Member Info for Agricore

1. £40m valuation for Mambare. Some talk of an invitation to visit Korea to agree a MOU and commence offtakes of Direct Shipping Ore. Align discount it by 90% to arrive at a £4m valuation.
2. Align say the WoWo Gap valuation is £3.2m however 890 thousand tonnes of nickel @ $24k/tonne and 66 thousand tonnes of cobalt @ $82k/tonne is $26.8bn worth of resources.
3. Altana partnership will fund energy storage projects; if Corcel pull its finger out and can arrange some then there's project/arrangement fees which it can earn in 2022.
4. Burwell is a "shovel ready" 100MW project (solar and storage) which Corcel own - on the books at £90k. Align reckon it's worth £1m-£2m even at this stage and would be worth circa £40m in 2025 once operational.
5. Demspter - Vanadium 50% owned - on the books at £250k. Worth £1m according to Align.

The 2021 accounts show net assets of £4.5m including the above. If there was a fire sale tomorrow you have to ask yourself would those assets only sell for £4.5m? Or one third less than £4.5m?

I ask this because today's market cap puts the entire business at £3m which seems to be incredibly cheap.

You can't deny the communication has been poor and "suddeness" of Avonmouth Peaker's demise is a disappointment but you have to stop and wonder..... is there a baby in that bath water?

My bad, yes I meant $8.4m

I’ve been reading about what’s driving the demand and supply and I found this article is very interesting and supports a higher tin price from August:
https://www.reuters.com/markets/commodities/high-flying-tin-takes-tumble-tightness-eases-2022-06-17/

FK, there are strict rules about buying shares in "closed periods" i.e. where they are privy to information that could be construed as "insider knowledge". The fact that there are numerous reports and assay results pending is a great illustration of this.

So when you say we can't know the reasons for BOD not purchasing more shares I have to disagree.

GLA

Boohoo, What has changed here is the price of tin: Currently $26,825. This in turn is partly down to increased supply e.g. from Malaysian Smelters have increased tin production 20% and also Tin has followed Copper downwards in the negative sentiment.

Recapping the fundamentals at this new price:
> AISC for 2022 predicted to be: $20,500
> Based on a 800T production year and assuming 6 month average $36,000 and 6 month average $26,000 (so $31k overall) places us on a $10.5k per tonne profit is still $84m EBITDA and growing
> Zero value being attributed to Lithium. Lithium has not dropped in price as of today.
> Zero value being attributed to Tantalum. Ditto on tantalum price.

So in my view ATM price fall is part of the recession despondency and capitulation. Great chance to top up and I've taken that opportunity.

GLA

There were 2bn tonnes of waste generated in 2021
Eqtec reckon they can generate 930KWH per tonne using gasification
If all waste were converted, that's 1860 Terrawatt Hours of electricity
IF every single tonne could be gasified, and IF Eqtec could build an infinite number of plants could it power the world?

Answer: No. But it could generate 7.8% of world demand (2021 demand was just under 24,000 TWH) worth about £360 billion (assuming 20p per Kwh)

Landfill: The cost per tonne in the UK is £98. So assuming the UK government price this to reflect the externality cost, then that's a further £196bn saved, and further assuming that the up to 2 tonnes biochar is a useful commodity worth £75/tonne that's a further up to £150bn generated.
(https://www.parliament.uk/globalassets/documents/post/postpn358-biochar.pdf)

All in all, while my musing is a bit academic and no of course the above won't happen, and the answer is no Eqtec can't power the world, nevertheless I think I've just illustrated how valuable the Eqtec technology actually is. 20p Kwh assumes just electricity whereas liquid fuels of syngas and hydrogen offer enhanced economics. Today's market cap of less than £50m is insane:
Price/Sales 2022: >2, 2023: 1.1, 2024: 0.8, 2025: 0.4
Price/PBT 2022: 100, 2023: 9, 2024: 5, 2025: 2
(Using Longspear's forecast numbers 2022 to 2025)
Today's market is capitulation and despondency - when was the last positive thing you read anywhere? What happens after capitulation? Exactly.

GLA and keep your chins up

Hi Troy,

You were right when you anticipated today's news about Shale drilling. I think it reflects the extreme despondency in the market that there's virtually no reaction or trades in the market to today's news. It's actually a positive sign (the only way is up, as Yazz sang).

Finalisation of the pipeline H2 2023 is later that either of us would like and I had hoped Q4 2022 would be achievable. Nevertheless it is welcome progress. I looked up the pipeline map and there's a much bigger picture than just connecting to Kolkota. The pipeline network stretches right across India and is a national pipeline network.

GLA

You only need to go back a short way to see how the BOD are generating shareholder value. Qbot generated 6p/share last week on the upround for example. Did you miss that?! Generally there's been a severe derating of Biotech which has hit PDS for example. However this has now bottomed and the outlook from PDS phase 2 trials are strong. Biotech is fairly recession proof too!

You can moan about "brazenness" (sic) and "bloated salaries" but I'm pleased with how the BOD are leading the business and the commercial decisions they are making. Just sell up if you don't share that belief.

What I'm disappointed with is that this discounted offering was made to ii's - and private investors were excluded from the raise. I have written to the company to express my disappointment. Assuming you are a PI like me, I suggest you do the same.

Interesting move by IP Group to create an autonomous early stage fund. The idea being this incubator feeds later stage companies into the IP Group main engine once they've reached sufficient maturity. It's a good idea, and I can foresee a renewed emphasis on greentech in the coming months/year. IEA announced this morning we are off target; extreme weather events and food shortages will drive a renewed emphasis for example. On which cheerful note here's an article about Kiko!

https://tech.eu/2022/06/22/ftse-listed-ip-group-spins-out-kiko-ventures-a-new-450-million-climate-tech-fund

GLA

Having talked up the potential of the gas peakers to walk away seems deeply disappointing - and to not monetise it in any way as a "spade ready" project too. They don't mention Tring Road Gas Peaker either - so is that still in play? Not clear.

Otherwise it's of course positive around battery storage and around the offtakes - although to be fair doesn't really reflect any progress does it?

Overall feeling quite disappointed.

My estimate of KZG is:

1. HMS:
a/ Predicted to generate a GP of $300K per month of Zirconium and $225k Coastal Diamonds (@$750/carat)
b/ Walviskop 3.1MT of 62% minerals
c/ Neighbouring Beach 5x the potential i.e. 15.5MT
d/ Building a separation plant would mean 6x Revenue i.e. $1.8m/month gross profit.

2. Inland Diamond Mining
a/ 1000 carats a month @ $250/Carat should generate at least $1m GP/month

3. Tantalum Mining
a/ 3 Tonnes a month (volume is just a guess) at $160/Kg generates around $0.2m GP

4. Bringing it together:
Overheads 2021 were $1m. New appointments and new costs assume this doubles in 2022 ($2m). I've factored in costs of production to each of the above 3 areas.
Gross Profit should be $0.525m + $0.2m + $1m = $1.725m/month
Assume Jan - June we only achieve what revenue we know ($0.24m) plus 6 months ($10.35m) = $10.6m less the admin $2m = $8.6m PBT

This provides a decent run rate to pay for the scoping study and DFS at Great Lakes Graphite which I'd speculate is going to be around $4m. There are small creditors (circa $0.7m) plus notes to the accounts that reveal e.g. Directors deferred fees and a loan from Riverfort stacks up another $0.8m. There's negligible depreciation (maybe $0.2m?). There's bags of warrants too, so there is some dilution.

The good news is even if I'm 3x or 4x too optimistic in my assumptions and let's say it's not $8.6m PBT but just $2m... that will still be adequate to fund the 24-30 months Great Lakes Graphite and to clear creditors and plough back into operations.... And could you reasonably assume if it's $2m PBT in 2022 it grows from there towards $8m+ in 2023+ (e.g. 2nd beach and the separation plant)

I've used the data from the various Align analyses, plus data from the 2021 accounts to try to piece together whether this has legs. What I'd say it comes down to is whether you believe Dennis. What I mean is he would need to be a total idiot to commit to Great Lakes Graphite if the 3 sources of income weren't pretty certain. The lack of comms and updates *IS* disappointing - would've been nice to have had more of a heads up on progress before today. But listening to the interview with Dennis he sounds like.... a man with a plan.

I've topped up today at 0.95p which I think will prove to be a smart move and I can see how KZG could be valued at £15m-£20m based on a PE of 10-13 based on a $2m forecast profit. Which translates to a share price of 2.2p or 70%-120% upside from here - based on what I think are some conservative assumptions.

GLA

The "dawn" is technical validation firstly with Siemens Gamesa (in 2021) and Hyosung (in April 2022). The intense validation and now endorsement by these 2 large players I take as being what will translate over the next 2-3 years into commercial success.

Hi Zebbo, I'm pretty sure Bill said in the last investors call that they'd cashed in the swaptions (at 3X) but then taken out new ones with longer expiry dates.

Bill always talks his book up so recently when he said he expected 0.75% base hike or even 1% (and got 0.75%) strongly suggests that PSH has some swaptions out there benefitting from that hike. :)

Meanwhile we are now on a 35% discount to NAV - i.e. the discount has widened by 5% despite the hidden value of:
1. the swaption
2. the liquidation of PSTH and Netflix which provides liquidity in a market awash with opportunities (we can safely assume PSH are doing something interesting with these funds)
3. Fannie Mae and Freddy Mac are beneficiaries of rate rises.
4. The portfolio are all resilient quality stocks - happy to be holding some key US names that generate lots of cash.
5. Favourable $/£ translation for UK holders

GLA

Wassssss-sup? My fellow supremes!

Been reading about the acquisition and how this is a smart move for supreme.

So here we go. A chart that summarises perfectly why buying a closed system provider is smart:

https://www.bbc.co.uk/news/business-44295336

60% of the market is closed and growing.

Another clever move by our BoD

One interesting fact from the recent CRUX visit to Afritin was they are considering introducing ore sorting during FY23.
https://www.youtube.com/watch?v=K4rcHl-BtXY

This is a first time for a tin mine but some research shows it's used for other metals like titanium, magnesium and gold so no reason why it couldn't work. Anthony claims it can drive 3x to 4x concentration at "very little cost".
https://www.thermofisher.com/blog/mining/opportunities-for-improvement-an-introduction-to-ore-sorting/

Tamesis in their analysis at year end thought the FY23 AISC would be $26,600. Clearly the Q1 results show this to be far too pessimistic.
Hannam meanwhile think an AISC $20,500 is achievable though offer no explanation how they arrive at this estimate.
So I tried to look at ways to calculate what 3x to 4x concentration at "very little cost" would mean in terms of a revised AISC. If it means tin concentrate volumes can triple then this could mean a ~$7000 AISC/tonne. However the world isn't that simple (surely) so I decided Hannam's $20.5k/tonne AISC for the coming 12 months is more realistic.

It does mean profitability improves greatly in FY2023 (y/e 28th Feb 2023): Based on a 750 tonnes of tin, AISC $20,500, Average Selling Price of $36,000, and same overheads as 2022 leads to a GP of $11.6m and EBITDA of some $9m. That's a heck of a result considering.

Perhaps you are missing the obvious: Motivation.

Perhaps Cobre is not sufficiently incentivised by only owning 51% and has said it will focus on its other projects (which it has) which in turn means MTR doesn't get its NSR. Perhaps the reasoning is that better to motivate Cobre and gain on the NSR (at no cost) rather than cling to an asset which isn't generating income? In fact an asset which consumes ongoing cash (which Michael alludes to in the RNS). An asset which lost £0.5m in 2021.

I'd further point out that £1.5m is 25% less than its book value at 31/12/21. Given the ongoing write downs it could be argued that £1.5m is about right - especially too given the depressed valuations to many (all?) miners right now.

Ultimately I agree that we need to hear from MTR and for communication to improve, and I am just speculating. However I would like to think that the sale of KML is following a strategy and the company actually knows what it is doing...... it is a successful and seasoned deal maker and has struck some clever deals (e.g. some of its NSR). Presumably you know that and that's the reason, like me, that you hold shares here? I still believe the patient investor will do very well from MTR. **The long-term fundamentals of copper have not changed**

GLA.

I would disagree that ATM "needs" the price of tin to return to $40k. The progress made on the AISC is significant and further improvements are coming from quite a number of angles:
a/ Recovery improvements
b/ Throughput improvements
c/ Significantly byproduct credits (i.e. Lithium)

"Further Phase 1 plant optimisations and process improvements will drive a reduction in AISC to ~US$20,500/t in FY23. As by-product streams and ore-sorting technology are integrated, this is expected to drive an exceptional, negative AISC of ~US$(5,300)/t on a post by-product basis for the remainder of Phase 1 from FY25E onwards"

It's also true that phase 2 will be transformative however ATM doesn't "need" to accept poor finance terms - it can bide its time if it needs to. That puts it in an extremely strong position. I take Peking's point about rising finance costs and IRR calculations (I cannot find what WACC is being used???) however we are able to use existing cash flow to drive incremental improvement. I'd also point out that the PEA is very conservative. The subsequent drill results are coming in quite a bit higher than the PEA and current prices are higher too. If anything the PEA is a bit of a worst case scenario.

Finally there's no consideration for Brandberg West. This is a further substantial resource belt not wholly dissimilar to Uis. It's "valued" at $0.85m (its purchase price). It's realisable value in today's market is far higher than this so sits on the books as hidden value.

GLA

Today's near 6% rise could be in anticipation of the value of the Swaptions. Although some strong recoveries across most portfolio holdings today too.

Very good read....
Positives:
- Integrated powertrain/invertor/AFT makes a lot of sense - higher value add
- Appointment of David Pates as managing director of its Light-duty e-drive division. David joined from his previous role as the engineering director of Mahle Powertrain Ltd - formerly Cosworth Technology Group (until its acquisition from Audi in 2005). David's industry leading knowledge and expertise has been instrumental in the recent commercial progress.

Negatives:
- Propel's revenue of 1.5m euros equates to around only 250 inboard motors. I have it in my mind that there was a production availability of several thousand (I may have this wrong, and I've reread previous RNSs to try to ascertain this but it would be nice to see a "sell out" and not "unsold inventory" in this proof of concept.
- No mention of the AFT190/Heavy Goods/Buses.
- Scale up will require investment. Are PIs going to be shafted on a discounted offer to IIs?

More questions than answers but positive and look forward to further news in July.

>> This round, which comprised conversion of £762,000 of loan notes (of which £500,000 was provided by NetScientific as announced on 21 December 2021) and £900,000 of new equity, results in the direct equity holding in Q-Bot by NetScientific increasing from 18.3% to 20.6%, in addition to EMVC's Capital Under Advisory representing 16.7%. NetScientific's 20.6% Q-Bot direct stake is valued at £2.77m based on this funding round- a gain of approximately £1.45m in less than one year.

That (paper) gain equates to around a 6p gain on the current share price. Not bad!

Note too ATM's preliminary economic assessment which put Uis at $2.1bn. A PEA is like an estimate of NAV without being substantiated i.e. the execution risk. But if it is already producing tin and proven it can extract lithium how much execution risk remains? I guess you could say the Tantalum module is unproven as yet.

So today's price 6.5p puts the share on a ratio of 0.04 P/NAV or put another way if ATM's share price reflected the NAV value then this would be a ** 50 bagger ** and would trade at around £3.25 a share.