Stefan Bernstein explains how the EU/Greenland critical raw materials partnership benefits GreenRoc. Watch the full video here.
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Cheers otemple. Yep, mea culpa time....coincidentally last night I was further researching CAPD's holding in Awale and came to a similar conclusion. Although at one point it appears that CAPD's holding actually increased further to 13.33m shares from the 8.33m I previously noted, in 2021 there was an 8 for 1 share consolidation. So, assuming CAPD even still owned their shares in Awale, the holding would likely be now worth less than £1m anyway. As you say, a shame.
I am however absolutely sure about CAPD's investment in WIA Gold, which keeps rising and is worth almost £8m.
Mark Simpson checked today and had it confirmed we no longer have a holding in Awale, which is a shame
Excellent news Rivaldo. Can’t help but thinking perhaps I should have invested in Awale but of course would not have known about it without Capital. Hopefully one day all this will be reflected in Capital’s share price. I suppose it reflects the problem with investing in small cap aim shares with little institutional interest. I remain positive though given recent market updates.
Wow - Awale surged again in last night's trading - up 100% to $0.8! So CAPD's investment is now worth the best part of £4m....
This was on stunning drilling news (also good for CAPD as the operator) - the CEO's commentary is worth a read!
https://money.tmx.com/quote/ARIC/news/7824050364831601/AwalxE9_Hits_457_gt_Gold_over_32m_at_the_OdiennxE9_Project
"This drill hole is absolutely spectacular. I have been looking at gold projects for the last 20 years and have never seen anything like this. Odienné has produced very high-grade mineralization since we started drilling, though we always felt that some special things would come as we continued our work. The harder we press at Odienné, the more it gives back, and we've only just scratched the surface."
Awale were up another 8% to CAS0.39 last night on yet more successful drilling news. CAPD's holding is now worth £1.9m:
Https://money.tmx.com/quote/ARIC/news/7272985030761629/Awale_Resources_reports_more_significant_assay_results_at_OdiennxC3xA9_project_in_CxC3xB4te_dIvoire
Awale also "now plans to pursue further drilling to explore the shear zone-hosted target's potential", which is more good news for CAPD as the drilling contractor.
And WIA Gold were up 8% to new highs of A$0.82 - this holding is worth a further £7.75m.
Awale and WIA are now worth almost £10m between them.
Plus Allied Gold rose 5% to $3.35.
Awale rose a further 17% on Tuesday and then another 20% overnight to CAD0.36, so CAPD are up another £500k since I last posted on this, and this investment alone is now worth £1.75m.
CAPD just look ridiculously cheap imo. They're on a P/E of 6.2 on conservative forecasts, with around a 3.5% divi, and a fast growth business in MSALabs on top of its other divisions which are growing nicely and diversifying into more risk-friendly geographies. Plus they have a long-term top-notch track record.
A few random points I picked up from today's presentation:
- 2024 is expected to be a "fantastic year"
- they expect to be realising some gains from the investment portfolio "this year"
- some of these may be returned to shareholders
- the Sukari mining fleet could either be redeployed or sold,a nd again it was noted this could involve a return of funds to shareholders
- Kaizenkid elsewhere has noted that the PDI and Sukari proceeds could total $60m
- ARPOR should imprive with the move to the USA
- guidance for MSALabs this year is $50m-$60m revenues, up another 40% at the midpoint
- CAPD are fully provided against any Morila debtors
- forecast growth is almost entirely from existing contracts
- all receivables from 31-60 days old have been received
And Awale's shares climbed another 17% last night to CAD$0.30, so that holding alone's now worth almost £1.5m.
CAPD's holding in Awale Resources looks like becoming another decent-sized holding.
Awale's shares rocketed 42% last night to CAD$0.255 on excellent drilling news.
CAPD hold 8.33m shares per my records, so this is now worth £1.25m.
CAPD are also the drilling contractor at Odienne, so there should be lots more work in the future:
Https://money.tmx.com/quote/ARIC/news/6947909948766115/AwalxE9_Hits_Multiple_Shallow_HighGrade_Intercepts_Including_24_gt_AuEq_over_75_Meters_at_the_OdiennxE9_Project
""We are delighted with these assays from the follow-up program at the BBM target. The mineralization is robust and we have now confirmed plunging high grade mineralization over 500m of strike, which remains open in all directions. The consistently high-grade gold mineralization encountered in multiple drill holes underscores the prospectivity of our exploration area and highlights the substantial value it holds for our Company and stakeholders."
Tamesis have released their post-results update.
They retain their 160p target price, and note that EBITDA, PAT and net debt were all better than expectations.
They forecast 18.7c EPS this year, i.e 14.7p EPS, with "at least" a 3.04p dividend.
Brief extracts - note that they were "taken aback" by the initial share price reaction!
"And there is more to come: management are guiding to a revenue range of $355 - 375m for FY24. If delivered, and we normally get upgrades throughout the year, it will equate to a 17% CAGR since 2021 and we see no reason for this growth not to continue into 2025. As part of the guidance, the company have specifically guided to revenue from the MSALABS business at $50 – 60m, and reiterated their guidance of 21 Chrysos units to be rolled out by 2025 which we estimate will deliver $80m in sales. Capex is guided to $70 – 80m, covering sustaining capex for ongoing fleet as well as their planned expansions in the US and MSALABS.
We show our forecasts below and in the appendix. At the mid point of guidance revenue grows another 15%. We believe EBITDA will reach $98.7m assuming the margin remains at 28%. Cash from operations reaches $104.9m and net debt goes to $76.1m. This will allow management to pay out at least 3.04pps in dividends – currently yielding 3.4%.
Investment Case
The investment case is still centred on diversified and therefore low risk growth. This in turn has been accelerated by the breakthrough technology that is Chrysos which carries very low capital requirements. The engine room drilling business is benefitting from the increasingly large and high quality client base for whom Capital works and finally the mining service operations have the ability to deliver step changes to the P&L. The growth is accompanied by a dividend and an investment business with assets currently worth $47.2m. We believe the company should start to set investment parameters and structure to its investing. This, along with the release of the margins in the MSALABs operation, may encourage the market to apply a SOTP analysis to the valuation which, using our methodology, comes to 157pps."
I don't thin MSLABS could ever be spun out given that Capital Ltd is simply a distributor for Chrysos (also publically listed with very different valuation profile to Capital Ltd) and doesn't own anything.
WIA Gold's share price was up another 10% overnight to 0.075 and to more new highs. So the value of CAPD's investment in WIA has almost doubled since the year end and is now worth over £7m.
Likewise didn't make the presentation this morning so hope to pick it up on youtube at some point.
I am slightly underwhelmed by earnings in today's announcement. Their previous positive words bely what has clearly been a more difficult market this year. EPS is down sharply on last year and unlikely to make a new high next year unless margins improve. Still think they are cheap, but mainly because of MSALabs. Imagine the rating that would get as a standalone business. Surely they need to consider spinning it off to maximise shareholder returns. It is the only growth part of their business currently and such a different beast that I have to question the logic of keeping it in the group. I guess the benefits would be the end to end solution for clients, and presumably the shared industry contacts. But is that enough to justify rating a fast growing business at a P/E of under 8?
JL
Hopefully the LSE presentation will be available later as I was busy and couldn't listen.
One interesting comment from the presentation reported elsewhere (hope DangerCapital doesn't mind me reposting):
"Predictive likely to be taken over post DFS
PDi currently worth $32m to CAPD so this would be a material event"
I don't wish to sound negative on the company (or get into an argument), but using the metrics the company highlighted in their broker consensus forecast RNS yesterday:
Revenue: consensus (318.4) vs actual (318.4)
EBITDA: consensus (89.2) vs actual (91.8)
NPAT (adj): consensus (35.3) vs actual (35.5)
Net debt: consensus (71.7) vs actual (69.8)
don't scream Ahead of Expectations to me.
Operating Profit is up (55.1 vs 60.3), which highlights that underneath all the complex moving parts the company is sensibly managed and is heading in the right direction.
Bodruncie, all the main numbers quoted - PAT, EBITDA, net debt - were some way better than consensus forecasts. I'm not sure what more one can say in respect of being better than expectations!
Good to see the share price bouncing now after the usual ridiculous exiting by short-termers on results days. This always seems to happen with CAPD, but I suppose it does give opportunities to buyers.
I'm really pleased with those world dot maps. Show's how diversified they are. Can anyone explain this interest rate thing? Is that on the debt they hold?
"Ahead of expectations" might be over-egging it, it was more like an "in-line", but I am pleased with the direction of travel.
The newer aspects of the business: the investments, MSALABS, the increased US presence, are all indicators of a future 'ahead of expectations".
CAPD nicely positioning the company for the future.
Results are out - and are significantly ahead of consensus in all respects (except revenues as these have already been disclosed).
PAT is a substantial 9% ahead of consensus.
The core 17.5c historic EPS puts CAPD on far too low a rating, especially given the $47.5m investment portfolio which offsets 2/3 of the debt.
2024 guidance for revenues is a very decent 15% up at the midpoint - this despite Sukari mining services ending halfway through the year.
The tone of the outlook is extremely positive about "maintaining the growth momentum".
MSALabs is forecast to bring in $55m revenues this year at the midpoint - 43% up on last year.
And there's news of a new contract win "from Allied Gold Corporation for a grade control drilling services contract across its Cote d'Ivoire complex".
You can register to watch CAPD's post-results LSE presentation at 9.00 am tomorrow. Which I assume means the 2023 results will be tomorrow morning (following the positive year end trading update).
Broker consensus is usefully noted in today's RNS - pretty handy against a £175m m/cap and with an additional $50m or so of quoted investments in hand:
Https://uk.advfn.com/stock-market/london/capital-CAPD/share-news/Capital-Limited-FY-2023-London-Stock-Exchange-Presentation/93478501
"Capital Limited consensus summary - 14th March 2024: Below is a company compiled consensus summary, reflecting the estimates of our covering analysts. Analysts include Peel Hunt, Stifel, Canaccord Genuity and Tamesis.
FY23 Consensus ($m)
Revenue 318.4
EBITDA (adjusted for IFRS 16 leases) 89.2
Operating profit 55.1
Net profit after tax (Adjusted for investment gain/(loss) 35.3
Net Debt 71.7"
As ever, very much appreciate the updates rivaldo. Tend to take no notice of broker target prices although do track upgrades/downgrades and their forecasts really are useful when it comes to highlighting new events / unexpected changes which may otherwise go under the radar (at least my radar!)
Perhaps, given the revival of the commodity sector this week, the latest forecast is already out of date.
Tamesis Partners appear to have raised their 2023 forecasts recently, and before next week's results.
Comparing today's note to their last detailed note on October 18th they now forecast:
19.8c EPS (previously 18.5c EPS)
$37.8m PAT (previously $35.5m)
That's now 15.6p EPS for a historic P/E at 89.9p of just 5.8.
Plus an EV/EBITDA of only 2.8 and 37.9c operating cashflow per share.
And around a $50m portfolio of investments to further back up tangible NAV and offset borrowings.
Tamesis retain their 160p target price.
The gold price has surged above $2,115 this morning.
And two of CAPD's larger investee companies saw good overnight price rises:
- PDI rose 7% to A$0.23 and are near all-time highs (CAPD's holding is worth £23.5m)
- WIA Gold rose 24% to A$0.063 (CAPD's holding is worth £6m)
The gold price is now above a noteworthy $2,080, which should encourage further sector investment, thus benefiting CAPD.
Also, an interesting RNS from Intertek this morning. They've acquired Base Met Labs, a minerals testing business with a focus on gold, copper and other critical metals. No consideration was disclosed, and Base is relarively small with £7.8m turnover, but Intertek make positive noises about the sector as follows, which should reflect well on the prospects for MSALabs and Chrysos:
"André Lacroix, Chief Executive Officer of Intertek, said: "There is no doubt that, with a growing population and the rise in demand for raw materials, the requirement for leading ATIC solutions at every stage of the minerals and mining supply chain globally is increasing rapidly."
Good to see the share price inching up a little to the current 88p bid.
Nice coverage here about MSALabs helping define "the world’s largest rare earth metal deposit":
Https://www.mining.com/joint-venture/jv-article-msalabs-probes-global-expansion-after-swedish-mega-find/
Extracts:
"Now, MSALABS is turning to expansion in North America where it has a $145 million, five-year contract with the world’s largest gold producer, the Nevada Gold Complex run by Barrick Gold (TSX: ABX; NYSE: ABX) and Newmont (NYSE: NEM; TSX: NGT). The analysis company is promoting a centralized lab concept there for geologists to reduce turnaround time and save money. It will use three PhotonAssay units to serve the site’s 12 open-pit and 10 underground mines.
PhotonAssay
MSALABS, whose global customer roster also includes Teck Resources (TSX: TECK.A/TECK.B; NYSE: TECK), Hecla Mining (NYSE: HL) and Kinross Gold (TSX: K; NYSE: KGC), was the first to offer the patented PhotonAssay analysis in Africa and Canada. It is rapid and more precise than the traditional fire assay process where there’s risk of contamination and gold loss."
"MSALABS began using PhotonAssay at Barrick’s Bulyanhulu gold mine in Tanzania in 2021. It has installed nine units across operations in Canada and Africa and intends to deploy 21 units globally by next year, making it by far the largest provider of the technology. Barrick is replacing its fire assay setups globally with 11 PhotonAssay units under agreement with MSALABS."
"It has a global network of 27 laboratories in key mining regions including Canada, the United States, Latin America, Africa and Europe. Other clients include Canada’s largest gold producer, Agnico Eagle Mines (TSX: AEM; NYSE: AEM), Victoria Gold (TSXV: GCX), the Yukon’s only gold producer, and successful East Coast explorer New Found Gold (TSXV: NFG; NYSE-AM: NFGC).
Labs can also be found at Barrick’s Kibali gold mine in the Democratic Republic of Congo, Kinross’ Tasiast gold mine in Mauritania and Shanta Gold’s (LSE: SHG) Singida gold mine in Tanzania.
MSALABS has recently completed its newest laboratory in Marsa Alam, Egypt, supporting the renaissance of the Egyptian mining industry. The next facility will be just on the other side of the Arabian Nubian shield at the Jabal Sayid mine, a joint venture by Saudi state mining company Ma’aden and Barrick."