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As I explained on this board months ago Polymet demonstrated through its own technical report that this is a marginal project at best (Phase I NPV of 173MM and IIR of under 10%). in other words...yuck.
I said to sell into whatever pop the permit approval offered which was good advice.
Unfortunately for me, I had a sell order in for 1.6 cdn (I own POM) and it never got hit, so my 'greed' of wanting an extra penny leaves me still holding the bag.
I will try and unload again after the next permits
If you are asking this to understand if I have any environmental concerns about the project, then 'yes' I want copper/nickel mining in N Min. Mining is critical to our way of life and POM has done exhaustive studies and passed every hurdle.
If you are asking this to understand if I want jobs/tax dollars for the N Min., then my answer is "I don't care". I am not a local who see the mine as bringing jobs/dollars to the region.
If you are asking this to understand if I want POM to be successful in building a mine in N Min from a shareholder perspective. then my simple answer is 'yes', but I own a lot fewer shares than years ago, so my ‘yes’ today is smaller than before.
If you are asking this in a broader "what is my agenda?" way then, here is my story: I have owned POM for way longer than I would care to remember. Longer than 15 years. While I have made some money on it, certainly not enough to justify the time value. I own a small number of shares now (2000) that are slightly underwater.
The numbers don't lie. The Economic Assessment shows that this is a marginal project. Even worse considering that metal prices are way below the base case - other than cobalt. Does this mean I don’t think the mine will get made? No… given that so much time/energy/money has been sunk into this project, it will likely get built.
What I am suggesting that most logical place to exit will be after permits. That is likely the biggest pop. It will drift down until financing which will pop the stock price again. Stocks generally trade down during long construction so no point in holding during that time. Those waiting for the big payout during operation will likely be disappointed, since this is a marginal project. Yeah, yeah…maybe metal prices will be much higher by the time production starts, but do you really want to wait 4 or so years to find out.
And anyone who thinks the stock is being manipulated, is only searching for a scapegoat as to why a stock they bought is going down instead of up. The real answer is usually much simpler and obvious…it just isn’t all that good a project
- Big run up leading to the updated Technical report in June. - Stock deflates once it became clear that the project is marginal (Phase I IRR of 9.6%! Phase I+II IRR of 10.3% at $3.22 copper!) - smaller run up leading to the Forest exchange confirmation. - Stock deflates after the excitement is over.
The last hurrah for this stock should come after the final permits are issued, so take whatever pop this provides as a cue to exit.
Any reason you guys just don’t go to Sedar and check the MD&A?
As a result of these financing transactions and the purchase by Glencore of PolyMet common shares previously owned by Cliffs, Glencore's ownership and ownership rights of PolyMet as at December 31, 2017 comprises:
? 92,836,072 shares representing 29.1% of PolyMet's issued shares;
? Glencore Convertible Debt exchangeable through the exercise of an exchange warrant (“Exchange Warrant”) at $1.2696 per share into 38,660,854 common shares of PolyMet (including capitalized and accrued interest as at December 31, 2017) and where the exercise price and the number of shares issuable are subject to conventional anti-dilution provisions;
? Warrants to purchase 7,055,626 common shares at $1.00 per share at any time until October 28, 2021, subject to acceleration on the earlier of receipt of permits necessary to construct NorthMet or the twelve month anniversary of the issue date provided the 20-day VWAP of PolyMet common shares is equal to or greater than $1.50 (“Acceleration Triggering Event”), and where the exercise price and the number of warrants are subject to conventional anti-dilution provisions; and
? Warrants to purchase 625,000 common shares at $0.7797 per share at any time until October 28, 2021, and where the exercise price and the number of warrants are subject to conventional anti- dilution provisions.
If Glencore were to exercise all of its rights and obligations under these agreements, it would own 139,177,552 common shares of PolyMet, representing 38.1% on a partially diluted basis, that is, if no other options or warrants were exercised or 34.4% on a fully diluted basis, if all other options and warrants were exercised, whether they are in-the-money or not. Warrants giving Glencore the right to purchase 6,458,001 shares of its common shares at $0.8231 per share expired on December 31, 2017. Subsequent to December 31, 2017, warrants to purchase 6,458,001 common shares at $0.8231 per share at any time until March 31, 2019 were issued to Glencore. See additional details below.
Sorry Trumpcard, but your statement here demonstrates that you don’t understand mine finance. Would you bet 1 billion dollars on a business plan that shows a 10% IRR? Not much room for error. If metal prices go down you stand to lose a good chunk of that 1B. Remember there are other projects wanting your money that have an IRR of 35% or more. What project will you back?
Let me put this a different way. The economics of this project are 1/3rd of what they were from the last DFS.
Or to put it yet another way this project is 2/3rds less exciting than it used to be.
I still think it will get built, but I, along with a few others here I don’t think the shareholders will see much benefit.
I wrote that post on my phone, so I likely got some numbers wrong, sorry to not be as exact as I should.
I did elaborate on the IRR and NPV by mentioning that I have seen stock tank on IRR of 20%. But to provide further (over-simplified) context, a mining project generally needs an IRR of 30-40% to get funded. Granted PLM/POM is in a bit of a different situation that it is not remote and it has Glencore as a partner. But it is still REALLY low.
Have you looked at the actual technical report? The current case has copper at 3.20 which is higher than today. And while Im sure copper is going up long term, they cranked that number as high as they could get away with for this report. Generally technical reports use conservative numbers, so one should ask why they didnt in this case. The answer is fairly clear that given 60% of the revenue come from copper: the numbers would be even worse if they didn't.
Also, did you look at the sensitivity if metal prices go down 10%. Phase 1 goes into negative NPV.
I agree that if you include Phase 2/3 then the project starts looking much better, but the costs in my view have gone ballistic for even Phase I.
Glencore will happily wait the 10 years as their outlook is in decades vs. ours which is measured in quarters (ok not really for mining projects, but you get the idea). While I would love to evaluate the project with Phase2/3 eyes, as an investor I need to look at from Phase I since that is what PLM is trying to raise money to build.
That Star Tribune article pretty much sums up my feelings exactly.
After tax, net present value of future cash flow discounted at 7 percent is $173 million for Phase I, and $271 million inclusive of Phase II.
After tax, internal rate of return is 9.6 percent for Phase I and 10.3 percent inclusive of Phase II
The 59,000 tpd and 118,000 tpd upside cases suggest potential valuations that range from $750 million to more than $2 billion (NPV) and IRRs that range from 18 percent to 24 percent (including both Phase I and II). The 59,000 tpd and 118,000 tpd upside cases, however, would be subject to additional engineering and environmental review and permitting. Any such opportunities would be subject to various regulatory requirements and would require additional capital investment. The included Inferred Resources would have to be successfully converted to Measured and Indicated before any prefeasibility studies could commence
There way too many “if and when’s” here and it will take another 10 years to get that value.
Glencore is not shorting this stock. That is just silly talk for so,many reasons that are not worth getting into.
Anyway, I have been following this stock for 15 years sometimes in sometimes out and bought in 6 months ago thinking this was finally alll coming together. But this release was not was what I was expecting,. Perhaps I am missing something, but I didn’t want to bet on that. If you think my perspective wrong and the numbers do work, I’d be interested why you think so.
The stock is dropping because the phase I IRR and NPV is really bad. Stocks in this phase trade at discount to NPV usually, not a premium.
I have seen stocks tank on 20% IRR so 8% is worse.
And Phase II is way too many years, studies and dollars away to add any value or be any sort of carrot, unless you want to park your money for 10 more years..
The stock is not being manipulated, it is guys like me leaving the dance floor.
I am not saying this mine won’t get built, Glencoore is likely too far in at this point, but the excitement of this play is gone.