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#MKA Cleared all moving averages in the daily and weekly chart. 10p should be tested soon, 12p looks possible. I wouldn't be surprised if a positive RNS was released once we reach these levels - it could move the SP even higher. Guy on Twitter been posting some nice charts posted this morning
The structure is in various corporate presentations . The funding deal will depend on the option chosen - I.e. debt / equity / offtake commitment . The latter is very interesting if the US DoJ want to secure supply - i.e . Fund mine production in return for first refusal / discounted supply .
interesting point. I have never fully understood the corporate structure here. can you elaborate on your understanding of how money would flow between mining operations at Songewe and lancaster / mkango
I'd just like to point out that as I understand it the project debt would be repaid out of cashflow at the project level. That is, Lancaster pays the debt repayments before Mkango gets their share of the profits.
A reminder of what he calculated long ago . We have upgraded the resource by 60% since then .
The investment values Songwe Hill at £24.49m – which translates into a share price of 23.3p – remarkably almost exactly the same as our valuation exercise on the previous page calculated.
More significantly however is the option agreement attached to the £12m investment. It stipulates that Noble can increase its stake in Songwe Hill from 49% to 75% by securing all project finance (currently estimated at $216m). If we assume a 4:1 debt to equity ratio for the project, then Noble would be required to put up a further $43m at the project level (or find a partner to assist in this), and also secure $173m in debt finance. Construction would be fully funded, and the mine would enter into production.
Mkango would not be required to inject any further capital into the Songwe Hill project, were the option exercised. Given that the DFS will be fully funded by Noble, it is thus feasible that Mkango will not actually be forced to return to the market for the foreseeable future for further cash. Let us assume Noble exercises the option (and the £12m investment is already good reason to make this assumption): Mkango would have a completely free 25% carry on a REE mine that (using the existing PFS) will be generating – on average across its 18-year mine life – EBITDA of $103m pa on revenues of $162m pa. How would one value a vehicle (namely Mkango) that it appears likely will enjoy £18.5m EBITDA pa for almost two decades, commencing say in early 2021? Crucially that valuation should be based on Mkango’s existing capital structure, save for outstanding options and warrants that are presently ‘in the money’.
Employing a lowly multiple of 6x EBITDA would imply a valuation for Mkango’s 25% free carry in Songwe Hill of £110.8m. The total diluted share capital at the current price amounts to 153.5m. Accordingly, one could argue that were the option to be exercised by Noble to increase its stake in Songwe Hill to 75%, then Mkango could be worth 72.2p per share based on Songwe’s existing economics alone.
Imo someone’s or some are accumulating stock recently. Each time any sellers come and it drops buyers take the stock. This should probably be valued at £20 -£30 million right now give the cash position and low free float and news that out. It will be a PF maker tho imo
It's the directors job to engage with shareholders as well as run the company. Unfortunately a lot of information is missing 'pending updates' on the website and has been for some months, so I suspect your best approach would be to speak to Will via the website.
Larus, I'll do that if I have to, but would prefer directors to get on with running the company rather than spending time providing information which shoud be in the public domain. I'm hoping that someone can point me to some relevent information that's already out there to clarify the situation.
I hope someone can help me understand the financial implications of the last £7m Talaxis investment. The £7m was injected into Lancaster which owns the Songwe licence. This fully funds the completion of the DFS. However, in the recent Crux interview, William Dawes states that some of these funds can be used to cover Mkango G&A costs at top company level. This seems unusual, but if that's what's been agreed, then great. I have to assume that this applies until the completion of the DFS. Then WD goes on to say categorically that they will never need to raise funds or dilute ever again. This slightly contradicts a statement from the June financial report on page 25 which quotes, "While investments by Talaxis are in subsidiaries of Mkango, the Company has agreed with Talaxis that certain expenses of Mkango will be reimbursed by funds held by Lancaster BVI and Maginito in return for Mkango’s management of the subsidiaries. Therefore, the Company expects that funding received from Talaxis, funds received from the exercise of warrants, funds received from the exercise of stock options and from the University of Exeter grant, will be sufficient to fund Mkango’s operations in the near term." Note the "certain expenses" and "near term". To me, near term would indicate to the end of the DFS. Assuming that Talaxis then decide to organise finance for the project, let's say that takes 6 months, we also know that mine construction is estimated at 18 months. So that leaves at least a 2 year period where Mkango have no income. So is WD banking on Talaxis funding Mkango G&A for that period, not to mention the progression of other projects? I'm not invested here (yet), but hope to be in the future.
Good interview from Crux, however, can’t help but conclude that MKA need to try harder to highlight just how much potential there is here so correcting the current SP value disconnect. https://youtu.be/haFgdFiKuSE