GBE - Globe Metals & Mining (REE play)

[Lego_Man]

Background: I've been keen to hop onto the REE bandwagon in the last few months...however the way the sector has run so hard has never left me happy enough that i would really be investing in a multi-bag/real value play.

After looking at a couple of companies commanding monstrous market caps relative to their stage of development (LYC, GGG), i looked at GBE - which i believe Shasta has brought up in a couple of threads here. They have a couple of nice irons in the fire, the first is their Niobium project in Malawi that is currently at feasability study stage. Also have a fluorite exploration thing going on in Mozambique and some assorted Uranium tenements in Aus. Currently in trading halt pending the announcement of a REE project acquisition.

A high risk play (especially sovereign-wise) but this looks like a company who is gradually getting their ducks lined up for production within 18 months. Hopefully this latest acquisition is a value adder rather than a willy-nilly elephant hunting expedition.

Dont have my notes on me to give facts and figures, but just thought i'd throw it out there and see if anyone else was eyeing up this stock.

[shasta]

Background: I've been keen to hop onto the REE bandwagon in the last few months...however the way the sector has run so hard has never left me happy enough that i would really be investing in a multi-bag/real value play.

After looking at a couple of companies commanding monstrous market caps relative to their stage of development (LYC, GGG), i looked at GBE - which i believe Shasta has brought up in a couple of threads here. They have a couple of nice irons in the fire, the first is their Niobium project in Malawi that is currently at feasability study stage. Also have a fluorite exploration thing going on in Mozambique and some assorted Uranium tenements in Aus. Currently in trading halt pending the announcement of a REE project acquisition.

A high risk play (especially sovereign-wise) but this looks like a company who is gradually getting their ducks lined up for production within 18 months. Hopefully this latest acquisition is a value adder rather than a willy-nilly elephant hunting expedition.

Dont have my notes on me to give facts and figures, but just thought i'd throw it out there and see if anyone else was eyeing up this stock.


Not quite so high risk anymore Lego Man, GBE already have a good chunk of there forward production on offtake agreements.

Not bad for a market cap @ ~$20m (just 93m shares on issue)

Malawi is probably medium sovereign risk, as there are bigger Uranium companies in there already ;)

[Lego_Man]

Announcement out today - 80% ownership JV on the Machinga Rare Earth project (also in Malawi). Market seems to like it, up 2.5c in early trading.

Looking at Niobium/Tantalum and hopefully a cornucopia of other goodies. A good project to make use of their local expertise/knowledge of geography etc.

I forgot to add - i hold.

[Snapper]

Just been having a look at this company - another announcement out today on the recovering tantulum market and on the effect new US regulations will have on mines in conflict zones, ie Congo, etc. I like the look of their assets (mainly REE) but having a look at their cash burn, currently around $4 million pa they've only got enough cash for another year or so and production is forecast to start in 2013. So it looks likely that they'll have to do another capital raise to continue until then and then there is the production/startup costs.

LegoMan or Shasta, do you have any idea what their cashflow strategy is going to be, capital raise?, joint venture?

[shasta]

Just been having a look at this company - another announcement out today on the recovering tantulum market and on the effect new US regulations will have on mines in conflict zones, ie Congo, etc. I like the look of their assets (mainly REE) but having a look at their cash burn, currently around $4 million pa they've only got enough cash for another year or so and production is forecast to start in 2013. So it looks likely that they'll have to do another capital raise to continue until then and then there is the production/startup costs.

LegoMan or Shasta, do you have any idea what their cashflow strategy is going to be, capital raise?, joint venture?

Snapper, i've been following GBE for a long time & really like the company & its future prospects (my favourite REE play)

Thuthuka paid $US10.6m to acquire a 25% stake in the Niobium project funding 85% of the BFS (GBE share ~$US1.9m), so the BFS is basically full funded, which will make getting project funding a bit easier.

There is a current dispute between GBE & Thuthuka, which will probably delay things by 3-6 months.

GBE already had 45% of forecast production under MoU offtake agreements, which de-risks the project IMO.

Capex costs are estimated to be around $US150m, but i'd add on a 10% contingency, so say $US165m (payback is just over 2 years @ forecast REE pricing).

Thuthuka's share (@ 25%) = ~$US41m, so GBE's contribution will need to be ~$US124m

Given the forecast gross profit margin of ~49% & the short payback timeframe, GBE may well look to finance there share by way of debt, & i think they will achieve this when they secure more offtake agreements. (probably a minimum of 75% under MoU before the banks will lend)

GBE have a tight capital structure & could raise part of the funds via equity, but it would be highly dillutive given the low number of shares & fairly low share price.

I think they would only do a capital raising to cover working costs/over run of BFS costs & funding there other projects.

Disc: Nil

[Snapper]

Thanks for that, Shasta. All sounds good except I remember how much trouble LYC had with its funding and its market cap was about 20 times GBE. Could it be, also, that Thuthuka (whoever they are) have run out of dosh - it seems that GBE is covering their share of the BFS at the moment. I think I need to get a better feel for how they are going to proceed to production before I jump in here.

Cheers

[shasta]

Thanks for that, Shasta. All sounds good except I remember how much trouble LYC had with its funding and its market cap was about 20 times GBE. Could it be, also, that Thuthuka (whoever they are) have run out of dosh - it seems that GBE is covering their share of the BFS at the moment. I think I need to get a better feel for how they are going to proceed to production before I jump in here.

Cheers

A better comparison at roughly the same of stage for GBE is with MAK (progress wise not a metal comparison)

If Thuthuka pull out, then i would imagine a chinese company would be sniffing around, they already have the REE market cornered

GBE's capex is much lower than ARU & LYC, from memory - $US150m isnt a major stumbling block IMO

My biggest worry with GBE, is that they get taken over on the cheap - they have other interesting projects, not just the Niobium!

[shasta]

A better comparison at roughly the same of stage for GBE is with MAK (progress wise not a metal comparison)

If Thuthuka pull out, then i would imagine a chinese company would be sniffing around, they already have the REE market cornered

GBE's capex is much lower than ARU & LYC, from memory - $US150m isnt a major stumbling block IMO

My biggest worry with GBE, is that they get taken over on the cheap - they have other interesting projects, not just the Niobium!

GBE - Maiden Drilling Program - Machinga REE Project

http://www.stocknessmonster.com/news-item?S=GBE&E=ASX&N=499212

This project contains the heavy rare earths which are priced at much higher multiples than the lighter ones

Interesting rare earth + uranium company

Disc: Nil

[shasta]

GBE - Maiden Drilling Program - Machinga REE Project

http://www.stocknessmonster.com/news-item?S=GBE&E=ASX&N=499212

This project contains the heavy rare earths which are priced at much higher multiples than the lighter ones

Interesting rare earth + uranium company

Disc: Nil

GBE - June Quarterly Activites & Cashflow Report

http://www.stocknessmonster.com/news-item?S=GBE&E=ASX&N=499852

Thuthuka dispute resolved & GBE now owns 100% of Kanyika project (previously held 75%)

Another good weekend read, especially as they have other rare earth projects

http://www.stocknessmonster.com/news-item?S=GBE&E=ASX&N=499855

GBE had $2.3m cash on hand @ 30/6/10 (+ $0.6m received after the 30th)

[Lego_Man]

Back on the radar bigtime - they've found REE at their fluorite project at Mount Muambe (i wasnt banking on this). Machinga results havent even come in yet!

They'll need to bring in a strategic partner sooner rather than later i would have thought, with what they've bitten off.

[Aotea]

From what I understand, GBE is onto a winner for one thing...its not just the presence of Heavy REE's, but it is the fraction of them- being on the higher end.


Held GBE since they were 16c, and see a soid future in their HREE tenements.