RE: ATM2 Aug 2019 12:23
I think the tin price is largely irrelevant at the moment given the puny amounts being produced currently, a 10% fall would certainly dent the SP if in full production but not at the moment. I believe the lack of buying is down to most PIs (mainly BMN holders) are buying as much BMN as they can at the moment and the uncertainty over the future share dilution on stage 2 fund raising..
There is obviously a general negative mood surrounding most miners given the global uncertainty and ongoing trade war (which nobody wins but dents China’s growth in the short term).. Junior miners requiring funding to grow, like ATM, are therefore going to suffer even more. I genuinely expected the SP to be around 5p by now so this is very undervalued imho. But, the low SP has a further knock on, it potentially increases shareholder dilution on a fund raise. A double whammy..
When ATM are producing 10k tons and have their own smelting plant, as planned, in the next 4/5 years I reckon the MC will be around 500M, so with 1B shares around 50p. (With an assumed £5k profit per tonne) For those who remember this has been my view since last year. Therefore if the dilution increases the number of shares to say 1.5B then this SP target falls to 33p. I am still happy with a very likely 10 bagger over 4/5 years in my portfolio, although a 15 bagger would be even better!
I have a very nice holding here and will probably add once the stage 2 fund raising has been finalized and the dilution is known. In the meantime this is a buy and hold play as part of a diversified portfolio, not a get rich quick punt..
All in my opinion and using assumptions that others are free to believe or ignore GLA
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