Member Info for Arbroathsmokey

I have reviewed my recent Altona investment, and these are my findings based on collating the various company releases. I think it is undervalued. Most of you know all this already but I am sharing it in case it helps someone new. Please do your own research because I am not a chemical engineer, a geologist, or a successful investor hence this information may be complete bobbins.

Unlike most, I think the recent growth capital facility was good for long term investors. It demonstrates that our CEO is primarily working on behalf of the company and its shareholders. He is not motivated by his ego to advance a pet project regardless of shareholder value (which is a behaviour I have noticed in the management of some listed junior mining companies).

Rare Earths:

Altona has already delivered a maiden JORC Mineral Resource Estimate of 13.6Mt at 2.42% TREO, secured a 25-year mining licence, published a competent person report, and a positive scoping study. Altona has also received a US$ 1.875 million grant from USTDA to advance the rare earths project through to PFS. The scoping study identified a NPV of $283.3 million (NPV of upside scenario is $409.9 million) based on a discount rate of 8% and 2023 economics (TREO price $24,651/tonne). The study assumed a product with planned purity of 55% TREO will be produced by a new hydrometallurgical plant and that the product will be bagged and then transported in containers (by road) to Beira port. The rare earth proportions in the product used for economics are Praseodymium 3.78%, Neodymium 10.01%, Terbium 0.08% and Dysprosium 0.43%.

The maiden JORC MRE was based on targets 1 and 4 (target 6 was a dud?). The PFS will update the MRE via drilling (the scoping study recommended exploration drilling at targets 3, 9, and 11 - the USTDA sponsored work only covers ‘targeted drilling’ but I don’t fully understand what that means), optimise the process design, and update project economics. Hence the resource may increase.

Upon completion of the PFS Altona ownership will increase from 51% to 70% (the original shareholders will remain with a 20% free carried interest and a 10% participating interest).

For context, Monte Muambe was previously explored by Globe metals. In 2011, Globe Metals announced multiple REE discoveries at Monte Muambe above 3% TREOs. Globe Metals did not complete metallurgical testing; in 2013 it impaired the mineral asset due to an ownership dispute.

….my error, it was never on AIM. I like this company as an investment because the fluorospar project has a high certainty of going ahead ( demand is forecast to increase) and it could easily justify 8p now all by itself. The copper and rare earth project projects are more speculative but could eventually be extremely valuable however if they fail, the Fluorospar project will hopefully protect my investment . Gallium is a long shot in my opinion but I am less well informed than our CEO hence happy to be proven wrong.

Hi marco,

Altona moved from AIM to the main market years ago. From inspection, it is significantly undervalued compared to similar companies. The fluorospar project can justify a market cap at multiples of the current market cap all by itself right now now.

Thanks. It is helpful to compare. Ares Strategic Mining is projected to produce approximately 50,000 tonnes per year of finished fluorspar products from its operations, with specific projections including about 54,000 tonnes of acidspar annually based on its planned flotation plant. The company's Lost Sheep Mine in Utah is currently in the ramp-up phase, aimed at supplying the U.S. domestic market. No JORC resource estimate or PFS. About £56 million market cap.

If it is any consolation, you have company. I did the exactly the same except that I then moved the cash from selling KEN into Altona (REE). Sometimes the investing gods can be cruel. I am hoping that the reason BZT isn’t currently being promoted by CB is that BZT does not need another equity dilution I.e. all is well.

For perspective, Kendrick have today announces that they own 70% of 14Mt RE mineralised rock ( non JORC). Compared that to our resource(s) and our market cap.

We now have a similar market cap to Kendrick (who have a similar resource in a slightly more friendly jurisdiction). Altona are significantly more advanced in proving their resource and obtaining funding. Not identical but not entirely apples and oranges either. It may help put some perspective on this drop.

Hi Evan. Many analysts agree with MAFL. One of the main reasons that RIO wanted to take over Glencore was to obtain copper resources.

Jacques mentioned that the tactical portfolio (containing the copper investments) should be 50% of total NAV. It will be interesting to see how MAFL balance portfolio weightings when the value of GS (in the strategic portfolio) is recognised. The tactical part of the portfolio could become much less significant.

I thought that was an excellent interview. My only slight disappointment was that no guidance could be communicated about the Portuguese mine. Jacques seems confident that the GS resource can be increased to one million oz with a successful drilling campaign and that gold production will increase due to higher ore grades and investment in the processing facilities. The potential value to MAFL shareholders that the 15% of GS that MAFL own ( on a fully diluted basis) will soon be impossible to ignore. He also mentioned that a GS board meeting will occur next week to (hopefully) take a decision on the best value option to proceed. I would hope that MAFL issue an RNS to inform MAFL shareholders and the market of that decision.

Correction: positive cash flow not free cash flow.

I expect there is an important difference between those terms. (Last post for now, I became over excited when I read the results).

As far as I am aware, these results are the first time that the market has been officially informed of the free cash flow of 2 to 3 million dollars a month from GS. That is 24 to 36 million dollars a year. We own 16 % of that free cash flow. I think these results are signalling to the market that GS is worth significantly more than 50p per share to MAFL (possibly 70p on a 5 x multiplier). Please don’t take my word for it for it though. If something looks too good to be true it generally isn’t.

Correction: US dollars not GBP

Strategic portfolio was valued at £9.2 million at end of December.

GS is one component of the strategic portfolio and it is generating £2 to £3 million per month and is also cash rich. It is forecast to increase production. MAFL holds approximately 16% fully diluted. There seems to be a significant value disconnect (or I am misunderstanding something).

Does ‘fully diluted’ mean that the value of some other component (e.g. deferred gold delivery) become zero and converted into GS equity)? Apologies in advance if I am being thick.

Looking forward to the interim results and an insightful commentary from Jacques. Due soon?

The share price is now back to a rational value above 40p. Has it been tipped somewhere? I hope it isn’t being taken private.

Is Snowy too small for Endeavour to partner East Star and accelerate the project? He spoke of East Star having developed an excellent working relationship with them.

I thought that the response to the question related to ASX listing was informative I.e. there is no overall value unless a cash raise is also simultaneously required to help develop a project. The company is funded for 2026 and there are many near term and longer term opportunities being progressed (hence a presentation challenge). It would be nice if this company was championed by a prestigious tipster because it is clearly undervalued.

A significant leak of inert gas into a confined space is extremely hazardous. Fatalities have previously occurred. From inspection the Helix design includes a forced ventilation system to act as a safeguard. The proper design of a reliable ventilation system is extremely expensive ( eg redundant electrical power systems for the extraction fans). I am surprised they didn’t select the cheaper (and safer) option of enclosing the process plant within an open barn type structure. I expect they know what they are doing but I would be asking the plant manager for reassurance before I allowed anyone to enter the shed. Catastrophic mechanical seal failures are rare events but they are credible.

The muted London stock market reaction to the recent trading statement and market update makes me wonder if this company should consider listing on another stock exchange. The liquidity provided by the market is awful considering this is a £200 million plus market cap company. I expect some of the ethical funds would be interested in obtaining a significant stake but if transactions comprised of less than 0.1% of the issued shares can cause an 8% fall in market value then perhaps they are wise to avoid it.

Agreed. The rate of growth of the overall OLP is increasing every quarter (i .e. growth is accelerating) and margins are being maintained (or increased). A muted market reaction today but I expect the market will assign it a higher value eventually. It is easy to justify £3+ now in my opinion. A P/E of between 7 and 10 could be justified given geographical risk (which seem to be well managed).