Due Diligence and research/speculation here, really curious to know what you guys think about my hypothesis (which combines a lot of misc DD). I originally meant this to just be a comment but I decided to just go all out and post my thoughts. Would love to hear any critiques or things I may have missed, so that we all have the most accurate information. It is a bit long so bear with me.
I broke this down into two parts, because this was originally two posts. The first part explains the logistical and operational reasons why I believe that Ameca Mining needs to be in whatever entity of Ameca becomes public. The second part focuses a little bit more on the actual valuation of the public company with and without Ameca involved, and why I think it doesn't make sense for Ameca not to include the mining division if they complete the RTO.
Part 1
Ameca Mining and the RTO
I am curious why some people don't think it makes the most sense for them to include the mining aspect into whatever becomes the public company (which, in my opinion, will be Ameca Group with encompasses Schatzi, Infra, and Mining). I won't mention the most common pro-mining reasons we all know about.
Yes, they said that the mining project for Graphite was fully funded. However, from Schatzi's Ameca Group Page they currently need 25m for a production plant in Sri Lanka. In the same packet that says this, it also shows the breakdown of work between the different groups, and Ameca mining is responsible for both mining AND production.(Also, that packet has recently updated their figures to show that the mining division aims to mine 140,000 tonnes per year of a 3 million tonne resource, which seem to be significant increases from the 15,000 ton/2 mil total tonne we've seen so far, assuming that is only talking about the graphite).
In addition to that, the Graphite mine is not the only project that Ameca Mining will need funding for. They said they have claims globally, and Sri Lanka was the maiden project. Acting on those claims will take a lot of money, and they likely won't have enough funding from their graphite to fund those projects in the near future. Also, even within their Sri Lanka project, they don't make it clear that the Gold/REE projects are funded, just the graphite.
Because of both of these points, I think Ameca Mining needs to be included so that they can have access to public funding through stock offerings, which will allow them to build that production plant now, while also funding those other projects as the need arises. Not only that, but I also strongly believe, as another poster just mentioned today, that they have big ambitions knowing that they have struck gold in Sri Lanka and will have unquestionable demand for their resources.
Where I think they are going
All of their moves with the different components to me hints that they want to be a vertically integrated company that controls all aspects of finding resources (Schatzi), building infrastructure around their mines (Ameca Infra), the raw materials supply and basic production/processing(Ameca Mining), further processing of resources into higher value products such as graphene, REE oxides [maybe battery anodes?], etc (Ameca Learn, Tech), and the distribution/manufacture of their products (Ameca Supply).
Now, this could be a very large move for a junior minor to make before getting established with their first real mine. However, I think they are aiming bigger than other companies because they somehow lucked upon one of the greatest mineral findings in recent history. 3 million tonnes of some of the purest graphite in the world, significant amounts of (unconfirmed) gold that is relatively shallow and can be dug out at low cost with open pit mining, and then the palladium and high concentration of rare earth elements.
We don't have much to go off of for Palladium estimates, but I want to get a little more into the REE's briefly. I don't think people realize how unique the findings from their core samples indicate this deposit is.
Looking at Europium specifically, it is one of the rarest REEs and very expensive, and it accounts for less than .5% of the total REE concentration in 3 of the 4 largest REE deposits in the world (in the 4th it accounts for around 2%)(Data i got from ISSN: 2079-9276). Ameca's XRF analysis (if it is correct) has it listed as the second most abundant listed resource, at 100-200x the concentration of gold.
Anyway, if what I am saying above is correct (and I would welcome any fact checkers to make sure I got it right), their Sri Lanka assets could be worth far more than what was projected. It would mean that they have access to a large amount of diverse and highly valuable minerals that have stable and/or increasing demand for the next decade, and if they can execute on production and sales (which should be the least of our concerns) then they could have a very high revenue in a relatively short amount of time.
They also have acknowledged the potential to add significantly more value through additional REE processing, graphene, etc, which is what the purpose of their Tech/R&D group likely is for. However, that group by itself, in the beginning, won't be making a lot of money and would need significant funding and resources.
Conclusion
To me, the most logical conclusion is a large, public, parent company that is able to raise funding on the public markets. The main revenue source (at least right now) and valuation would be provided from their mining operations and assets, which are substantial and I believe would likely cause the company to have a high market cap (unquestionably higher than without the mining assets included). In the immediate future before revenue grows from their graphite mine, a high market cap would allow them to sell equity to fund both their Production Facility, and the 50m in R&D they say they need (which would go to developing those value added products). The ability to raise easy cash without debt would also help them to expand on their other claims and projects without needing to wait for revenue from sales, and in the future is always safe to have in case of a cash crunch. Once they have steady revenue from their mining, it would be less likely they need to dilute further. There are many other advantages I see to having a public parent organization, but one last one is that having all these groups under the same umbrella would make it far easier to gain access to funds and distribute them and other resources as they see fit to all of their subsidiary groups, rather than needing to get a grant for R&D, or PE to explore a new potential deposit.
In essence, I believe Ameca Mining is an essential part of whatever becomes the public company, because it would provide the main source of revenue and assets that will be used to determine share price. A high market cap in the near term will allow them to instantly raise capital for their other projects (exploration, R&D, other mines, etc), something that they wouldn't be able to do naturally without taking on massive amounts of debt or waiting for cash flow to give them flexibility. And I think they are comfortable setting up all of these projects/different because they are sitting on a (literal) gold mine that could be one of the largest vein graphite, REE, and palladium producers to the western hemisphere.
Part 2
I want to clarify one of my major points about the valuation of the public entity, because I think it is really important in this whole equation.
The most likely reason some version of Ameca wants to go public is to raise funding (essentially the only reason anyone goes public). Ideally, they would be able to raise as much capital while giving up as little equity as possible. The more highly valued the public company is, the larger the market cap, and the higher they can sell shares for.
To me, it wouldn't make sense for them to just merge Schatzi or Infra without mining. The primary value of this company at this point in time is the mineral assets and revenue from selling those, both of which are under their mining group. After all, I'd bet that for 95% of us the potential of mining inclusion is why we are here.
If they just merged Schatzi, and Mining was left out, the company likely would not be valued very high at all; we don't have any revenue figures from them, but it is clear they would have no where near the potential revenue as the Mining group. In addition, Many investors who were speculating that Ameca Mining would merge (myself included) would likely sell their position, causing the stock to decrease. This would mean that, to raise 25 million for the production facility and 50 million for the R&D, they would have to sell an enormous amount of shares to acquire the funding, which would dilute their ownership and lower the price further (although technically, they would have slightly more control over the mine if this was the case).
Now compare that to Ameca Mining. If they merge STHC with the group that has a possibly 10+ billion dollar rare mineral claim in Sri Lanka, then the market cap and share price very likely go far higher than it is currently. A higher share price means they need to sell less shares to raise the same capital, meaning less dilution, and less of a price decrease.
Some simple, very rudimentary calculations I did:
STHC with just Schatzi:
75 million needed, Price per share @ $.10 (Market Cap of ~37 million, which I think would be generous in this scenario),
75 mil/.10= 750 million shares to sell, which is basically the entire authorized float of the company.
STHC with Ameca mining (and potentially other groups):
75 million needed. Price per share @ $2 (market cap of ~738 million, which I think is definitely reasonable if their resource claims are accurate and they show significant production of graphite this year).
75 mil/2= 37.5 million shares. Would likely double the current float, but they would be giving up only 10% of the company in exchange for most of the funding they need to really get established.
It is important to note that these calcs are based on the assumption that they plan to raise all of that funding through stock offerings. Clearly, if they raised some of that funding through other methods such as debt or private investment, these napkin figures will change. But, my main point still applies.
If money is the big reason they are going public, I just don't think it is feasible without having the mining group's valuation included, unless they don't care about massive dilution.
Again, I would love to hear any feedback or other people's thoughts on this. This is obviously heavy speculation, and I may be incorrect on several things. Also, some of this may have already been posted, so I apologize if that is the case. Nonetheless, I am incredibly bullish on their prospects in the near and long term. Thanks yall.
