Tuesday 6 March 2012

Last chance on EMED before launch?

To be truthful, you should really have bought here at under 10p a share and who knows, with a stock market meltdown just an Israeli bomb away, anything is possible.

However,  long-time readers will know that I have had half a million odd shares in this AIM listed prospective mining company since 2009. In all that time the Company has been seeking to re-open the Rio Tinto mine in Andalusia in Spain. Corruption and general bureaucracy has delayed this event for at least 2 years longer than necessary.

Finally though this month the stars are aligning. Firstly, the corrupt PSOE party in power is about to lose an election in 3 weeks and the incoming PP have opening this mine and getting the desperately needed 1600 jobs up and running.

Then a Chinese company signed an off-take deal to buy the copper that will be produced, guaranteeing future sales. Then yesterday, Goldman Sachs was appointed, again via an off-take deal, to produce the £175 million of financing. This is all the money the company will need to re-start production at the mine.

When up and running the mine should produce about $150 million a year in profits, so the debt won't take long to pay off, on a DCF of 10 years you would expect EMED to be a billion pound odd business. At 14p which it is today it is valued at £120 million, so this share could eventually go for nearly 100p (there are some future options which will dilute away some of the value).

Even better, having met the CEO a few times, the Company has a strong management team who have piloted this through 4 years of pain and frustration and now pulled off some great, pre-start deals - strong management is the key to any good company, especially on AIM

Personally I see the final permitting as pushing this share at least 100% over where it is today, with 70-100p over the next 2-3 years.

(NB As this is dual listed, you can buy in an ISA)


Budgie said...

Yikes - ½ million!! What happens when the Spanish economy descends further into trouble (last post) because of the euro?

Steven_L said...

It's been on my watchlist ages since you're always banging on about it.

Could be tempted to ditch Gulfsands and have a crack at this instead.

Another Minerva?

Sean said...

I will have 5ks worth if you underwrite the first 1ks losses on a fall.

CityUnslicker said...

I underwrite nothing Sean, all my punts are very high risk indeed. Look today, GKP down a measly 15% on the day.

Big risk off day actually on AIM, EMED hardly moving which is a sign possibly.

Although if the markets stay this way for a wee correction and there is no EMED new then perhaps a slightly lower entry is possible.

James Higham said...

Shall watch your further progress with great interest.

Budgie said...

Arrrgghhhhh! GKP down 23.8%, Xcite down 9.25%, EMED down 7.1%, AFE down 7.6%. What a day.

Anonymous said...

Yep. Further the base case of 9m, isnt really as many of us know the base. It will be 15m. Not including the underground potential / satalitte mines around the sides. Always counting Slovakia as "0" worth right now, even Kefi as nothing.

There is no reason for the 38p target price being so low. Its clear the view on copper is BULLISH in the medium to short term. Hence why the Chinese wanted to allocate it now. The LOM copper price IMHO is far too low. Regardless the natural hedge is NEVER considered properly. When Copper falls, and its not due to demand, say its a rising USD, the USD is rising against the Euro. Its perfect. Thus our cost of sales plummet down. No one ever adjusts the cost of sales when working out the long term cashflows.

Easily EBITDA will break $300m when its all up and running.

I just love the fact its totally ignored. Administrative standing will come, especially with the PP easily taking power. Then, and only then, will the slow, Sunday reading paper types, Pension funds, and retail investors (other than the specilist small cap ones we have) will come in. Then, oh look, Spains biggest copper mine and one of the biggest globally. Then we will see MANY investors kick themselves for now ignoring multiple warnings.

Central Spain have the environmental licence. Thats hilarious. There is no way the PP in the central ranks will approve it for the PSOE right now. That will look too good for the PSOE. Clearly we are in the best position this long running red tape nightmare can be in.

Plus we ARENT delisting. We will RELIST on the AIM as a producer. We are currently listed as an explorer - so have to relist due to rules when we produce.

But personally that 38p target is rediculous. Even factoring a mother of all dilutions. Which with Goldman - thats an incredable deal.

So this year, certainly when build work starts AND THEY CAN DRILL THE RESOURCE AS PLANNED AS SOON AS ADMIN APPROVAL COMES IN, with the serious copper around the mine, I see 50 - 60p without any real effort latter in the year. As, as soon as we derisk, the larger buyers will pile in.

Future dividends will be fat. And again we know the LOM will be easily, easily extended.

So......... AGREED!

savonarola said...

Unslicker I have been away(Africa) a while. You gave me Char(@38p) I gave you Mano River now split into AFF and AUE so we are square.
Sold a few Char to finance AEY and XEL and will sell a few more for EMED. Hope I owe you a Nebucanezer in a year or two.