Member Info for Agricore

1a. Vietnam 3MW Solar - producing initial $0.06m EBITDA in Q4 ’22 (and $0.26m EBITDA p.a. thereafter)
1b. Wider 150MW Solar opportunity in Vietnam and install plan is 3MW each quarter so approximately 12MW new capacity/year. Each 3MW is $1.9m capital cost amortised over 30 years and $0.32m revenue. Rates and revenue are locked on a 25 year PPA agreement.
2023 EBITDA could be $0.78m. 2024 EBITDA $1.82m. 2025 EBITDA $2.86m

2. 15% ownership in Duyung, one of Indonesia’s largest discovered gas fields, pending Gas Sales Agreement in H2 ’22 & Final Investment Decision in H1 ’23 +
Incredible project economics of 51% IRR. NPV10 of $87m
2025-20233 EBITDA could be $11m per annum. Because this will be 75%+ debt funded maybe $8.1m PBT to Coro)

3. Sale of Italian assets comprising:
- €0.3m cash down payment for option "right to buy"
- €5.7m cash sale for Italian assets
- up to €1.5 million paid over 3yrs after disposal
- c.€0.5m EBITDA per month until disposal (assumed 5 months)
= Totals €10m value
(However there's $8.25m hidden value I've spotted in that the Rehabilitation Provisions for Italy would also transfer to the new owners. There was $7.59m of provisions in the 2021 accounts relating Italy and the net assets were actually minus $0.66m).

4. Phillipines - Coro’s 80%-owned - two development stage renewables projects – a 100MW solar project (Q1 2023) and a 100MW wind project (Q3 2023) from ready-to-build status (i.e. ready to begin building). Capital for solar is $100m and 6 months build. 20% IRR. Wind capital is $173m. 20% IRR.
Solar 2024 (onwards) EBITDA $16.66m (because this will be 75%+ debt funded maybe $7.2m PBT to Coro)
Wind 2025 (onwards) EBITDA $28.84m (because this will be 75%+ debt funded maybe $12.8m PBT to Coro)

5. No value ascribed to Ion Ventures (21% owned)

6. Last reported cash position was $2.8m (~£2.3m) on 12th April 2022 (per the 2021 accounts)
But regardless of the cash position, the way this needs to be valued is on a Price Earnings basis in my view. Using a 2025 PE then assuming a generous admin/corporate overhead of $5m/year then I arrive at an annualised profit PBT of $28.86 or £25.10m. Assuming a PE of 10 (£251m) but risking by 50% I arrive at a fair value of £125.5m or a 20 bagger from here compared to the current Market Cap of £6.3 million.
Align feel it is "only" worth a quarter of this at 1.5p/share (merely a 5 bagger) although it's not clear how they arrive at their valuation. (The Vietnam profitability they quote as being worth £3m per annum which assumes the full 150GW is deployed. In reality the roll out will take a number of years)

It could be a 40 bagger if you remove my risking. GLA.

Technicals are showing a bullish harami which is a buy signal today.
I base my investments predominantly on fundamentals, but technicals are always a nice to know.

Reading the recent analysis around TEK I don't see that anyone has really cottoned on to the idea that even while the portfolio grows and progresses (from a NAV point of view) that the relative value has grown a further 10%. What I mean by relative value is the fact that the FX rate of $/£ has dropped to from 1.33 to 1.15 and potentially will fall to near parity. This will be a further 10%. BELL, LUCY, Guident and Salarius are almost all US denominated assets. Their relative value have grown 20% due to the USD strengthening.... you get more GBP per $. So a NAV of 55p by year end isn't unrealistic even without further commercial progress (which will happen also).

GLA

Gerry, At the time of your message it's below not above 10% yield (on 2022 dividends). But v.close and today's closer still, 9.9% yield by my reckoning. 10.4% based on the forecast 2023 dividend yield.

Also of interest is its 32.6% discount to NAV, and reduced P/NAV of 0.66 which places it below almost all its peers.

Looking back to 2020 there was a drop in fair value of 7% (£54.8m). Will that happen again (or worse) in 2022/2023? It seems to me there's several key differences.
1/ Deflationary environment like 2020? Not at all!
But its major cost is fixed! RGL's 40% gearing is either hedged or fixed at 3.4% which is well below inflation (and reversionary yields crucially).
2/ RGL strategy of targetting high quality offices with a EPC of B+ (and refurbishing or disposing those below) gives RGL a degree of safety, even in a more challenging market. This is an "in progress" goal.
3/ Certainly the discount is far above the falls seen in 2020 when arguably when a "You must work from home, if you can" mantra was a death knell to RGL compared to a 2022/2023 if you work from the office you don't have to pay to heat your home. Seems to me either hybrid or 100% office working is the direction for many people.
4/ With technicals you can argue for 64p (although the last technical signal is a bullish piercing line).
5/ Fully covered dividend forecast for 2022 and for 2023, rent roll is 15% higher than 2020.

The fundamentals suggest it's extremely cheap at 66p and it's difficult to see it going much cheaper, or staying so.

Peking, you are mistaken about ATM selling at a loss. ATM’s cash cost post phase 1 expansion is below even the current depressed price.

In any case Tin bounced strongly today and it’s inconceivable we will see a low $20-$22k tin price long term…. No mines can operate profitably at those prices.

https://www.**********.co.uk/articles/joanne-hart-discusses-lok-nstore-group-bloomsbury-publishing-ip-group-379b786

Joanne Hart of Daily Mail discusses IP Group. "Several companies have the potential to become big billion pound companies if and when they float. The CFO is focused on backing the winners and is worth backing."

Just adding to Mikie's point the FX rate doesn't behave like the commodity price. What I mean by that is that the year end FX rate determines the translation for that whole year (in GBP). Whereas the price of, say, copper on the 31/12/2022 doesn't mean we have enjoyed that price throughout the year.

The current 1.15 rate is forecast to drop to near parity 1 pound = 1 dollar by the end of the year. That translates to a lower PE of 3.1.

Thank you Seisnav for the model. What is also interesting is the idea that 2024 is less than 16 months away and that a bounce for copper, cobalt and platinum are forecast for 2024. Given the market is forward looking, this further heightens the target price based on a PE of 8-10 (for miners).

To the extent that JLP can evolve from a "miner" to a WaaS (waste as a service) business also brings the maximum PE into question. If JLP can deal with toxic tailings throughout the world (while earning a revenue stream from the recovered metals) should its PE be based more like a 20-25 PE? (Like Biffa for example).

GLA

Chrysalis forecast EPS for the next 12 months has increased to 21.1p EPS +36% to forecasts 3 months ago:
https://www.investorschronicle.co.uk/tips-ideas/2002/01/02/latest-update-companies-smashing-broker-forecasts/

I topped up at 73p today.
NAV is 163.48p
24.1% of market cap is cash and listed equities (17.6p a share or £105m) that leaves £867m worth of unlisted investments as at 30/6/22 valuation. So you're in effect paying 55.4p for 145.88p of unlisted - so a whopping 63% discount.

Of that 55.4p when you consider these 2 are approximately worth 55p:
Starling Bank: 17% ROTE and already profitable. Growing.
We Fox Insurtech: Strong growth (nearly 100% forecast for 2022) almost profitable. Insurtech is the most "undisrupted" area and therefore is ripe for digitisation disruption. (Source: the chap from Augmentum Fintech)

You are getting holdings in: Klarna, Smart Pension, The Brandtech Group, Graphcore, Featurespace, Deep Instinct, Wise, InfoSum, Tactus, Sorted, Secret Escapes, THG, Revolution Beauty all for free.
Of those Klarna is well funded due to recent downround. Strong expansion. Demand for credit will grow not shrink in current env't. If they can manage credit risk. And even if you value THG and REVB at zero then there's still serious value here.

A single mention of hydrogen in the annual report. Page 66. In relation to submarine air systems.

So I think it's safe to say it's not involved in any such development.

Hello,

I bought into Fair Oaks today and I wanted to say thank you for your opinions and insights which helped in my decision to buy. I was a little torn about the USD basis as of course it is a poor FX to be buying however if sterling goes lower still (it feels like it will) then it's slightly academic. I also managed to buy at $0.495 which I'm happy with too. Using ii you can trade electronically (I used to use HL but find ii much better value at £4 a trade)

My rationale for FAIR is that it's a "picks and shovels play" on defensives. Let me explain. Lending scarcity is driving higher rewards and that's great but risk is rising too. So if you can find a firm that's overlooked and that's targetting defensive verticals then the rewards are high and risks are relatively low. This excerpt from the link below "sold it to me": >>With this macroeconomic backdrop we like companies with pricing leverage or companies offering value-oriented products/propositions. Companies caught in the middle end up being price-takers and will struggle to generate free cash flow. We continue to see interesting opportunities in healthcare & pharmaceuticals, high tech industries and business services.

Anyway I researched the 2021 results and Fair Oaks web site before committing and spotted this recent article which is well worth a read.
https://fairoakscap.com/wp-content/uploads/2022/08/9Questions-Tyler-Wallace-Fair-Oaks-Capital.pdf

Not forgetting Dugbe: $1005 AISC and 23.3% IRR

Even Yanfolila will come right:
-> Guided production for H2: 52,000-62,000 ounces (or 25%-50% above Q2)
-> Fuel cost has eased 15%-20% since H1
That will bring AISC $1859 downwards towards the $1300-$1450 guided (realistically a $1500-$1550 should be expected)

Estimated Cash flow headroom of $56m ($100m Coris Bank + $20m OD.) @ 50% complete but with long lead time items ordered there is a remaining $115/2 = less than $57m of remaining capital expenditure required. In other words so long as Yanfolila is cash flow positive (it was $32.6m operating cash flow in 2021 before W/C movements to give an idea) then the headroom is sufficient. Put another away the cash cost for 2021 was $1502. Even with inflation cost increases it's very unlikely that HUM is not cash cost positive. Ultimately, this is my speculation. However one would like to think that HUM would be scenario planning and pausing Kouroussa if there was a risk to working capital. It's not inconceivable that one or more of its mines couldn't be sold off if needed too.

NAV is still 50p/share and the market price 84% discount to NAV is in extremis in my view. There are risks here but rewards too.

GLA

Why on earth would you expect ATM to have strong free cash flow on rapidly expanding output? If you read the cash flow statement, the increase in receivables £2.9m, inventory £0.4m, and plant/equipment and intangibles £6m (total £9.3m) is to be expected when doubling capacity, surely? Did you really expect free cash flow to exceed this?! The need for working capital shouldn't come as a surprise to anyone.

If you look beyond the 11% rate (which is presumably the "not great current dynamics" that you refer to) then ATM is profitable enough to tolerate a modest amount of debt since it is backed by expanding cash-generative operations, and in time can pay this debt down.

As for expanding tin vs "separating lithium" as you put it, you need to re-read your Afritin history and the sequence of events should make the reasons/logic obvious.

Regarding "directors backing their positions" the Directors already told 20m shares or about 2% of the company, and have warrants/options over another 2%. I see 6m options were exercised during the year, so I don't follow your sweeping statement about "skin in the game".

I didn't understand the rest of what you wrote.

I was disappointed today to not see any broker notes from Tamesis, Hannam and Capital Access who follow ATM. There was a short note from SP Angel but no analysis (as usual).

So I dusted off my FY2022 prediction and thought about doing a FY2023 one. So how did I do? I assumed 720 tonnes @ $33k and AISC $19k. I assumed by products could "just happen" (you live and you do learn). I arrived at a £6m PBT. Was I close? Not at all. I've improved my model this year and split out cost of production from admin/finance costs.

So I've also split out the year into a tale of 3 triennials (Ts). T1: March - June tin price average is $38k. T2: July - October (the present) tin is average $24.5k. For T3 (Nov-Feb 2023) I'm assuming a $28k tin price. We know that in H2 FY2022 Afritin produced 804-313 tonnes so an average of 81 tonnes a month. T1 & T2 are at 81.83 tonnes/month In T3 I increase to 105 tonnes/month (Phase 1 expansion commissioning is complete).
Cost of production was £9.3m over 760 tonnes which equates to $14.3k. For FY2022 the above adds to 1075 tonnes which I've also increased by 20% to $17k which arrives at $18.45m.
Admin Cost - I've assumed increases another 10% YOY to $4.6m
Finance Cost - I've assumed £4m @ 10% and a further £5.5m at 10% (for 5 months) to arrive at a $0.74m interest charge

So the whole thing comes out at PBT $8.4m or $7.1m excluding minority interest (ATM has 85% share). If you say ah hah tin isn't going up then rerunning with a T3 $23k tin price arrives at a $5.3m PBT instead (after minority interest).

So I've not factored any by products in here and yes while the September 2022 fundraising needs to support working capital there appears to be a profitable model going forwards to support investment into the pilot plant (As Anthony said in his recent presentation).

If you've been frightened by today's price drop then I hope this model helps you (as it helps me) to rationalise the situation. There is a downside scenario that *IF* financing isn't obtained and further *IF* there's a working capital shortage that could be curtains theoretically. However, ATM has overdraft facilities, had £7.3m cash at year end, £0.9m tin in hand, so I see the further finance as a derisking exercise, and one where we unfortunately pay a high price for finance but a necessary one and one where future profits cover payments.

When you factor in what FY2024 starts to look like once by products do start coming through (or an offtake agreement is made?) then the profitability increases much further.

GLA

Peking, you're a little out on the tin (spot) price.

Why the fall Reason #1:
Tin's spot price dropped to $23,500/tonne today.... so below $24k today which I believe partly explains today's SP fall. Tin has been range bound between $24k-$26k for a while now.

Why the fall Reason #2:
Also of note today "Tin futures hit the $24,500-per-tonne mark, a level not seen since March 2021 and nearly 50% down from their record peak, as fears of a demand-sapping global recession, tighter monetary policy, and persistent coronavirus-induced lockdowns in China ripped through metals to spur a broad sell-off. Still, fundamentals in the tin complex continued to be supported by rising demand from the electronics sector. On top of that, global production stagnated over the past decade due to a lack of investment by large miners while, more recently, coronavirus outbreaks disrupted output, particularly in Indonesia and Malaysia." (Tin Market Commentary)

You said:
>>> it's clear that the tin price fall is ..... impeding their growth plans
I disagree. Re-read your own quote "Management had anticipated the declines and are already at advanced stages of
securing the funding in order to continue its growth ambitions."

Why the fall Reason #3: There is also a "going concern" audit note that may have scared people today. However this note is contingent on the completion at the end of September with the Development Bank of Namibia Limited (“Development
Bank of Namibia”) to fund the Uis Phase 1 Stage II Continuous Improvement Project of NAD 100 million (approximately £5.5 million) Senior Secured Lending. Once this is secured I think we will see a change in sentiment.

The superficial reporting "ATM made a profit" today e.g. on Proactive make have got a few inexperienced people excited but it doesn't really explain the dynamics nor the true value here.

I think you misunderstand the role - and focus - of a Chairperson in a Plc. This link would help clarify.

https://www2.deloitte.com/content/dam/Deloitte/za/Documents/governance-risk-compliance/ZA_TheRoleOfTheChairmanAsWellAsValueOfANonExecutiveChairman_04042014.pdf

Just to add 2 things:

1. This is the reference to MineralCommodities:
"There may also be the potential of natural replenishment of beach sands. Mining south of Kazera’s licence application area is Mineral Commodities which has one of the highestgrade HMS operations in the world. Interestingly enough, it has a unique deposit due to the process and speed of which mineral sands are replenished by the sea. Since production started in 2014, Mineral Commodities has apparently mined over 9.7Mt so far which is vastly more than its original resource (2.7Mt) due to significant natural replenishment."

2. To add also that when comparing their actual profit levels (on much higher production) to KZG that they (and this is a crucial point) DO NOT MINE MARINE DIAMONDS. As KZG plan to.

GLA

The positives I take from this:
> Immediately earnings accretive (we know this from Align's analysis where a facility would be built which increases profits by 6x*
> Dr Naidoo successful career at Anglo American leading its Mineral Sands

Profit Estimates:
> £1.5m EBITDA to KZG based on 40% HMS ** (but could be £3m EBITDA based on 80%***) @ 0.072mtpa
> ~£13m EBITDA per annum, to KZG based on adding a BOO (build own operate) processing plant @ 0.24 mtpa
> By comparison MineralCommodities (down the coast from KZG and mining HMS) achieves US$16m EBITDA on a grade of 15% HMS and gets US$163/tonne revenue (vs $127/tonne AISC) albeit on a much higher production of 2.75mtpa
> Based on 80% and based on $163/tonne not $140/tonne then the ~£13m grows to over £30m EBITDA. Growing the operation to the same size as MineralCommodities.... well we do have a next door beach don't we?! £250m EBITDA is not impossible.

NOTES:
* an agreement in principle is in place with a third-party international group to build a processing plant on site under a potential Build Own Operate (BOO) structure which could greatly improve the profitability of this operation as WHM would be able to benefit from some of the processing upside. Land for the plant has already been identified at Port
Nolloth and the partner is intending to invest around US$20 million to build a 20,000tpa pilot plant at no cost to the WHM. It looks likely that the terms of the deal with the third party will allow WHM to benefit by receiving up to 6 times more per tonne for its HMS than the unseparated price (US$135-140/t) which ushers in the potential of WHM seeing annual revenues in excess of US$10 million.

** Based on a 6,000tpm operation selling production at US$60/t (assuming a HMS price of US$135-
140/t and a grade of 40% HMS) suggests achieving estimated gross revenues of US$360,000
per month and probably around US$180,000/month net to WHM. (Align Research)

***high-grade HMS sampling up to approximately 80% although in the company’s plans, a grade of 40-50% HMS has been used to be conservative. (Align Research)

Mr. Brett Boynton, Managing Director – Tectonic Gold Plc

“We are very pleased to have the Mining Permit finalised and are looking forward to seeing this project brought into production. We worked closely with Kazera and our local BEE partners to achieve this outcome and it is a great example of local and international partners creating opportunity in South Africa in the mining industry. This project complements our existing diamond mining joint venture on the South African Government diamond mining site and offers the opportunity to grow into a multi-generational strategic minerals project for the region.

Tectonic retains a 10% non-diluting equity interest from the previous sale of 60% of Whale Head to Kazera. In addition, Tectonic has sold 30% to a consortium of local BEE partners, with this sale to be funded over time from a share of the profits. The BEE syndicate includes entities controlled by Dr Gil Mahlati, a well-known South African business leader who has been appointed Chairman of Whale Head and Dr Dempsey Naidoo, also a high profile South African businessman. Dr Naidoo had a successful career with Anglo American, leading its Mineral Sands business before moving on to build one of the most successful engineering groups in Africa. He has also been appointed to the Board of Whale Head. These partners bring significant profile to what we expect to become a major project for the regional economy.

The initial £150 million valuation of the project does not include the neighbouring beach area which is under permit application. This much larger area provides upside to the project once the Whale Head beach zone is brought into production.

Mining of mineral sands in this area has historically been precluded by diamond mining activity and the necessity for strict security protocols around those operations. Despite the site being a well-established mining operation with almost 100 years of diamond mining history, the mineral sands have not been exploited. Whale Head will now mine high grade HMS zones with simultaneous diamond extraction in a first of its kind operation for the site.

The alluvial sands containing the diamonds and HMS are mined using dredging and digging equipment and processed using water and gravity separation. It is an environmentally friendly operation with no explosives or processing chemicals. The project will offer a range of job creation opportunities on site and in support.

It is anticipated that Whale Head will start operations and sell a concentrate until on site processing facilities have been built. This will likely be in partnership with a major international mineral sands production and sales group.

This is a great outcome for the Alexander Bay community as we will now see new economic development and it is a great outcome for our partners and shareholders.”

Potential Sale of Diurnal (on the books at ~£5m) presents a £9m gain on disposal or 0.8p added to NAV.
NB: This was revalued downwards in H1 2022 as part of the biotech write downs, so the gain partially offsets an earlier loss.

HOC achieved circa $1000 AISC at its inmaculada mine and its mara rosa is forecast at about the same. CMCL’s acquisition of Bilboes is $1000 but I thought blanket mine was a bit higher. However these are exceptions and my experience is the average AISC for gold is more like $1500 an ounce.

Gla