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Thanks for the stab at a NAV valuation. From this morning’s RNS, we have an update on MTR’s assessment of the values of their Cobre stake:
“As at 26 August, Cobre’s share price closed at A$0.565 meaning that post completion of the fundraising in which Metal Tiger maintained its pro-rata position the value of Metal Tiger’s investment is A$25.2 million”. That’s around GBP £14.8m by my reckoning. Adds another £1.3m to the valuation you complied.
Great post and spot in about the warrants.
In the interest of accuracy. 2.8m of those SFR are part of the collar facility and we have the loan, so SFR equity contribution is a fair bit less. Irregardless MTR is being materially undervalued by the market at present. And it’s not undervalued on hope of an exploration hit but on actual figures. SFR NSR will be producing revenue this time next year, the year after the at we could see a second mine being developed. And if CBE have hit true copper then get ready, ideal scenario as I have always maintained is we get a non SFR entity to take them out and move into the KCB. Pretty much all of it covered by our company making asset the NSR. ATB.
At today's prices:
1. Sandfire AUD$4.85 x 7.36m shares = £20.87m
2. Cobre AUD$0.52 x 44.57m shares = £13.55m
3. Other holdings = £6m approx*
= £40.42m ( vs UK MTR market cap of £30.5m!)
Interesting too that the bid offer of Ozzie MTR is $0.39 - $0.43 so even at the bid price that's equivalent to 22.8p
https://www2.asx.com.au/markets/company/mtr
Couple of things to add:
1. I don't see that the deferred income through NSRs (royalties) are being factored in anywhere to the monthly NAV. The ASX's monthly NAV is simply a 1 liner so doesn't substantiate anything. In the 2021 accounts the Sandfire A4/T3 is valued at £10.5m (6p a share). There has been drilling since 31/12/21 so this could revise higher. Moreover any future drilling in scope will also come under the NSR - it's uncapped.
2. There is a new NSR for Cobre not included in the above numbers.
3. * There are other holdings worth £6m (based on 31/12/21 valuation plus holdings listed as purchased post period in the 31/12/21 accounts but excluding Cobre/Kalahari/Sandfire). What I've realised this evening is that the majority of these are warrant holdings. What this means is you hold the right to buy a share. So if it tanks, so what, you don't own it. If it "does a Cobre" then you can buy it at a "pre-agreed" price. So the £6m imputed value doesn't really reflect the potential value. I guess one way to describe it is if half of the warrant holdings double and the other half go bust you've not broken even you've made a very tidy sum.
So I'm getting to 30p/share NAV where there's at least 3 reasons why it shouldn't "just" be 30p.
MTR's H1 report should be out by 31st August. It will be a very interesting read.
GLA
NTA at 31st July was 17.8p. CBE value has gone up around 500% since then. NTA for August will show a big increase.
Our 2% SFR NSR covers a mine which will be producing this time next year, itcovers an insane area that will IMO have multiple mines in the not to distance future. Will KS give us some information on A1? As per Steph sat images they are drilling methodically, they are doing this for a reason.
And then we have a second NSR over the KML land package - ideal scenario of Cobre get taken out by a third party (not Sandfire) and the KCB starts getting seriously explored.
And BOTH these NSRs are currently being valued by the market…. As negative. Hilarious.
or approx half our MC. If our SFR shares are worth £9m as Taylot posted earlier, those 2 holdings alone account for around 80% of our MC. I don't know how much all the rest, inc cash, amount to but perhaps someone can hazard a guess. We must be trading at a healthy discount to NAV surely and if Cobre continues to fly.... Perhaps another IC article is called for.
So, half our current MCAP then
According to the Cobre placing RNS, Metal Tiger has 44.57m shares in Cobre. So at A$0.61 that's over A$27m, or £15.8m.
I calculate there's currently a value of £12.8m for Cobre.
That's AUD61c per share and 165m shares = AUD$100m (or £58.3m at 1.73 FX rate). MTR holds 22% of Core so holds £12.8m.
Each further 10% rise in Cobre from here would be £1.3m or 4.3% of MTR's £30m NAV worth about 1.3p NAV/MTR share
Obviously that excludes the 2% NSR royalty or loan to Kalahari which aren't affected by share price changes.
Our Net Tangible Assets were £30 million (17.8p) on the 31st July 2022. I think this should now be around £38 million with the increase in Cobre, so around 22.5p a share or 35% increase from current share price. The NTA only assigns partial value to things like the A4 royalty, which will remain discounted until SFR publish the Motheo Expansion Case DFS (due next month) and the revenue streams can be calculated with more certainty.
MTR seems a relatively safe way to get exposure to exploration success in the Kalahari (through SFR and CBE), without much downside risk, as we don't need to raise capital and our market cap is fully underpinned by liquid assets. Our operating costs are also covered by the SFR dividend.
Hoping the share price will react more positively over the next 12 months!
Cobre's MCAP is currently $90 million AUD - or approximately £50 million.
MTR own 21%, so approximately £10 million
How do you come to 30%? I just took your 10million valuation, and took 20% of it, giving 2million. A positive position for once.
10%… more like 30%!!!!
Cobre up 20% again today, this is nearly 10% of our valuation. At some stage our discount will be recognised. How about another push from investors chronicle! An easy 30% is in order!
***Following these disposals, Metal Tiger is interested in 7,057,057 Sandfire Shares representing approximately 1.72% of Sandfire’s issued share capital. As previously announced, 2,842,667 of the Sandfire Shares held by the Company are subject to an equity derivative financing arrangement with a global investment bank.
Metal Tiger will use the partial proceeds of these sales on settlement to pre-pay circa A$1,370,000 against the outstanding loan principal of A$7.46m owed to a nominee of SC Lowry Primary Investments Ltd (the “Margin Lending Facility”), reducing the principal amounts owed by the Company in respect of the Margin Lending Facility to circa A$6,158,000 (excluding interest accrued).***
MTR current market cap is £27m.
-SFR - 4.2m shares (total holding minus collar facility) at A$5ps and subtracting the loan figure SFR equity is worth A$15m, so approx £9m.
-CBE worth approx £10m
-Various other equity positions - let’s say £5m (total guess)
-Cash.
T3/A4 WILL be in production next year and the royalty will be rolling in. SFR look to be proving up a resource at A1 and lots of rumours of a hit north of Ghanzi (can’t recall the target number) NSR will prove to be worth multiples of current MC IMO. And remember should CBE get taken out MTR retain its NSR over the ground there aswell!!!!
Anyone really think MTR is being valued correctly?? I’ll be buying more today.
There's also the 1.3 mil us dollsr loan
To kml which is now guaranteed by cobre
At 7%
I don't have access to the IC article :(
I think I can answer your questions though, 1) MTR do publish a monthly NAV (NTA)! It is an ASX listing requirement so they appear in ASX announcements (see https://www2.asx.com.au/markets/company/MTR) but don't make it to AIM RNSs. If you go back to June you will find an announcement with NTA of 20.7 pence. 2) As noted in the NTA announcements, the methodology for this valuation is given in the Annual Report (see 31st March 2022 announcement). Without going into too much detail, the Sandfire share price is a big factor for the MTR valuation (as you have highlighted) but the other big one is the value of the royalties. I expect both to increase significantly!
On the matter of the KML sale to CBE, generally I do think it was a good move to free MTR from future investment liabilities. The second half of the deal is also to be paid as £750k cash or in CBE shares at the 90 day VWAP. Quite what the share price will be after CBE give shareholder approval (hopefully!) I don't know but presumably CBE won't want to spend cash when they can issue shares so we might get some more cheap shares to pass on.
Hi all, was re-reading Investor's Chronicle where ST asserts the current NTAV is 20.7p (and MTR traded at the time at a 40% discount to that).
https://www.investorschronicle.co.uk/ideas/2022/06/20/bargain-shares-exploiting-a-valuation-disconnect/
Does anyone know how he arrives at this? I ask because the last accounts 31/12/21 the NAV was 22.9p (£33.8m) and intangible assets were sub £50k (split between some software and a project intangible). That takes me to 22.8p at best.
I'm not aware MTR publish a monthly NAV (don't laugh at my rhetorical question please) unless he's made a calculation based on movements in 2022? Hang on. Weasel words. Rather than using the usual (!) words of "Discount to NAV" he's says the NTAV is 40% higher than market cap - so a 40% mark up is a 30% margin. I'm assuming the use of NTAV rather than NAV is just a typo.
Just been trying to recalculate NAV based on events in 2022: (maybe that's what he did?)
-£0.5m loss on the Kalahari sale (albeit plus the future 2% NSR which could be substantial).
-£0.4m Armada
+£1.1m Value of unclaimed Armada Warrants ($0.80-$0.33)
+£5.3m gain on value of Cobre
-£7.5m loss on value of Sandfire
+£0.1m dividend from Sandfire
-£0.5m loss on value of Southern
= -£2.4m total (NB I haven't recalculated the smaller holdings)
Revised NAV as at 18th August £31.4m or based on 169m shares an 18.5p NAV per share. So share price is a revised 13.5% discount to NAV. Out of interest I now wonder whether ST did a similar recalculation and looking at Sandfire being 60c higher yes he might have. Does anyone have a view of the future for Sandfire? If it returned to it's year end value the NAV per share would leap to £38.9m which is back to a NAV of 23p/share. The sharp eyed would say ah ha back to the 31/12/21 NAV ..... we seem to now have 9 million more shares in issue than in December 21. (160m 31/12/21 and 169m today)
Bit of a ramble, sorry, but just trying to square up this one in my head. Have I missed anything of substance?
GLA