Gordon Stein, CFO of CleanTech Lithium, explains why CTL acquired the 23 Laguna Verde licenses. Watch the video 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.
I always felt this business would have defensive qualities. I do hope that it is borne out.
The previous repeat business is indeed encouraging. One would hope any new clients 'forced' towards KP Fertil would be retained.
One final point on that. I have heard the criticisms of the HMI product and its performance in comparison to established imported fertilizers and i remain open minded.
The company has reported a high rate of repeat business, which is encouraging, be it price or performance led.
What is important to recognise here, is that this Covid outbreak has and will go on to demonstrate, just how reliant countries are on international supply chains and how easily they can be removed, when those countries supplying to them, run into trouble.
So there is a strong case for countries whose key industries (such as agriculture is to Brazil), are so reliant on imports, revisiting this set up and beginning to look inwardly/locally, to find a means to avoid such reliance in the future.
HMI as a local supplier in the heartland of said agriculture, is a prime example of a company that would gain from such a move.
@f15jcm Indeed but first and foremost this is about demand and sales. HMI is already able to demonstrate itself to be considerably cheaper than imported fertilisers. The problem to date has been proof of concept through implementation by customers and the time needed to achieve that.
We are now one year further down the road with a much wider customer base, in a market where those sitting on the fence, are now staring a +20% increase in import costs due to the deterioration of the Real.
I don't see that situation improving for the foreseeable future. This is compounded by the fact that we are now just 1 month away from the main buying season starting for coffee and sugar cane, with other such as soybean to follow shortly afterwards.
Some farmers may still see imported fertilizer as their preferred option but can they now afford it or are the benefits still there, at such elevated prices. Further interruptions to the supply chain will further compound price increases as more customers fight for less supply.
HMI is local and available. Their only problem is staying in production, which is an unknown to date but as I said earlier, if farmers cannot obtain fertilizer when they need it, then local supply may be deemed critical for the economy.
Its a theory more than anything else but as investors seek out companies that are directly linked to the cure for Covid, the smarter longer term move, may well be to seek out those companies that feed the most critical supply chains of all, our food lines.
Finally, Brazil has been slow to react to the Covid outbreak and may well pay dearly for this but one thing is for certain, their president will fight the shutting down of industry critical to the economy, with everything he has. So HMI's chances of at least supplying stock piled material through this, is higher than in a great many other countries.
Plus at the end of the day, it isn't difficult to mine or indeed to process. So at a time like this, they could be being presented with a golden opportunity, which if nothing else will help them get their product more widely known.
So yes exchange rates into pounds etc is also important but first and foremost this is about sales and they could receive a real boost from the Real and perhaps Covid itself.
Fair and balanced commentary, BBN. Glad to see some of the sales team have been given the boot, they were clearly terrible.
Weakness in the Real cuts both ways, it buys less GBP/AUD
(2 of 2)
I am by no means attempting to say that HMI is the best stock since sliced bread or that they management team are perfect or haven't made mistakes.
However, what is also not deserved is the current valuation.
If HMI was sitting at £10-12m in value, I would be saying its cheap but its understandable why. Prove yourselves please by achieving it, then lets see what happens.
However, at £6m, the business isn't being accepted as break even on its business. It is barely being accpeted as having its cash in the bank and is certainly being ignored for what it has cost to set the mine up, push it through its various permits and feasibility studies etc. I accept that further investment in the mine, storage etc sits outside this break even and so taints the numbers and that affects their standing in the investment community.
However, said investments also add value. In addition, they demonstrate that HMI sees the future sales that it so often avoids commenting upon. If not, then why do it to yourselves? Its not bravado or sticking their head in the sand. 2019 has proven that the existing facilities can handle 50,000 tons. So if the future bigger sales aren't there, then why expend monies that push you closer to having to raise cash, when you don't need too. Again more signals.
It may well take this year to demonstrate that the business is achieving what they indicate they are going to. Even longer if Covid has an influence. Whatever the case, I see far more value here than the current valuation, such that I have even added today.
If they get it even half right or better still deliver even more due to the influence of Covid on imports and their prices, then today's valuation is a fraction of the true value, such that the wait for me will be worth it.
(1 of 2)
Long term holder here who post 29th March 2019 Interims results, decided to give the company a chance to see their plans through before judging fully.
Whether investors like it or not, HMI is tainted by the strong perception that management is bending the truth for their own gains. That they are simply taking a pay packet and perhaps running some sort of lifestyle company. This is driven by what is the biggest issue here, a lack of forward guidance and forecasting.
This view point has become so strong that all evidence to the contrary has effectively been ignored by the market, however much it has mounted up.
One clear example of this is today's update. There the company has reported a 150% YoY increase in sales up the end of Feb. Some will ask why can't they forecast this out to future revenues? Well whilst that may have been appropriate before, it is now unfortunately inappropriate given the true impact of Covid on the world, at this time, is unknown.
Whilst the first 2 months of the year are assumed to be the lowest sales months, all the company can do right now is better what they have experienced to date. A 150% increase in sales, however low they were previously, is worthy of note and should be a signal for things to come.
A simple add/subtract of the previous H1/H2 2019 figures (Note HMI changed their reporting date), shows HMI achieved c. AUD $580,000 H1 2019 sales, which at the then US$ exchange of $0.70 = $405,800.
At the reported $50 sale price, that equates to c. 8,116 tons.
We don't know how many of those tons were sold in Jan/Feb. However, it is also important to recognise that whilst the bigger markets of coffee, soybeans and sugar cane, are May to Oct, there are still some crops that are purchased in the earlier months of the year. See slide 10 below.
http://www.harvestminerals.net/media/1316/hmi-presentation-q3-2019.pdf
Now it would be wonderful if HMI could release a YoY update every couple of months, so that investors could get a better feel for how things are developing. However, progress in my eyes is clearly being made.
If they can maintain even half of that progress through to the end of June, they will be running at 20,000 tons prior to the really big trading months.
On the lifestyle side of things, I am encouraged by the decision not to issue performance shares. I have seen bigger companies push these through on worst performances. I am also encouraged by the US$400,000 in cost savings.
This year it is likely c. 45,000 tons (savings instigated post start of year).
So the signals are there that HMI can better 2019, if they can maintain production and sales.
My feeling is the vast majority of businesses will be affected by Covid. However, the indicators on imports being affected and more expensive, lends itself to HMI being encouraged to maintain supply, particularly if they can stockpile ahead of Summer.