Member Info for Agricore

The fact that the Newport MP is endorsing this says a lot about whether this will get approval.

Welsh Labour MP connected to the Welsh Labour Welsh Government and while not directly involved in my opinion "would know".

Green light approval coming soon!

I estimate the PGM at around $80m additional revenue with around $50m additional gross profit. I'm basing this on the tailings as platinum rich so 6P basket price of $1800/oz; and the LG6 (rhodium rich) to be $4500/oz (similar to Sylvania's basket). With a AISC of $600 per ounce.

As for the chrome, it's hard to find pricing as all seem to be behind paywalls. As far as I can tell chrome has increased yoy 2020 -> 2021 either as ferrochromium 60% and refined 99% and 99.5%. The increased capacity is coming at a time where per tonne profitability is also rising.

So very welcome news and the fundamentals here are incredibly promising even before this news.

Hi all,

Possibly like yourself I bought into this on the back of ST's recommendation in the IC. I have been generally very impressed by ST although I appreciate not everyone shares that view.

Anyhow I thought I'd revisit his articles, then read the latest annual report and try to crunch some numbers for myself.

I calculate we should see a cash adjusted PE of 14 in 2021 dropping to a PE of 9 is 2022. That's running some fairly conservative numbers based on what BATM tell us they are doing and what they have planned. Particularly, I'm removing any ventilator sales for 2021 and am assuming a slightly higher gross margin for 2021 and the same for 2022 of 40% for BioMed and 35% for Network. I'm assuming overheads static for 2021 (this includes a generous $10m R&D and increased OHs from 2020) then increase 10% for 2022. BioMed sales due to the ISS product and the Testing is conservatively assumed at 15% growth (so in 2021 it replaces the ventilator sales and then adds $20m in 2022 to bring revenue in at $150m). Network I'm assuming 15% growth too and again the drivers are the virtual WAN, the AWS, and Azure integrations. This, too, could be extremely conservative. So revenue grows to $70m and $80m in 2021 and 2022 respectively. These assumptions are based on what BATM tell us is already happening as at April 2021.

I arrive at a net profit 2021 of $30m (5p a share) and 2022 of $36m (6p a share).

Hence PE on an 80ish p share price of 16 and 10. (or a PE of 14 and 9 on a cash adjusted basis)

If this went bust, net assets are around $125m so worth around 20p a share plus whatever the IP is worth, so even if this weren't growing rapidly and growing in profits then I find it hard to think the fundamental value is at the very very least 80p a share.

Based on something like this being worth a PE of at least 20 then I can validate how ST arrives at his 170p "sum of parts" valuation (which he himself doesn't appear to) so can see an achievable 100% upside from here.

I can also see how this could be actually quite conservative and could be higher.

I'd also add how does the above affect SAE? It doesn't. GFG isn't a debtor to SAE, and the strength of the tidal technology and the success of Uskmouth and the WTE technology has no bearing on GFG. If the share price becomes very depressed then it risks someone coming along and buying up the shares and taking it private. So if that happens then the share price goes up and to acquire >50% and to launch a take over bid would require offering a premium to the share price and a majority of shareholders agreeing to the takeover price. Once a business acquires more than 3% they must declare themselves.

Not wishing you any ill but the simple analogy would be - let's say you buy some shares in SAE.

Let's say you fall on hard times and are bankrupted.

What would happen to your SAE shares?

You'd be forced to sell them to raise some cash to pay your creditors. The "bank" (but in GFG's case it's the insolvency practitioner) will look to get the best price for those shares. They'd sell them either in the market (pushing the price down short term) or they'd offload them to an institution at a discount e.g. JP Morgan.

So how does your bankruptcy affect me (another shareholder)? Well in the first example potentially your shares could depress the share price short term, although if your shares were sold at 3p each (say) people like myself would gladly buy up your fire sale half price shares, knowing that the technology and future sales and profits are strong (and that future profits is ultimately a strong driver of the future price). Once your shares are snapped up they'd return to their market price.

If GFG shares are sold to JP Morgan how does that affect me? It kind of doesn't. The fact GFG creditors only get 3p a share back of their money is their hard luck. I know there's some kind of argument that GFG's Liberty Steel would use the power from Uskmouth but power is power in the national grid so makes no sense to me.

Hope that helps explain.

Can I add once the UK (and other) government announce guaranteed power prices for tidal (seems likely to me) then the shares here will shoot up. I'd fill your boots at this bargain price and if a GFG firesale happens then be ready to scoop up an even bigger bargain. That's my plan anyway.

Yes apologies it’s 9c per share for this year. I read a report which said interim 1 was 6c and interim 2 also 6c. The $800-900 2021 predicted production cost is low compared to other miners too. If we see $2000+ Prices (looking likely) then profits will grow further in 2021.

Gla

2021 dividend is 15 cents a share so about 11p. That’s about 10% yield.

While there’s been a challenge recently it seems the company generates really good cash flow to sustain that dividend. The Sukari pit provides a steady flow and the new projects in west Africa provide growth potential.

So, no, I don’t think selling up is a good idea

I'm pleased with this announcement and have bought more via PrimaryBid, but wanted to ask your view as to whether this is a change of strategy from a sale of technology ("EPC Contractor offering") to plant operators to instead becoming more of an owner operator via this fund raise (presumably with some sort of plan to sell the plants on?)

I appreciate they talk about addressing the US market too.

I appreciate that owner/operator was part of their strategy but it seems to have been elevated? If you have a pipeline of "capital light" opportunities then why would you pursue "capital heavy" ones with longer timelines to profitability???

GLA.

The shareholding is worth about £20m at current prices. It's small beer in the world of finance so would be disposed through a book build and underwritten by an institutional investor. We will probably suffer a dip if/when that happens.

But who knows maybe the Welsh Government will buy it? Labour are meant to be interventionist, and they bought Cardiff Airport didn't they?

Sadly for UFO shareholders who go back to the days of Arian Silver this one lost over 95% of its value even though the owned one of the best silver mine opportunities. But years later new management, new era, the MD seems very credible and Elizabeth Hill 500g/tonne assay results is very tasty indeed.

Political risk is the reason HOC is at this price in my opinion. Once we reach some sort of accommodation with the new political masters (assuming Castillo wins) then this will revalue.

RECRUNCH - CONTD - 3% yield on a 60p future share price would cost the business about $100m per annum out of net profit (so about 50% of the predicted $210 net profit for 2025).

Someone replied on this thread that West Kytlim had had a “43% resource upgrade” but found no reference to this so my assumption remains 1Moz which are Eurasia’s latest numbers as far as I can see.
Someone replied on this thread that an October 2019 RNS was where Eurasia supposedly announced this would be the windfall dividend. I found no reference to this. But let’s assume for a moment that 80p must be the dividend amount.

Looking at this another way if the company does plan to provide 80p a share in 2021 then that’s about $3bn of assets that must be sold plus more to fund development to prevent further fund raises to dilute us shareholders. Assuming we can find a buyer for our inferred resources at $200/Oz and measured resources at say $500/Oz then that equates to the sale of 3Moz of measured resources and 8Moz of indicated resource:- so the whole of West Kytlim, Monchetundra (including Flanks but excluding District).

A sale at those numbers leaves a healthy warchest of cash to develop District (40Moz), Tipil (?Moz) and Rosgeo (100Moz). A sale below those numbers would suggest a lower value than 80p per share as I maintain that it would be foolish to throw all the cash into a dividend depriving the business of working capital to develop its resources.

I re-crunched the numbers based on the feedback you all gave - thanks to those who could add something to help me here :)
1. West Kytlim - 1Moz measured (per 2020 interim report - 15 years at 64000 oz/annum)
2. Tipil (24.5 Sq.Km West of West Kytlim known to have PGM) - ? MOz
3. Monchetundra - 2Moz measured (per 2020 interim report) plus 13 Moz (Flanks) indicated/inferred; plus (District) 40Moz indicated/inferred
4. Rosgeo - 100Moz indicated/inferred (RNS 26/03/21)

Let's assume $2000/oz basket price and say a $400 AISC (it's mainly open pit so that should be realistic).
Since Monchetundra and Rosgeo are neighbouring plots it's fairly safe to assume that the potential asset for sale is West Kytlim and Tipil (1000s of miles away from Kola in Ekaterinberg). The potential value is $1.6bn (1Moz * $1,600). If we say the “cut” is 20% to sell it off, then that’s $320m. Let’s say Tipil has a further 1Moz (but I can see no RNS as to its value). That doubles to $640.
Since we have 2.7bn shares then that’s worth around 24 cents per share. Let’s assume Eurasia are going to keep half for working capital and give half as a special dividend then that’s 12 cents a share. So say 9p a share – so a 30% yield – not bad and focus then is on the Kola peninsula (Rosgeo and Monchetundra).
No one has provided evidence that the forthcoming dividend will be 75p/80p/100p.
Eurasia say Monchetundra will be producing by late 2023 and Rosgeo let’s say we are looking at 2024. I expect the PGM market deficit by then will have reduced (source Johnson Matthey platinum market report), so let’s assume a $4500 basket price (we know it’s 64% palladium and they report “significant” Rhodium so let’s say that’s 10%, with the remaining 26% as Platinum) and a $600 AISC.
Let’s say 80% is actually of Rosgeo/Monchetundra is recoverable, so of the 155Moz is 120Moz and GM of $3900/oz. 2.7bn shares. That equates to a gross margin of the life of the mine $173 per share.
So if we can achieve production according to Eurasia's recent presentation of 1 Tpa in 2024 (35000 ounces) and 1.7 Tpa from 2025 (60000 ounces), then gross margin is $136.5m (2024) and $234m (2025 onwards). Less overheads (2019 were $1.5m but we have to assume these will grow, tax, depreciation, lease obligations will need to be taken into account so using Sylvania Platinum who have comparable numbers of production then that OH cost out of gross profit is $26m per annum).
This suggests a net profit of:
2021* - $318m (windfall profit for sale of West Kytlim and Tipil $640m less the 9p per share distribution)
2022 – DFS and EP – loss of $10m
2023 – Production begins - breakeven?
2024 - $110m
2025 - $210m
Assuming a reasonable PE of 10, and assuming us shareholders want a 3% yield (and static issued shares at 2.7bn) then I estimate an EPS of $0.08 then the share price will rise from 27p (today) to around 60p so about double it’s current value in 3 years, plus a tasty special dividend of 9p this year.

Is anyone actually going to pick apart my numbers and tell me why I'm wrong? Bit pointless telling me "you're wrong" without saying why?

Ignoring the childish remarks, the only factual point made in the replies was about the Aim Rule 15. Fair one. But re-read what they actually say.
>> Shareholders should note that one of the potential transactions proposed is one to which AIM Rule 15 (the fundamental disposal rule) would likely apply.

The key phrase is **one of the proposals**..... so my prediction remains realistic and could happen. I think will happen. If you understand mining then you'd understand having neighbouring concessions (Rosgeo and Monchetundra are adjacent) makes a lot of sense and to have synergies (plant and processing cost).... hence my rationale of Monchetundra (no DFS) being kept and West Kytlim (have a DFS) being sold. Rosgeo isn't Eurasia's to sell and Monchetundra is next to Rosgeo. Are there some other assets I'm missing??

As West Kytlim is the only producing asset, wouldn't AIM rule 15 apply? That's conceivable too.

Look, I've put a decent chunk of my savings into Eurasia so if we stand to get a 300% ROI dividend this year I'll be delighted, just like you presumably will be. But I've not seen any basis of fact why it could be 75p or anything close to that. Can anyone please explain how they are arriving at a 75p 2021 dividend?

From what I can see the different assets break down as:
1. West Kytlim - 1Moz (per 2020 interim report - 15 years at 64000 oz/annum)
2. Monchetundra - 2Moz measured (per 2020 interim report) plus 40Moz indicated/inferred
3. Rosgeo - 100Moz indicated/inferred (RNS 26/03/21)

Let's assume $2000/oz basket price and say a $400 AISC (it's mainly open pit so that should be realistic).
Since Monchetundra and Rosgeo are neighbouring plots it's fairly safe to assume that the potential asset for sale is West Kytlim (1000s of miles away from Kola in Ekaterinberg). The potential value is $1.6bn (1Moz * $1,600). If we say the “cut” is 20% to sell it off, then that’s $320m.
Since we have 2.7bn shares then that’s worth around 12 cents per share. Let’s assume Eurasia are going to keep half for working capital and give half as a special dividend then that’s 6 cents a share. So say 4.5p a share – so a 15% yield – not bad and we still have the Kola peninsula.
I have read people think the forthcoming dividend will be 75p. Utterly fanciful, in my view.
Eurasia say Monchetundra will be producing by late 2023 and Rosgeo let’s say we are looking at 2024. I expect the PGM market deficit by then will have reduced (source Johnson Matthey platinum market report), so let’s assume a $1400 basket price (we know it’s 64% palladium) and a $600 AISC.
Let’s say 80% of the 140Moz is 112Moz and GM of $800/oz. 2.7bn shares. That equates to a gross margin of the life of the mine $33 per share.
So if we can achieve production of 1 Moz per annum in 2024 and assuming a reasonable PE of 10 then I estimate an EPS of $0.60 then the share price will rise from 27p to around 440p so a 15 bagger in 3 years.
It seems to me that there’s a potential for disappointment in 2021 (i.e. due to fantasy expectations of 75p or more) and will dump the share in a pique of disappointment. I hope so. I will watch and pick up more shares if that happens. Medium term this has a potential to grow big.
Looking back over the past 5 years I am concerned that the management team don’t seem to have grown the opportunity, however the tailwind of PGM deficit and strong prices, the involvement and support of the Russian Govt (to bring hard currency in for mother Russia), and potentially management changes to replace people don’t prove equal to the challenge then this doesn’t seem to be the decisive factor. Political risk of expropriation is somewhat a concern too.

Ironic that you say you have read ST's articles:
"......AROC in the accounts. However, all the stock remains on Kromek's balance sheet (and in its UK facilities) ready for shipment and delivery in the future, hence why the directors still expect the position to reverse, at which point Kromek can book a hefty exceptional credit. **I am not sure investors have fully grasped this accounting point.***"

Look at the 12th May announcement - the AROC position ***is*** being reversed. Kromek have already made the stock so the £13m "LOSS" in 2020 this will be a GAIN in 2021. What they sell will have a gross margin of 100% (i.e. no cost of production) effectively.

Also they announced repeat wins and new customer acquisitions including for the lucrative 50% GM nuclear security.

They say they are "excited" by the trials and DARA (US Aviation) have progressed it to trials (i.e. they've been convinced by what they've seen. We've seen how shares like Novacyt shot up after announcing successful trial outcomes last year. That's may 1-2 months away.

Excluding intangibles (arguably their 25+ patents aren't worth zero but let's say they are), they have around £44m net assets or 15p per share. So effectively this high growth stock is at book value. You find me a stock with such growth potential at below book value - I don't think you can.

In other words it's a screaming bargain and I've topped up. ST is a rockstar with his analysis and I'm very glad to be a subscriber to his articles. It's been a fortnight since his last one. Has he gone on holiday? Lucky him :)