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CLARIFICATION ON BUSINESS TIMES ARTICLE DATED 10 OCTOBER 2017
The Board of Directors (&ldquo Board&rdquo ) of Alliance Mineral Assets Limited (&ldquo AMAL&rdquo or the &ldquo Company&rdquo ) refers to
the Business Times article dated 10 October 2017 titled &ldquo Alliance Mineral CEO: Better terms in latest
agreement with Burwill&rdquo (&ldquo BT Article&rdquo ).
As stated in the BT Article, the Company&rsquo s Chief Executive Officer, Mr Tjandra Pramoko (&ldquo Mr Tjandra&rdquo ),
made a statement that &ldquo Alliance Mineral share price next year should rise to S$1 per share&rdquo
(&ldquo Statement&rdquo ).
The Company wishes to clarify that, Mr Tjandra was asked during the interview about his opinion on the
lithium miners in Australia which are of similar size to the Company. In his answer, Mr Tjandra quoted
several Australian lithium miners, including Galaxy Resources Ltd (&ldquo Galaxy&rdquo ), a company listed on the
Australian Securities Exchange (&ldquo ASX&rdquo ), which has a market capitalisation of about A$1.2 billion and a
current PE ratio of approximately 23 times. Mr Tjandra had subsequently compared the Company&rsquo s
current share price with Galaxy, applying the same PE ratio as Galaxy. As such, the &ldquo $1 per share&rdquo from
the Statement was due to the hypothetical peer comparison made by Mr Tjandra for the purposes of the
interview and was not intended to be a forecast.
The following factors were taken into consideration by Mr Tjandra in making the aforesaid comparison:
(a) Among others, (i) the projected production of spodumene and cost of production for the Bald Hill
Project in 2018 mentioned in the pre-feasibility study (&ldquo PFS&rdquo ) announced by Tawana Resources
NL (&ldquo Tawana&rdquo ) on 11 July 2017, (ii) the off-take price under the off-take agreement (&ldquo Off-take
Agreement&rdquo ) with Burwill Commodity Limited (&ldquo Burwill&rdquo ), a wholly-owned subsidiary of Burwill
Holdings Limited, and (iii) the potential taxes and royalty to be paid and
(b) Using the PE ratio of approximately 23 times at which Galaxy is currently trading at, on the
assumption that the Singapore market values the Company at the same rate as the Australian
market values Galaxy.
Shareholders who wish to refer to the PFS may access the same at the following link
http://spcagent.io/taw/wp-content/uploads/sites/26/2017/07/TAW-1.pdf.
The Company also wishes to make clarifications to certain information disclosed in the BT Article as
follows:-
(i) &ldquo The original agreement with Hong Kong listed Burwill stipulated a A$3 million penalty if Alliance
Mineral did not deliver the lithium within two months starting March 2018 under an offtake
agreement. Mr Tjandra said this means that in the new deal, it can deliver as late as May and not
to worry about the penalty&rdquo
Company&rsquo s Clarification:
As disclosed in page 2 of the Company&rsquo s announcement dated 4 May 2017 in relation to the Offtake
Agreement, in the event of late delivery by the Company, the price per tonne of lithium
concentrate will be decreased. Pursuant to the Off-take Agreement (as varied by the binding term
sheet dated 2 October 2017 (&ldquo Binding Term Sheet&rdquo )), should delivery scheduled for April 2018
be delayed beyond the agreed grace period stipulated in the Off-take Agreement of up to 60
days, Burwill may claim against the Company for breach of contract. The &ldquo A$3 million penalty&rdquo
mentioned by Mr Tjandra in the BT Article was based on his estimate of potential damages
arising from such breach, taking into account, inter alia, the off-take price and the potential
damages which may be suffered by Burwill (subject to mitigation).
(ii) &ldquo Burwill agreed to take lower grade 4.5 percent lithium concentrate from the previous minimum
5.5 percent concentrate&rdquo
Company&rsquo s Clarification:
As disclosed in paragraph 2.6 of the Company&rsquo s announcement dated 5 October 2017 in relation
to, inter-alia, the Binding Term Sheet, the Company may deliver 2 shipments of lithium
concentrate of a grade lower than 5.5% to Burwill should delivery be delayed.
The lower grade of 4.5 percent lithium concentrate mentioned by Mr Tjandra in the BT Article was
based on his assessment that a concentration of 4.5% will be required in order for delivery to be
economically viable to both the Company and Burwill, having regard to, inter alia, the costs of
production and freight.
(iii) &ldquo Burwill also agreed to increase the amount it will buy to between 70,000 and 75,000 tonnes in
2018, and 80,000 and 85,000 tonnes in 2019. In the previous agreement, it was 40,000 tonnes in
2018 and 60,000 tonnes in 2019&rdquo
Company&rsquo s Clarification:
As disclosed in paragraph 2.7 of the Company&rsquo s announcement dated 5 October 2017 in relation
to the Binding Term Sheet, Burwill has exercised its right to purchase all excess lithium
concentrate produced (if any) for the first 2 years.
The quantity to be purchased by Burwill of 70,000 to 75,000 tonnes for 2018 and 80,000 to
85,000 tonnes for 2019 as mentioned in the BT Article was the estimates of the total quantity,
taking into account the estimated excess, to be purchased by Burwill based on the information
found in the PFS. These figures are purely estimates and are not contractually binding on either
Burwill or the Company. Burwill is bound to purchase all excess production above 40,000 tonnes
for 2018 and 2019.
(iv) &ldquo The current price of lithium of about US$880 per tonne is the highest ever - it was around
US$400 per tonne last year&rdquo
Company&rsquo s clarification:
The price of US$880 per tonne is higher than what Mr Tjandra believes is the latest publicly
available contracted price. Mr Tjandra took reference from the contracted price announced by the
comparable ASX listed companies.
(v) &ldquo The increase in offtake means Alliance Mineral will be getting US$132 million to US$140 million,
up from S$88 million previously&rdquo
Company&rsquo s clarification:
The estimated revenue under the Off-take Agreement stated in the BT Article was made by Mr
Tjandra based on the following considerations, among others (a) the agreed minimum quantities
to be sold under the Off-take Agreement and the estimated production quantities based on the
PFS and (b) the Company being able to meet the terms of the Off-take Agreement, including but
not limited to timely delivery, grade of lithium concentrate delivered, and sale price.
By Order of the Board
Simone Suen
Executive Director
12 October 2017
| Atom99 ( Date: 12-Oct-2017 23:17) Posted: |
http://infopub.sgx.com/FileOpen/Clarification%20on%20Business%20Times%20Article%2010%20Oct%202017%20-%20SGX%20%20Queries%20Final.ashx?App=Announcement& FileID=474030
http://infopub.sgx.com/FileOpen/AMAL%20-%20%20Mineral%20Resources%20Update%20on%20Bald%20Hill%20Lithium%20and%20Tantalum%20Project%20Final.ashx?App=Announcement& FileID=474031
Lifting of Trading Halt.
http://infopub.sgx.com/FileOpen/AMAL%20-%20%20Mineral%20Resources%20Update%20on%20Bald%20Hill%20Lithium%20and%20Tantalum%20Project%20Final.ashx?App=Announcement& FileID=474031
Lifting of Trading Halt.
furnaces ( Date: 12-Oct-2017 23:01) Posted:
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Announcement out,
I think can hit $0.50.
From tomorrow till 24 OCt 17,will AMAL' s SP hit 50 cents or more? Will it be an exciting or boring period?
We will know the outcome when the time comes.
Did I missed anything?
DYOR and DYODD. Cheers to AMAL!!!
We will know the outcome when the time comes.
Did I missed anything?
DYOR and DYODD. Cheers to AMAL!!!
99.9% should be a suspension going by its track record. The CEO is hopeless. I think he' s waiting for Dow to crash. Haha Good luck
ahhuat08 ( Date: 12-Oct-2017 18:26) Posted:
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Very well-reasoned.
twinpower ( Date: 12-Oct-2017 18:36) Posted:
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I guess all your concerns, from the FS to the ore reserve report, are all valid, and should ideally be present in a perfect scenario. However, what sets investing in shares apart from a punt in the casino is that in shares, it allows for calculated and measured risk to be taken that commensurate with the rewards that you expect. From what we have seen to date of AMAL, from the offtake agreement with burwill, to the PFS, to the relevant authorities approving all the required licences for operations to commence, then JL entering the frame, and finally burwill's recent capital injection, there is nothing to suggest that our belief in AMAL will not come into fruition. Of course alot of assumptions are made along the way, and the project might just turn out to be a scam - but what are the odds? Moreover, if there was indeed a FS and ore report that results in the resources being marked to market at fair value on the balance sheet, we would highly probably not see the share price at 33cents now, maybe double or even more. 😀
sheerluck ( Date: 12-Oct-2017 15:17) Posted:
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Sorry shoud have been 9.01 am, lol
ahhuat08 ( Date: 12-Oct-2017 18:25) Posted:
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Listed firm has 72 hours to lift the trading halt.
The 72 hours deadline is tomorrow morning firday, 13th oct 2017 9.10 am, any announcement must be made by then, be it lifting of trading halt or to be suspended for more time to release the announcement.
The 72 hours deadline is tomorrow morning firday, 13th oct 2017 9.10 am, any announcement must be made by then, be it lifting of trading halt or to be suspended for more time to release the announcement.
whymee ( Date: 12-Oct-2017 15:39) Posted:
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I know a billionaire and a few over 100 millionaire.... none of them had a degree...and they dont follow textbook to do things
Doesnt matter.... white cat or black cat as long as they can produce lithium.....
Textbooks are written by people guide lines are too....
Mark publish books also... getting a degree doesnt mean u will be successful... and those who didnt follow the normal degree path... are billionaire... bill gates, po bian kong, so many listed company towkay are too....
Sorry there are many ways of doing things and the guide line doesnt mean it is the best way and most efficient way to do things....
Mark way of doing things is one of the best way..... and most efficient... u drill enough to start the project and.then drill further to expand the resource....time to market is critical.... and alliance will benefit under mark strong leadership..
they start the project in 2016 and now 2017 they are developing it... within the next 5 month... they will deliver their first batch of lithium...
Go see other project they took them 4 to 5 years into production...
Also take note... mark did what he preach .... now the total resource is 25MT
The next upgrade in late Nov/Early Dec will bring the resource to 30 to 40 MT range
Singaporean must think outside of the box.... textbook methods arent always the best... becos there are always diff solution to every single problem....
Good luck
Textbooks are written by people guide lines are too....
Mark publish books also... getting a degree doesnt mean u will be successful... and those who didnt follow the normal degree path... are billionaire... bill gates, po bian kong, so many listed company towkay are too....
Sorry there are many ways of doing things and the guide line doesnt mean it is the best way and most efficient way to do things....
Mark way of doing things is one of the best way..... and most efficient... u drill enough to start the project and.then drill further to expand the resource....time to market is critical.... and alliance will benefit under mark strong leadership..
they start the project in 2016 and now 2017 they are developing it... within the next 5 month... they will deliver their first batch of lithium...
Go see other project they took them 4 to 5 years into production...
Also take note... mark did what he preach .... now the total resource is 25MT
The next upgrade in late Nov/Early Dec will bring the resource to 30 to 40 MT range
Singaporean must think outside of the box.... textbook methods arent always the best... becos there are always diff solution to every single problem....
Good luck
sheerluck ( Date: 12-Oct-2017 16:32) Posted:
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Source: Pilbara 2017 AR http://www.pilbaraminerals.com.au/site/PDF/2020_0/2017AnnualReport
sheerluck ( Date: 12-Oct-2017 16:30) Posted:
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Ok. Pilbara has proven ore reserve (page 13) and did a Definitive FS (page 23 under Project implmentation Timeline flowchart). So they followed the JORC guidance.
risktaker ( Date: 12-Oct-2017 15:59) Posted:
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http://www.pilbaraminerals.com.au/site/content/
A company worth 1.1Billion but it is same stage as alliance... they are developing their mines ...
A company worth 1.1Billion but it is same stage as alliance... they are developing their mines ...
On the Burwill agreement part, I am more interested in the " why" . Why Burwill is willing to take more litium at lower quality and still paying the same rate at before?
AMAL is very blessed. TAW helps with its operation (bearing in mind that TAW do own their own lithium mines which they are not developing and it does appear strange to me) and Burwill helps with its financing while AMAL simply investing their rights to mine minerals.
One can say in AMAL cashflow statement,
- TAW owes the operation cashflow
- AMAL owes the investing cashflow
- Burwill owes the financing cashflow
AMAL is very blessed. TAW helps with its operation (bearing in mind that TAW do own their own lithium mines which they are not developing and it does appear strange to me) and Burwill helps with its financing while AMAL simply investing their rights to mine minerals.
One can say in AMAL cashflow statement,
- TAW owes the operation cashflow
- AMAL owes the investing cashflow
- Burwill owes the financing cashflow
furnaces ( Date: 12-Oct-2017 14:37) Posted:
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Hi guys, is AMA confirm suspended ?
Let us know if you managed to out more. Tjandra quoted GR in his interview. I had a brief look at their AR2016, it seems they do have " proven" . It seems like Pilbara haven' t started production so might be a closer match.
JORC is a guide. So one can argued that it is a set of " good practises" gained from past experience both good but definitely more benficial from those bad ones. It is not prescriptive but is there for good reason. If a particular process is redundant and AMAL/TAW skipped it, I would agree but the FS is an important step in the go/no-go decision making so skipping it to me is simply a bad decision.
AMAL may choose to skip FS if financing is not from banks (thanks to furnaces!) since they got it from Burwill. But still it is an essence step from a business/investment decision-making process of their own. Also they are two steps behind " proven" since they haven' t even got " measured" in the mineral resource report.
Anyway, less than two weeks to 24 Oct but entering the WVAP period soon.
JORC is a guide. So one can argued that it is a set of " good practises" gained from past experience both good but definitely more benficial from those bad ones. It is not prescriptive but is there for good reason. If a particular process is redundant and AMAL/TAW skipped it, I would agree but the FS is an important step in the go/no-go decision making so skipping it to me is simply a bad decision.
AMAL may choose to skip FS if financing is not from banks (thanks to furnaces!) since they got it from Burwill. But still it is an essence step from a business/investment decision-making process of their own. Also they are two steps behind " proven" since they haven' t even got " measured" in the mineral resource report.
Anyway, less than two weeks to 24 Oct but entering the WVAP period soon.
RedEye1811 ( Date: 12-Oct-2017 14:47) Posted:
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You raise the follow question: " One of my previous questions is can they actually start mining without a ore reserve report. Surely they need to have " proven" before they can mine, no? Any example of other mining company that started mining without " proven" ore or started investment decision without a FS? An ore report can also allow them to update their balance sheet with the value of the " proven" ore. Isn' t it more proper that way?"
I do not have any example of other company taking similar approach off top of my head, and am bogged down to dig for one now. Will seek to dig when got time. However, in respect to your question, a question in reply: where is there a set of rules that require a mining entity to follow a prescribed set of steps?
Whilst it may have been convention to do this, then that and so forth, progression can come when people find other ways to doing it. Many advances is society are made when people buck convention. It may be " more proper" to development " proven" ore, but is that a required rule or merely society/industry established convention. If merely convention then if TAW/AMAL feel that based on the operations they are developing they do not have to prescribe to convention then what is the issue. If people always stuck to convention we would all be standing still.
I do not have any example of other company taking similar approach off top of my head, and am bogged down to dig for one now. Will seek to dig when got time. However, in respect to your question, a question in reply: where is there a set of rules that require a mining entity to follow a prescribed set of steps?
Whilst it may have been convention to do this, then that and so forth, progression can come when people find other ways to doing it. Many advances is society are made when people buck convention. It may be " more proper" to development " proven" ore, but is that a required rule or merely society/industry established convention. If merely convention then if TAW/AMAL feel that based on the operations they are developing they do not have to prescribe to convention then what is the issue. If people always stuck to convention we would all be standing still.
sheerluck ( Date: 12-Oct-2017 14:14) Posted:
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For AMAL/TAW, their aim is to get into production as fast as possible. Hence, they if there are steps that can be skipped, they will skip that.
AMAL/TAW has a reserve report that comes with the PFS, which determines its Life Of Mine to be less than 4 years. Not very impressive but that' s what they are doing. Going into production fiirst. The recently released is a resource update report. The reserve update will come in December.
From my understanding on the mining projects, you dont need a FS or DFS unless you are borrowing from the bank because banks require that. Otherwise, you can make do with a PFS. A PFS has lower confidence ratio but they are sufficient to start the operation. Also, havng a FS/DFS will mean delay of at least 1 more year. It is time consuming and not really necessary. And the window of opportunity might be lost.
Burwill also didnt reveal the exact changes in the offtake agreement, hence I guess it is not realy necessary to reveal them. Its all part of the business dealings.
AMAL/TAW has a reserve report that comes with the PFS, which determines its Life Of Mine to be less than 4 years. Not very impressive but that' s what they are doing. Going into production fiirst. The recently released is a resource update report. The reserve update will come in December.
From my understanding on the mining projects, you dont need a FS or DFS unless you are borrowing from the bank because banks require that. Otherwise, you can make do with a PFS. A PFS has lower confidence ratio but they are sufficient to start the operation. Also, havng a FS/DFS will mean delay of at least 1 more year. It is time consuming and not really necessary. And the window of opportunity might be lost.
Burwill also didnt reveal the exact changes in the offtake agreement, hence I guess it is not realy necessary to reveal them. Its all part of the business dealings.
sheerluck ( Date: 12-Oct-2017 14:14) Posted:
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