Well, as they say, nobody ever got sacked for taking profits!

I've not traded any out, which goes against the way I usually trade (take some profits on the way up) simply because I think there is an end-game in this which involves some corporate activity: whether a corporate takeover or the friendly participation of a major in the shareholder base, I don't think it really matters, as either will simply point to what we already know, that V.DAN is undervalued. I think it's best to wait for news and let nature take its course. Today's dump and the reasonably strong support of the share price after Arianne's latest announcement last night is perfectly natural, and orderly, and just further illustrates that the share book is witnessing a transfer from those with short term (if profitable) interests to those with a longer term horizon. I would take any close above CAD1.00 today as a very encouraging sign, and so far so good!

On another site, I posted the following. I wanted to tackle the valuation from a discounted cash-flow perspective rather than just throwing out figures per rock in the ground, to illustrate the point.

Courtesy of the Canada Phosphate presentation online, details from the scoping study, some marginal rounding up to keep numbers easy to play with, and assuming CAD = USD:

All-in-cost to produce 1 tonne of concentrate: CAD60
Current Phosphate rock price (Morocco), 70% BPL, contract, f.a.s. Casablanca: CAD155 (World Bank data)
Potential premium for V.DAN 40% concentrate: CAD25 (guess)
All-in-revenue per tonne of V.DAN concentrate: CAD180

Scoping study targets: approx. 2MM tonnes of concentrate per annum; 13 year operation and assumed capital cost of CAD325MM

PV of Net Revenue of CAD240MM per annum for 13 years discounted at 10% is CAD1.7BN
Deduct CAD325MM of capital costs.
NPV of the project therefore is in the order of CAD1.4bn or thereabouts.

Assuming 50MM shares-odd, this works out at close to CAD28 per share.

And as was pointed out earlier, the Canadian Phosphate presentation ignores the titanium contained in the deposit, but states that this could give rise to an additional 20-40% of revenues (and, in my view, possibly A LOT more!).

CAD35-40 per share based on current market conditions does not seem out of the ordinary. And the resource is only going to grow!!

Now granted, these figures look quite fantastic and they clearly ignore the fact if V.DAN were to go to the stage of trying to develop the project and find financing from (a) a mixture of equity raising; (b) project financing and (c) contracted forward deliveries to offtake partners, we may have to deal with considerable dilution as shareholders. In my view, the dilution or consideration assumed by a major may not be as drastic as imaginable this time last year. In this case it would be a function of time (i.e. where the share price would be after the announcement of a positive PFS.

Let's just throw some figures out there for the sake of the argument. I'm an optimist. Let's say V.DAN is trading at CAD2.00 after the announcemtn of a PFS (market cap CAD100MM). Let's assume for simplicity that the project is financed with CAD100MM new equity (51% of the project), CAD125MM debt finance and CAD100mm contracted forwards to offtakers. So now, there are 100MM shares outstanding and the project financing is taken care of. Run the numbers I did above and you still get a massive increase from where we are at the moment.

And who knows what value can be added from the titanium? Remember it will be in the tilings because the P2O5 major will probably not care for it (remains to be seen), so you don't have to attribute any drilling costs to this when it comes to extracting value from it, as it's already "out there".

So whether you take a DCF approach based on the company's scoping studies with updated market prices, or base it on the CVRD Bayovar pricing as per Canada Phosphate's presentation, there is still room to go.

CJ