30m ?) In short it is a poor business decision to even consider putting additional cash into such a venture.

    Finally, when I hear $50 to $60m to build a 5,000 mpta separation facility I think that Nick Curtis is a bungling idiot for not building 2 of these 5k mtpa facilities right next to each other (for $120m). In spite of incorporating the "economies of scale " it will take 6 times more capital to build the Lynas process than an equivalent Steenkamp?...

    Lynas is world's different in that Lynas OWNS a (nearly) completed house. They have even secured a short term debt facility against it. Lynas is valued at $625m according to an audited balance sheet. GWM is "appraised" at ~$65m.

    Comments?
    Sep 29 09:27 PM | 1 Like Like |Link to Comment
  • REE/Strategic Minerals Concentrator, September 27, 2011 [View instapost]
    Why is it foolish? Why would you invest in a shell company (a company with no assets)and dilute your investment with that of the existing shareholders. Certainly not because you like them.

    Show me some assets in GWM, I would really like to see (as JV/TOA) what I am getting for my investment. I mean, here is a ~50m company with goodwill of $2.5m? Really?

    The upcoming meeting will be telling...
    Sep 29 04:06 PM | 3 Likes Like |Link to Comment
  • REE/Strategic Minerals Concentrator, September 27, 2011 [View instapost]
    If you were thinking about a JV, TOA or even buying GWM, why would you pay any substantial price. GWM hold assets somewhat south of $50.

    They have 500m shares outstanding common that represents 75% mine ownership. If I am looking to get into GWM's pants, i would wait until they go to 0 bid and bankruptcy…

    This way they could loose the current shareholder and start out fresh. The assets could be bought at fire sale prices.

    It wouldn't be personal just good business… jmho...
    Sep 29 01:05 PM | 1 Like Like |Link to Comment
  • 3 Major Trends And Stock Picks To Go With Them [View article]
    Good article and insight… Agreed a world wide melt down could occur but the Washington Post cites significant Chinese investments in Greece and there is even talk about a China/Greece bailout. It makes sense, everyone owes China, so China stands to loose as much as anyone if such a meltdown occurs…

    Also this is one of the few mentions of the Rare Earth Industry I have seen. The REEs are nascent technology and the potential impact of REEs on existing technology has yet to be realized.

    Great job…

    http://wapo.st/qwtiLE
    Sep 29 01:30 AM | 1 Like Like |Link to Comment
  • REE/Strategic Minerals Concentrator, September 21, 2011 [View instapost]
    Mercy, this is an incredible article (both). I read the "Undertanding in 13 Questions and the Tsurikov letter second. It really shows how information can be manipulated to one's cause… Thanks for posting...
    Sep 25 08:57 PM | 2 Likes Like |Link to Comment
  • Molycorp: Rare Earth Leader Now Dirt Cheap [View article]
    farwest, I think you have a misconception about the nature of rare earth elements. These metals are not just mined, they are 1.) mined as an orebody from REE rich deposits (like Mt. Pass or Mt. Weld) then 2.) concentrated from the orebody by a gravity floatation process the 3.) separated by highly technical processes into the individual elements generally chemically bound to form oxides.

    The process to separate the individual elements is highly technical and requires extensive chemical processes. It is a process that is obviously very difficult. Given the high prices of REO's at the present, and given your assertion that REE's will drop dramatically, it would make sense that many companies would have already jumped in to begin mining and processing REO's.

    This has not happened.

    Moly and LynasCorp are the frontrunners on the way to significant production of REO's. They have each spent in excess of a half a billion dollars to develop a processing system. These systems take a minimum of three years to bring on line and require substantial IP, experience and planning to even begin production.

    The REE industry is not mining, rather it is technology applied to mining. The barriers of entry a tremendous and any company even contemplating had better be well capitalized.

    That said, the demand itself for REE's is increasing at an exponential rate and is the quantity needed for each application. The uses are wide and varied and growing every day.

    Suggesting REE's are simply mined and processed is intrinsically incorrect and is confirmed by the lack of players in the REE space… JMHO...
    Sep 25 05:18 PM | Likes Like |Link to Comment
  • REE/Strategic Minerals Concentrator, September 21, 2011 [View instapost]
    Hi Chi,

    Whatever happens is going to be a study in micro-cap evolution. I am very interested to see how they are going to put out of this dive without taking the wings off...

    Plan A is a pretty lousy option because they are low on cash and they will probably be spoon fed a TOA or JV. There is no question that waiting to the last minute will cost them in this area. As an attorney I'm sure you have been in the no-leverage position and it makes for tough negotiations especially with the back against the wall.

    Plan B is highly unlikely as GWM has few assets. Collateral is limited to Steenkamp itself and LCM which at this point is loosing money and with the recent REE price drop may have a tough quarter/year. This is especially true if they stockpiled feedstock before the price drop.

    Plan C was destroyed with the economy. The question becomes how to price any potential offering. It would have to be significantly less than the lowest recent market price which means for a mere $30m dilution may be substantially greater than 10%. It would be tough to garner interest IMO.

    The special meeting will be interesting but the fact they haven't signed the TOA/JV doesn't bode well. I'm sure any successful venture would be announced quickly.

    As you said, they sure have a lot of development plans but I just don't see how they are paying for it. Just imagine the price tag on the planning/engineering venture... Time will tell...
    Sep 23 10:50 PM | 3 Likes Like |Link to Comment
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