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Hi Bonker & others
I know a lot more about Malawi now, having read the last corporate presentation and been following the debate around the potential granting of the MDA. I’m reasonably confident it will be signed at some point, usual negotiation bluster. When the balance of win/win for both parties is reached it’s green for go. Sounds a great project, I’m in for the ride.
GLA
There was a lot more detail about Lotus MDA and the terms being agreed. The article, imo, didn't read well for MKA and given the fact it took place just over 3 weeks ago I can't see much movement in the short term. That, and the fact there has been a vacuum of information from the BOD on the MDA - I would have thought the BOD would have been eager to update their shareholders - had there been any material movement in the negotiation's and expected time frame.
Scrap MIne-Refine-Recylce and just go for Recycle -Recycle - Recycle. Then all Management, time and company efforts can drive that forward without this ongoing distraction. (I fully accent this "Distraction" was our Flagship!!!). But luckily the other iron in the fire looks Red HOT.
@ toplocks - at 8p it hardly matters whether the MDA arrives or not :)
I have to second that, as much as I am frustrated with the MDA / Songwe at 8p we are currently undervalued simply on the HyProMag venture so, the as I said before the investment case is still strong
I think MGMT are putting the asset up for sale, hence why there is no rush or sacrifice to hurry up and get to 'production', and personally I think that is that is the best route as I don't believe constructing in Malawi would be a smooth process, both political and financial (inflation and debt issues)
Well we're currently valued precisely 1p above the already marked-to-market valuation of Maginito via Cotec so we're exactly valued at that plus cash-and-a-bit so downside is limited to say the least at 8p.
Dawes did say that the MDA would "unlock money" - you may be right about a sale - FYI and I'm still sticking to this - at the prior high for Neodymium that project is worth the better part of 40p here.
Bonker - when you say 8p is 1p above marked to market valuation how did you get to that?
The notes I have down is:
- The recent conversion of £2m loan into 10.6% Maginito equity values Maginito at £19m (but based on Feb'23 valuation principles)
- Which infers MKA 79.4% holding valued at £15m or at c.6p (but based on Feb'23 valuation principles, see below)
- This £19m Maginito valuation was agreed in Feb'23 and the "live" value must be higher (e.g. purchase of HyproMag Germany, US JV progress, MSP announcement etc)
- The latest Cotec accounts I can see (Q2 Jun'23 accounts) show Maginito valued at cost rather than marked to market
- The market values Cotec at around CAD40m which is is notably higher than it's latest reported NAV (Jun'23 NAV of around CAD26m which includes Maginito but doesn't include the US JV as a separate asset yet)
- On the September Cotec webinar which Julian Treger did, he mentioned that they think the Maginito US JV already has a value which dwarfs the market cap of Cotec (i.e. the CAD40m / around £25m market cap).
- On the October Cotec webinar Julian Treger spoke about the Maginito value on their books requiring revaluation given the developments since the latest valuation was agreed (but I'm not sure how this will be done; perhaps we'll find out in the Q3 Cotec report which last year was released 4 November)
Given Cotec have 5 or 6 assets it's hard to know how Cotec investors are thinking about or valuing Maginito & the US JV. But a good sign that the Cotec market cap is greater than latest reported NAV. Please correct me if I've got anything wrong!
Hey.
Sorry - yes £15m / 6.17p plus whatever's in the bank and down the back of the sofa etc.
All the other stuff is just people talking mate - it's only when money changes hands (marking to market) that you can fix hard numbers against anything - all else is speculation :)
Sort of agree. There's:
1) price of last transaction which is what Cotec currently use in the accounts and what you're referring to
2) what the market values it at. I.e. does the market agree with NAV or does the market apply a discount / premium because of a belief that management has overvalued / undervalued the asset
I would suggest 2 is the most important. Typically for asset managers (which effectively is what Cotec is) you'll see the market applying a discount to NAV. Interestingly the market values Cotec above it's NAV (currently +50% premium vs Jun'23 value of net assets). Clearly Maginito makes up part of that NAV. Don't know how much of the premium (if any) is attributable to Maginito though.
Either way at some stage you'd expect to see Cotec investors interested in MKA given the "cheaper" valuation. I can't see the share price staying at these levels when this all becomes more transparent.
For me one thing which might hold back a re-rate, and very much welcome anyone's view on this, is whether MKA is burning a lot of cash still and will need to raise money again soon. Difficult to know when cash flows from recycling will become positive and cover the corporate costs (and in the first instance if there is significant working capital requirement which will needed to be funded)
This is why getting Songwe over the line is so important, IMO.
The last raise was fundamentally about Songwe. We need to see a tangible return on that.
If we are to have another raise (which seems more likely than not I think), then we need the SP to be far higher than it is now, unless the BOD can secure a raise at a big premium (unlikely in this market).
If no further raise is required, irrespective of Songwe, then it largely becomes a moot point.
Although it would still be a credibility hit to the BOD in such a scenario, IMO.