BERAL, INC.
Andrew Racz
Director of Research
300 East 54 Street, Suite 26C
New York, NY 10022
Phone: (212) 319-6949
Fax: (212) 753-1944
E-mail: mlikar@aol.com

Brilliant Mining Corp.

September 17, 2006

(BMC.V)

Price:  C. $.78

 

 

U.S. $.70

 

 

Note: The company is listed on Tier 1 on the Toronto Venture Exchange (TSX).

As of June 30, 2006

 

Long-term debt


 

 

 

Convertible debenture*

$3,772,727

   
 

Shareholders' equity

$21,512,499

   

*10% coupon

 

Conversion price: C. $1.00

 

The future of Brilliant Mining is complex.
It has a bright future of a nickel mining concern,
but
its financial structure, once simplified, creates unusual
values.

A Vancouver-based company whose main operation is a 25% partnership with a nickel mining entity in Perth, Australia, in fact a public company, in Australia, is in the mining business.

The company was incorporated under the Alberta Business Corporation Act on October 1, 1998 and has its shares listed for trading on the TSX Venture Exchange. In the period ended June 30, 2006, the company acquired all of the issued and outstanding shares of a private Australian company, Donegal Resources Pty. Ltd. Donegal has a 25% interest in the unincorporated Lanfranchi Joint Venture consisting of a producing nickel mine property on an approximately 50km2 geographically continuous mineral tenement package in Western Australia.

Prior to this acquisition, the principal business of the company was the evaluation, acquisition and development of mineral exploration properties. By acquiring Donegal the principal business of the company has changed to the extraction and sale of ore containing nickel.

The company’s nickel production is small in absolute terms but it’s steadily growing as can be projected for the next five years. To put the company in perspective, it has approximately 80,00,000 fully diluted shares outstanding, of which 26,000,000 would mature as tradable shares upon the exercise of various warrants and convertible debt, the table of which is presented below.

Potential Shares Outstanding

June 30         Shares Outstanding

47.5M

Warrants Outstanding

($.69 Exercise Price)

25.7M

Convertible Debentures

4.0M

Options

1.3

 

78.5M

Based on the previous table, the warrant exercise program and the current cash position is approximately $15 million. Accordingly, the current market cap, which is about C. $70 million, is almost 20% backed by the $15 million cash the company would have upon the exercise of all the warrants and convertible debt.

This purely financial information indicates that there is a possibility on pure financial fundamentals that a company is emerging whose book value and cash value is equal to the market price after about 4 successful years. At the same time it is engaged with a powerful partner in the production of nickel, which is projected to bring about $15-20 million profit in fiscal 2007 and $30 million in fiscal 2009.

The financial aspect of the operating business is also very impressive. Preliminary information from Brilliant’s Australian partner and public sources indicate that the partnership delivered approximately 1,208 tons of nickel in the June quarter, which was actually later higher because the month of July had a delivery of 572 tons of nickel. The following table illustrates the big operating leverage and cash flow. Brilliant has a 25% partnership in that production, the structure of which we illustrate in the table below.

Utilizing the monthly figure of June -- 572 tons -- Brilliant receives one-quarter in gross distribution, minus the smelter fee and hedging cost.

Monthly Delivery based on 6,000 tons of Ni metal per year 

500 tons ore*

   $ 8,580,000

OPEX + milling

   $ (2,750,000)

Revenue

   $ 5,830,000

BMC 25% Revenue

   $ 1,450,000

BMC 25% Revenue Annualized**

   $ 17,500,000

BMC 25% Post-hedged Revenue
Annualized***

   $ 6,500,000

* 500 Ore tons delivered x 88% recovery x 65% smelting net fee x $30,000/ton Ni price.

** Pre-hedged revenue.

*** Assuming 75% of production hedged at U.S. $6/lb.

*** Current Hedging Arrangement expires at the end of July '07 production month.

However, it is expected that in the September quarter, the figure would be 1,300 and the following March or May, it could grow to 2,000 quarterly deliveries. The calculation at the 2,000 tons of quarterly delivery indicates a potential gross revenue flow of over $60 million.

Quarterly delivery, effective delivery

2,000 tons x 88 x .65 = 1144 ton

Price

$30,000/t     $34.5M

Monthly tonnage revenue

670 tons

Smelter, milling (40%)

12,000,000 - $9.6M

Total revenues for BMC annual cash flow

$25 Million

25% to Brilliant

6.25M

Annualized to Brilliant

25.0M

Thus, at the over $30,000,000 per ton level, annual income can be about $2.00 per share.

Going back to the balance sheet of Brilliant, and assuming that the following fiscal year 2008 and 2007 would have a delivery rate of $2,000 a quarter, we can create a possibility that in the balance sheet of Brilliant by the end of fiscal 2008, there will be over $75 million cash and by calendar 2008, in December, the figure will be over $175 million.

 

Today

Jan. 2007

Jan., 2008

Dec. 2009

Cash

15

13

12

25

If, however, BMC’s 25% interest in the Australian partnership can be sold (net) of taxes for $100M, we are talking of a potential cash value of $155M.

Let us now examine the future of this company, not only in financial but in operating and macro-economic level. The end of the Cold War began the development of the so-called Communist world and China at a rate that none of the political leaders of the last century have ever envisioned. In a way, we could proudly say that the hidden reserves, the determination and the constructive spirit of the six billion people in this universe have defeated the destructive forces of the 20th century.

The main leaders in this crusade are the working people of China, India, Russia, Indonesia, the Middle East and now perhaps beginning the 600 million African Continent. Three billion new capitalists were born in the Far East and they have created their own demand and their own desire to have steel created to transform their society. See Table 8 on International Steel.

This demand is much greater than the demand for the past. In 1941, Prime Minister Winston Churchill reminded the Japanese that the 100 million steel production of the United States, the 12 million steel production of England is greater than the 7 million steel production of Japan and in a war, Japan will be defeated.

Sixty years later, the world steel production, broken down to some countries, is more than twice as big and it's growing. It is not the space to describe the alternatives or non-alternatives of stainless steel. Today 67 of the nickel production companies satisfy the world's stainless steel demand, and that percentage in the next five years is likely to be well over 70%.

Tight steel market strains supplier-customer relations: with prices going up, the lead times stretching out, supplier-customer relationships are being put to the test. In today's tight market, customers have placed a premium on dependability of supply and honest communication regarding availability and delivery.

The Indian steel industry is poised for massive expansion. The combination of strong consumption, growth, high steel prices and a relatively unexploited iron ore raw material base has already attracted massive investment.

The GPMS-MC global steel market price index appears to have peaked. It stood at 167 in August compared to 193 in July, brought down by weaker raw material and slab prices and strip product prices in Asian and emerging markets. However, we are not forecasting a major slide in the short term. It will hold at or just below current levels through to November.

What we would like to state is that the demand for nickel is unlikely to fall. We can't have an economy satisfying the steel demands of Japan, Russia, India and China--and each of them are growing--without delivering nickel. The production of nickel, if it's assured internationally worldwide at a certain level, creates a basis for nickel mining companies, as their products are automatically taken up. In other words, if you take the existing mines and the growing demand, the first issue any economist will point out is that the price is not going to go down but it's going to go up. If the acquisition of nickel by the steel and other industries is an assured factor, obviously more mining will happen.

It is not a coincidence that when investment advisors and bankers suggest a nickel play, they have the following alternatives. 

  1. Inco (N) - NYSE $76

  2. The LME

  3. 3. The LME mini-contract -- which is cash.

Thursday, September 7, 2006

Positive sentiment supports base metals

LONDON, Sept. 6 (Reuters). Lead was at the front of an advance in a solid day's trading at the London Metal Exchange on Wednesday, dealers said.

While most three-month contracts rose around 2%, led was up 4.7% to a peak for the day of $1.345 per ton, its highest since February.

Traders said buyers were picking up contracts across the board, and the new wave of speculative money that fund managers talked about on Tuesday was still coming into base metals.

"It's the whole complex," a ring dealer said. "The reason behind it is there's buying in the Far East, there's fund buying and there's technical buying."

Lead closed kerb trading at $1.340 per ton, up $55 on Tuesday's kerb.

Copper ended the kerb up 1.5% at $8.040.

Very few publications have pointed out of the emerging new industry, mainly publicly owned nickel companies in Australia, Canada, and South America that can provide an investment alternative for people who want to participate in the popularity and prosperity and the future of the nickel industry.

It so happens that when we look at some of these companies like Brilliant Mining of their partner, Sali Mali Mining Ltd. in Perth, Australia, we find that their respective multiple is unusually low for a solid, steady mining entity. Not only do they represent solid values, but oversized current and definitely potential cash value which hardly accompanies an industry in its early stages. To place Brilliant financial in this picture, we have created an evaluation which we present in the following table.

Potential Value of Brilliant Mining

Current price: U.S. $.70

 

Value
(with interest)

 

Cash (current)

$15M

$20M

 

Calendar 2007 profit

$17M

$20M

 

Calendar 2008 & 2009 profit

Value $25M

 

Value of 25% partnership

  

  +100

   

  

 Total

$165M

  

  

+ interest

$180M

Looking back on comparative thoughts in the investment field, when an industry suddenly emerges and captures from virtually infinitesimal market valuation, stockholders' attention and creates large oversized capital gains, I want to quote two examples.

   4.  In the middle or late 1990s, Amazon and other Internet companies broke into the limelight. Most of the companies were not rich.

   5.  In the middle of the 1960s, Xerox introduced the Copier 914. It was originally estimated to have an unlimited market. Many times between 1964 and 2006, I have seen in describing companies or industries that maybe a Xerox type phenomenon has broken the stock market and the economy. Some worked, some didn’t.

It is for the intelligence and the researchability of the reader to evaluate the figures and the facts we have provided and answer the question himself: Would this new publicly-owned nickel company represent a Xerox type of phenomenon which could make a major difference in any portfolio?

Disclaimer

Information contained herein is based on data obtained from recognized statistical services, issuers reports or communications or other sources believed to be reliable. However, such information has not been verified by us and we do not make any representation to its accuracy or completeness. Any statement non-factual in nature constitutes only current opinions which are subject to change. BERAL INC. or their officers, directors, analysts or employees may have positions in the securities or commodities referred to herein, and may as principal or agent buy and sell such securities or commodities. An employee, analyst, officer or a director of BERAL INC. may serve as a director for companies mentioned in this report. Neither the information nor any comment expressed shall constitute an offer to sell or a solicitation of an offer to buy any securities or commodities mentioned herein. There may be instances when fundamental, technical and competitive opinions may not be in concert. This firm may from time to time perform investment banking or other services for or which investment banking or other businesses from any company mentioned in this report.

 

Archive

Bunker Hunt Article
Posted October 27, 2014

Lamb Realty.
Posted October 15, 2014

Chiquita Brands International
Posted August 20, 2014

Emerson Radio
Posted August 24, 2014

Evercore Partners Inc.
Posted August 5, 2014

Moelis & Co.
Posted July 22, 2014

Torchlight Energy Resources, Inc.
Posted May 21, 2014

Andrew Racz
Posted May 19, 2014

Royal Nickel Corporation
Posted May 02, 2014

Recorded Interview Robert Schermer, CEO
Posted March 15, 2014

Cowen Group, Inc.
Posted March 5, 2014

Pacific Booker Minerals Inc.
Posted February 4, 2014

Sandstorm Gold Ltd
Posted January 24, 2014

Global X Gold Explorer ETF
Posted January 16, 2014

Bring Back Mr. Giuliani
Posted December 24, 2013

Gold Reserve Inc.
Posted October 15, 2013

Premier Diagnostics Health Services Inc.
Posted September 25, 2013

Almaden Minerals
Posted September 3, 2013

Electric Cars In New York City
Posted August 27, 2013

The World Without Gold
Posted July 2, 2013

Remembering Mr. Churchill
Posted June 10, 2013

Financial Transactions in the Digital Age
Posted May 15, 2013

Senator Chester Crandell ( R ) Arizona
Posted May 7, 2013

Explor Resources Exs V
Posted April 14, 2013

The Gathering Storm
Posted April 9, 2013

Vietnam - West of Hong Kong
Posted March 11, 2013

Vietnam – In Peace!
Posted February 26, 2013

Wisdomtree Investments Inc
Posted January 28, 2013

Explor Resources Inc.
Posted November 28, 2012

Oremex Silver Inc.
Posted September 18, 2012

Alphamin Resources Corp.
Posted July 26, 2012

Harvest Natural Resources
Posted July 20, 2012

The Man Who Was Created by Gold
Posted July 06, 2012

Recorded Interview With Zach Erdem, President
Posted June 20, 2012

Nortec Minerals Corp.
Posted May 01, 2012

The Fundamentals of Chesapeake Gold Corporation
Posted April 16, 2012

Jourdan Resources Inc. (JOR.V)
Posted March 20, 2012

THE IMF
Posted February 27, 2012

Gold Index Bonds - To Avoid the Money Traps
Posted February 2, 2012

Monarch Casino & Resort, Inc.
Posted February 01, 2012

QMC Quantum Minerals
Posted january 19, 2012

African Metals Corp.
Posted December 21, 2011

The Crisis That Almost Wasn’t
Posted December 7, 2011

DNI METALS, INC
Posted November 18, 2011

The Crisis That Almost Wasn't
Posted November 15, 2011

Ocean Power Technologies, Inc
Posted October 19, 2011

The Mongolian Economic Miracle
Posted October 12, 2011

H. Hunt
The Son of Bunker Hunt
 
Posted August 24,2011

Sandstorm Gold
(SNDXF - NASDAQ)
Posted August 15, 2011

"Silver At $200
Posted July 29, 2011

"First Majestic Silver Corp
 Posted July 26, 2011

"Interview with Brian Kirwin,
President
American Bonanza Gold Corp"

Posted July 21, 2011

"Interview with Ian Foreman
President
Yale Resources Ltd."

Posted June 16,2011

"Interview with Brandon Mckee
Callinan Mines
By Andrew Racz "

Posted June 1, 2011

"Andrew Thompson Interview Soltoro Ltd."
Posted May 15, 2011

"Great Panther Silver Limited"
Posted March 29, 2011

"The 21st Century's Marshall Plan"
Posted March 17, 2011

"Interview With
Houston Hunt"

Posted February 23, 2011

"Esperanza Resources Corp."
Posted February 23, 2011 

"Douglas Lake Minerals"
Posted January 11, 2011 

"Do not bet against Casablanca"
Posted December 10, 2010 

"Palladium"
Posted December 8, 2010 

"Full Circle"
Posted November 19, 2010 

"REMX - NYSE ARCA - MV.RARE EARTH/STRATEGIC METALS"
Posted November 8, 2010 

SilverCrest Mines, Inc.
Posted October 26, 2010

Cache Exploration, Inc.
Posted October 22, 2010 

Silvore Fox Minerals Corp.
Posted September 29, 2010 

Almaden Minerals, Ltd.
Posted August 16, 2010 

"The Path Of A Hungarian Immigrant"
Posted August 12, 2010 

"Interview With
Mark Hazout -
Silver Dragon Resources
"

Posted June 24, 2010

"Who Owns Whom At The Final Tally"
Posted June 15, 2010 

"The World Needs
Bunker Hunt.
"

Posted May 24, 2010 

"Arafura Resources "
Posted April 15, 2010 

"MF Holdings LTD"
Posted April 7, 2010 

"Quest Uranium Corporation"
Posted April 5, 2010 

"Lynas Corporation, LTD"
Posted March 19, 2010 

"Rare Element Resources LTD"
Posted February 9, 2010 

"Mexco Energy Corporation"
Posted January 4, 2010 

"Claude Resources"
Posted December 16, 2009

"The Silver Spirit"
Posted November 25, 2009 

"... from Casablanca to Monte Carlo."
Posted November 20, 2009 

"Sutter Gold Mining, Inc."
Posted November 16, 2009 

"Whose Friends Are They Anyway?"
Posted November 4, 2009

"U.S. Energy Corporation"
Posted October 28, 2009 

"Harris & Harris"
Posted October 13, 2009


"They Made A Difference"
Posted September 30, 2009 

"Bridge Bancorp, Inc"
Posted September 22, 2009 

"Entree Gold - September 2009"
Posted September 3, 2009 

"Who Lost Mongolia"
Posted August 16, 2009 

"Mongolian Prime Minister Sanj Bayar -
A politician of the 21st century"

Posted July 16, 2009 

"Romios Gold"
Posted July 7, 2009 

"The Grand Alliance"
Posted July 6, 2009 

"Sandstorm Resources, Inc."
Posted June 22, 2009 

"Ireland, Inc."
Posted June 16, 2009 

"The Brave New World! - Gold at $1000"
Posted June 5, 2009 

"Claude Resources, Inc."
Posted May 28, 2009 

"Bullion Management Group"
Posted May 11, 2009

"Golden Hope Mines, Inc. - Retraction"
Posted May 4, 2009 

"Silvercrest Mines, Inc."
Posted April 1, 2009 

"Silver Dragon Resources"
Posted February 27, 2009

"In Gold We Trust"
Posted February 26, 2009

"Entree Gold: An Unusual Asset Accumulation"
Posted February 20, 2009 

"The Ultimate Colorful Fate of Edmond Safra, Bernie Madoff, and Governor Bill Richardson"
Posted January 12, 2009

"Silvermex Resources, LTD"
Posted December 13, 2008 

"Prime Minister of Mongolia"
Posted December 11, 2008 

"US Gold Corporation"
Posted December 1, 2008 

"Rubicon Minerals"
Posted November 5, 2008 

"Gold Coins & The Money Game"
Posted October 29, 2008 

"Gold and the Chinese Millennium"
Posted October 20, 2008

"JNR Resources, Inc."
Posted September 30, 2008

"Three Immigrants In Front Of The Court"
Posted September 24, 2008 

"Governor
Walter J. Hickel Interview"

Posted September 11, 2008

"The Alaskan Queen"
Posted September 9, 2008 

"Evercore Partners, Inc."
Posted September 3, 2008 

"Stalin In The
White House"

Posted September 2, 2008 

"Cal-Maine Foods Inc."
Posted August 4, 2008 

"The Mongolian Revolution"
Posted July 10, 2008 

"Mongolian Newsletter, First Edition"
Posted July 2, 2008 

"Goldsource Mines, Inc."
Posted July 1, 2008

"The Douglas Lake Story In The Age Of Fear"
Posted June 25, 2008 

"Mongolia: The 10th Richest Country in the World"
Posted June 10, 2008 

"North American Gem, Inc."
Posted June 5, 2008 

"The Emergence of Tanzania"
Posted June 4, 2008

"Tanzania - An Up & Coming Mineral & Agricultural Producer In Africa"
Posted June 2, 2008

"Western Potash Corp.
(WPX-VSE) "

Posted May 12, 2008 

"Judy Garland &
The Subprime Crisis"

Posted April 29, 2008 

"Altek Power Corp."
Posted April 27, 2008 

"Letter to Prime Minister of Mongolia"
Posted April 24, 2008 

"The Mongolian Manifesto"
Posted April 4, 2008 

"Prime Minister Sanj Bayar of Mongolia Receives The Nobel Peace Prize"
Posted March 17, 2008 

"Olympus Pacific Minerals, Inc."
Posted February 28, 2008 

"Tanzania Gold - Douglas Lake Minerals - Harp Sangha"
Posted February 21, 2008

"Warren Buffett Receives A Call From Franklin Roosevelt"
Posted February 19, 2008

"Gold At 2000!!"
Posted February 14, 2008

"Entrée Gold, Inc"
Posted February 11, 2008

"The Unexpected
Mongolian Dilemma"

Posted February 2, 2008 

"Mongolian Gold"
Posted January 8, 2008

"Sir, Do Not Abdicate"
Posted December 27, 2007

"No More Munich -
The Mongolian Version of 1938"

Posted December 11, 2007

"Watergate Saved Nixon's Life"
Posted November 28, 2007

"The Mongolian Wakeup Call"
Posted November 16, 2007 

"Sanj Bayar -
The Prime Minister of Mongolia"

Posted November 15, 2007 

"Stalin & Chavez"
Posted November 9, 2007 

"Tagish Lake Gold Corp."
Posted November 1, 2007 

"Gold Indexed Bonds"
Posted October 11, 2007

"Jasper Mining Corporation"
Posted September 27, 2007

"Ghengis Kahn Returns"
Posted September 27, 2007

"Interview with Professor William Pfaffenberger - Torch River Resources"
Posted September 22, 2007 

"Interview with
Jim Davis - President of Leeward Capital Corporation"

Posted September 4, 2007 

"Interview with
David Hjerpe - Newmac Resources, Inc."

Posted August 27, 2007 

"The Age of Special "Corporate" Relationships"
Posted August 23, 2007

"Entrée Gold Inc."
Follow Up Report #1

Posted July 24, 2007

"Aldershot Resources Ltd."
Posted July 16, 2007 

"Portal Resources"
Posted June 12, 2007 

"Ghengis Kahn Was Hungarian"
Posted May 31, 2007

"Bayswater Uranium Corp."
Posted May 30, 2007 

"Brilliant Mining Corp."
Posted May 22, 2007

"Golden Valley Mines, Ltd"
Posted April 21, 2007

"Warren Buffett - Franklin Roosevelt"
Posted March 15, 2007

"Rubicon Minerals Corp."
Posted March 1, 2007

"Robert Friedland -
The Man of The Year"

Posted February 21, 2007

"Lexam Exploration, Inc."
Posted February 11, 2007

"My Father Died In Auschwitz"
Posted January 19, 2007

"WisdomTree Investments, Inc."
Posted December 26, 2006

"Entrée Gold Inc."
Posted December 13, 2006

"Aero Mechanical Services, Ltd"
Posted November 17, 2006

"This Year I"m Voting For Dick Nixon"
Posted November 7, 2006

"Global Options
Group, Inc."

Posted November 1, 2006

"The Arrival of the
Nickel Billionaires"

Posted October 18, 2006

"The Kennedy-Nixon debate revisited"
Posted October 4, 2006

"Brilliant Mining Corp."
Posted September 17, 2006

"A Matter of Reasonable Doubt"
Ken Lay - Enron

Posted August 30, 2006

"Silver Wheaton - SLW"
Posted August 28, 2006 

"Silver In The
Twenty-First Century"

Posted August 16, 2006

"The Age of Mediocrity"
Posted July 19, 2006

"Let There Be Sunshine"
Kirk Kerkorian

Posted July 12, 2006

"Oil & Gas
Energy Crisis Solution"

Posted July 3, 2006

"I Am An Immigrant!"
Posted June 7, 2006

"Northern Star
Mining Corp."

Posted May 19, 2006 

"Gateway Gold:
It"s A Gold Story"

Posted May 15, 2006

"Ken Lay's Legacy"
Posted May 8, 2006

"The Principal Guest Was Missing"
Posted April 25, 2006

"J.P. Morgan Offers Advice To Ken Lay"
Posted April 11, 2006

"Pocketful Of
Miracles"

Posted April 8, 2006 

"Midway Gold
Corporation
"
Posted March 23, 2006 

"Harvest Gold"
Posted March 2, 2006 
 
"Sparton Resources"
Posted March 1, 2006 

"Interview with
Robert McEwen-
U.S. Gold Corporation
"
Posted February 22, 2006 

 
"A Tribute to
Rudy Giuliani
"
Posted February 15, 2006
 
"Your Money Is Not Yours"
-Enron & Martin Siegel, Esq.

Posted February 9, 2006

"Other People"s Money -Enron & Martin Siegel, Esq."
Posted January 28, 2006

"Northern Star Mining"
Posted January 16, 2006 
 
"Sonesta International Hotels Corporation"
Posted December 29, 2005 

"The Currency of Mass Destruction"
Posted December 5, 2005
 
"Bunker Hunt-Silver-China"
Posted November 28, 2005

"50 Relatives Worse Than Yours"
Posted November 14, 2005

"Then And Now"
Posted November 9, 2005 

"The Business of Hungary is Business!"
Posted October 31, 2005

"Mr. Prime Minister"
Posted October 13, 2005
 
"U.S. Gold Corp."
Posted September 29, 2005

"Orezone"
Posted September 23, 2005

"Mr Clarke -
Call In The Boys"

Posted September 12, 2005
 
"A Letter To
President Bush"

Posted September 8, 2005

"Mr. Smith Goes To Hungary"
Posted September 1, 2005
 
"Orko Gold"
Posted August 18, 2005

 "Near Hit"
Posted August 16, 2005

"An African Queen"
Posted August 11, 2005

"1848 and Beyond"
Posted August 4, 2005

 

 

Andrew Racz. 300 East 54 Street, Suite 26C, New York, NY 10022
Phone: (212) 319-6949 Fax: (212) 753-1944. E-mail: mlikar@aol.com

Copyright © 2011 Andrew Racz. All Rights Reserved.

Disclaimer