Our latest Investing Matters Podcast episode with QuotedData's Edward Marten has just been released. Listen here.
London South East prides itself on its community spirit, and in order to keep the chat section problem free, we ask all members to follow these simple rules. In these rules, we refer to ourselves as "we", "us", "our". The user of the website is referred to as "you" and "your".
By posting on our share chat boards you are agreeing to the following:
The IP address of all posts is recorded to aid in enforcing these conditions. As a user you agree to any information you have entered being stored in a database. You agree that we have the right to remove, edit, move or close any topic or board at any time should we see fit. You agree that we have the right to remove any post without notice. You agree that we have the right to suspend your account without notice.
Please note some users may not behave properly and may post content that is misleading, untrue or offensive.
It is not possible for us to fully monitor all content all of the time but where we have actually received notice of any content that is potentially misleading, untrue, offensive, unlawful, infringes third party rights or is potentially in breach of these terms and conditions, then we will review such content, decide whether to remove it from this website and act accordingly.
Premium Members are members that have a premium subscription with London South East. You can subscribe here.
London South East does not endorse such members, and posts should not be construed as advice and represent the opinions of the authors, not those of London South East Ltd, or its affiliates.
Morning Westie, I had considered cutting my losses on a many occasions with AFC but felt the product the company were developing was strong (and still do) and the hydrogen power market will be huge. It was taking ages to get the tech right and a final product signed off for commercialisation. With no revenue these companies just dilute and dilute to keep the lights on, you see it so often on aim - look at FUM, 20 years on AIM and still no revenue from a product they have developed. Always going to be the next Viagra (and still might be) but painful for investors to sit out. I had bailed on a few stocks prior to AFC and was nursing big losses so I was prepared to change tack and sit it out, though clearly not for long enough. I needed some money at the time which was my catalyst to sell when I did. As you say investors circumstances are all different.
The fundamentals at EML all appear very strong, low cost, high margin, 2 year build to revenue, close to port, no aquifers to contend with, shallow ore body, stable country, huge product requirements, the list is pretty long. Great experience in the management team bodes we’ll too.
I like your analogy of the government kicking themselves in the nuts - eloquently put. All the very best, idg69
Morning Idg - A very interesting read thank you and proves there are companies out there which can make investors a lot of money. I wonder whether you ever considered cutting your losses when you were under water or did you believe in your research and the company fundamentals which obviously came through in the end. Your patience and belief definitely worked to your advantage. I guess that's investing and coupled with human nature, you'll always get some who are less patient than others. I'd never criticise investors from selling as each individual has different circumstances.
I've been in EML for over 4 years with an average of just under 5p. I've been buying since then and now have a substantial investment. So, like you, I remain optimistic for the future prosperity of EML. Yes it's frustrating while the wait for the ESIA goes on, but it'll come. As you say, why would the Moroccan government want to refuse the permit when they're looking to increase substantially their exposure on the world stage. Refusing it would be the equivalent of kicking themselves in the nuts.
I do think we'll see some sort of tie up with OCP, maybe announced at the same time as the permit, quickly followed by funding. At that point it'll be interesting to see what happens to the share price.
Good luck with your investment.
Cheers Westie, I am quite optimistic on this one. I don't like the ESIA delay, it's frustrating, but I can't see the government tanking such a big opportunity whilst they are trying to promote the country as a place to come and do business. Once we have ESIA approval finance will be quick on it's heels, both could be announced together - what a day that would be.
My reason for optimism is, back in 2016 I started investing in AFC at 22p and kept buying more until it bottomed out at just over 3p in April 2019. I ended up with a 9p average and was still 66% down and feeling glum. A little news flow came along and talks of commercialisation and it started to rise and rise some more. I cashed out at 12p with an OK profit having been under water for 3.5 years. It went on to peak at 80p at the end of 2020 from a low of 3.25p and I could have paid my mortgage off with the profit if I'd just been brave and held. It has pulled back significantly to 32p and a MC of 238m today. The financials for AFC are not a patch on what EML could be. We are only at 67m today. My little tale of AFC demonstrates that big gains can happen and in a relatively short space of time and a lot of that was on hype, not solid financial fundamentals which is what we have with EML. I've seen silly gains with lesser businesses so that gives me optimism when it comes to EML. I also think the world markets for Potash are not going to cool anytime soon. I hope my optimism pays off for us all in the coming months/years.
Evening Idg. I do admire you're optimism and indeed I would be over the moon if we saw 50p+ on finance which on present timescales should happen over the next 3/4 months. As i've said before i'm not quite so optimistic. Let's see if we can get back to 10p again and hold double figures.
Thanks for the various replies to my question, many interesting points raised. I've been around for 18 months with EML starting a position at 5.5p. I'm both positive and patient if not a little disappointed we haven't had the ESIA approval (as everyone here is) I've just topped up again around the 7p mark and happy to wait for news. EML are 25% of my current portfolio and happy with this.
With a potential 4bn NAV (based on lower Potash prices than today) I think this will spike to 25-35p on ESIA approval and 50-60p on completion of finance (dependent on equity/debt split). I also think it will then drift back whilst the construction of the plant commences (with a few spikes as off take agreements are announced) before another hike -75p - £1 on completion/production and revenues start rolling in. Who knows we could even see dividends in 3-5 years?
These are just my predictions - would be nice to think
I don't know why you'd try to compare an eye-wateringly expensive nickel laterite project that the entire market knows will not commission on time, budget or commisson without needing further funds, to Khemisset when there are more relevant peers, one of whom has justed started construction and almost 3x EMLs market cap despite being a smaller project. Just saying.
@19:17.
and youre point is?
chisler
You can't compare HZM to us from so many angles.
Imo the sp is dependent on the price further strategic partners are brought in pending esia.
I think funding will be secured relatively easily as this is in Europe's backyard. Hopefully they won't do a hzm on us.
Worth re-reading the latest (March 2022), research note.
" Valuation update. We have updated our model and valuation. Although the Khemisset
project metrics have not changed, we have updated our numbers to reflect pricing and the
inclusion of SOP amongst other changes. Given that Khemisset is nearing construction, we
switch to a blended NAV/EBITDA forward-looking exit valuation approach. Our previous
17.6p/sh estimate of fair value is replaced by two metrics; a pre-production average of
19.9p/sh including funding considerations and a production stage average of 56.3p/sh. We
use $450/t MOP for these numbers and thus the potential upside versus current pricing is
obvious. Thus, we currently see 2.8x upside to the current share price at the pre-production
stage and 8x at a fully ramped up production phase"
https://www.emmersonplc.com/wp-content/uploads/2022/03/Shard-Capital-EML-25-3-2022-R-1.pdf
Hzm - full funding (november anniunced, closed in march), permits (long ago) and its now in construction (3-4 months) Strategic partners were brought in at 7p in November 2021 when market sp was 8.5p. Price dropped to 4.9p over a month from announcing S partners at 7p. Share consolidation 2 months back 20:1.
Share price today is 103p or 5.15p in old Sp.
Surely a major factor in SP projections is the uptake of institutional investors (II's). When/If major risks like the environmental permit and funding are removed (hopefully without too much dilution), you would expect more investment from II's? However, the company will still be loss making until it reaches production so I would imagine this will still put off many.
What would be useful to know is who out here has genuinely invested in an EML like company in the past and been on the full investment journey. Every company is different I know and some have been burnt by Sirius but perhaps some have other stories to tell?
Less than 3 years to full production I recall from investor presentations. I think someone is getting confused with high capital intensity deep shafts projects such as BHPs if talking 5 years+. Just highlights the advantage of Khemisset's near surface, simple resource and proximity to infrastructure. Wanted to add, EML reckons quality juniors should be valued according to peer group, at 30% of NPV at pre-production stage but recognises one prerequisite is attracting quality shareholders to the register.
I'll add to my previous post in that no way was I intending to be negative. I'm probably one of the most positive (maybe wrongly) posters on here. Just looking to be realistic re future sp.
Re producing, I think 5 years is overly pessimistic. More like 3 years in my book.
Yeah still early days. About 5 years away from producing anything but great potential.
GL.
Do t forget its August guys. Come September buying will resume.
Personally don't see Khemisset being owned by EML by the time it reaches production so £1.88 might be academic. As for sp, how it behaves is a function of how its currently rated for the project's status and its attractiveness to the international market. Typically you see a lull during the lengthy permitting phase, which we have here, however compounded by a general market sell off. To me, this sp / mcap will rise into completion of main permit phase, customer offtakes and securing project finance. As the project is built, sp further rises toward commercial operations. Hopefully the rest of 2022 contains all the news investors want and brings international market attention to Khemisset.
I admire your enthusiasm Matador and would love your projections to be correct but i'm not quite so positive. I think the sp until we're into production and making money is in the lap of the Gods. Yes for sure it'll be given an uplift with ESIA/funding but like OOSM I can see a lull during the construction phase. Let's hope i'm wrong anyway!!
I don't disagree with any of what you say. Itll take about three years and will be up and down like a Goth on Prozac.
Spend what you can afford to lose and just wait.
Whilst I don't disagree that the SP will take substantial upward steps under those circumstances Matador78, there is likely to be a an 18 month period after funding where the SP will likely fall back and plateau whilst the mine and processing plant are actually built .
As for the 188p SP, that optimistic projection requires an operational SOP production facility as well, so whilst it is all possible in today's market it is unlikely to be quite that rapid.
One other point is that if a JV with OCP is announced, and it covers more than just an offtake agreement, it is hard to project what value the market might add in with that extra benefit.
ATB & GLA
On ESIA 19p
On funding 46 to 52p
When the Spade hits the dirt..56 to 1.88p
EML currently sat around the 66m market cap mark. Anyone have any predictions as to what the MC will rise to if and when the ESIA approval is received? Then what it could be on agreement of finance package? and finally on mine opening and production/revenue getting underway? Do current shareholders believe we will get taken out before production commences? or will the current BoD take this all the way to production?