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And that SFR valuation assumes SFR doesn't make any material discovery in the non-T3 part of the JV area. If it does, MTR's uncapped NSR comes good too.
A reminder of the mis-match between share price and NAV.
MTR receives 6,296,990 SFR shares if/when the deal completes. SFR is currently trading at $6 per share. That translates to AU$37.782m or £20.78m. MTR MCap is currently £18m or £2.78m under the value of the soon to be highly liquid holding in SFR shares. In addition, MTR will receive AU$1m in final dividend in November, with further dividends each six months thereafter. And it gets a net smelter royalty capped at $2m once SFR starts to produce from T3.
So perhaps £3m to £5m under NAV on MOD/SFR alone, before any account is taken of the multiple other investments.
It's a bit of a mystery. Fundamentals are sound. Market just not valuing it right yet.
Both MTR and MOD hit lows in January. Since then MOD is up well over 50% while MTR is barely up at all. MOD rise follows SFR bid. MTR gain hugely from that bid. The SP hasn't reflected it yet (still well below NAV) - it will eventually.
I also hold HZM, where the SP has made no sense for months. Suddenly it's shot up by 70% on no news.
That should read SFR up over 9%. Since then it's dropped a little to $6.19 - up over 8% on the day.
Good to see MOD and SFR SPs recover so well today. MOD up to 42c - up over 6% today. SFR up to $6.23 - up over % today.
What a really nice change. Two people - Joebop and DaisyRoots - disagreeing, but doing so in a really positive way: setting out arguments for/against potential courses of action, with intelligent rationales for their views; no name calling or other nonsense.
On balance, I tend to agree with DaisyRoots, but I see the sense of Joebop's points and respect his views more generally.
A lot of name-calling on here yesterday, which I'm not going to get into.
A reminder that ARCM has a lot going for it. A few highlights for me:
With gold price rising, there's higher potential for good sales of Sturec and Casa. I remember NvS saying there would be no rush to sale, as cash was not needed. He told us to expect in the order of $5m for Sturec and $15m for Casa (these were orders of magnitude guides; not predicted sale prices) but of course he can only sell for those sort of amounts if/when an offer is made.
At Cheyeza East they've found a good seam of copper, still open on latest drills, with over 4% in one drill, with 0.5 to over 1% on others. Yesterday's assays not stellar, like the previous one. Hence the disappointment compared with perhaps unrealistic expectations. As others have said, if the drill results had come in other order people would be chuffed, not downbeat.
Back in February, NvS was already telling us he was excited about Cheyeza West and Lumbetta. That's where they've recently started a drill programme, with drillers taking ARCM shares at 4.78p rather than cash. BoD member bought at 4p last week; whole board bought at 4.5p last October.
Cashking will have. Surprised he's not notified us that SFR is up another 3% at $6.22. That translates to £22 million in SFR shares for MTR, before our expected SFR dividend, out of a current MTR MCap of £20 million. So minus £2 million attributed to all our other investments.
I know Cashking likes to keep in touch with the Sandfire SP, so I thought I should report that it's begun to recover and is now back above $6.
Its SP, MOD's SP, and pretty much all others have been hit by Trump trade malaise. But at $6.02, that translates to £21m for MTR - above today's MCap. So a negative value still being given by the market to MTR's 2% NSR, to KML, to Cobre, to Pan Asia Metals, to Veta Resources, to Thailand, to Spain, to GGP, to Thor, the list goes on.
More like 6-7p for me. I'm reminded that Nick and other directors bought at 4.5p last October. I don't think they'd be dancing in the streets with just over 10 per cent growth over 14 months after all the work and development.
Excellent. MTR now has so many irons in the fire and the prospect of never having to raise funds again, thanks to Sandfire deal. While of course there are still risks, the upside is so much more than the chance of downside. This particular investment looks good to me.
It's also worth noting the market's inability to be rational much of the time.
Yesterday ARC Minerals released assays with 4% copper. Market response was to drop by 10%.
A year ago copper was at $3.30 and MOD seemed about to make substantial new discoveries. MOD didn't in the end find what speculators had hoped for and Trump helped copper fall to $2.60.
All that is history. MTR now has a diverse portfolio of metals investments, none of which are priced in the SP except for its investment in MOD.
So a good time to buy.
This sell-on-news business is a bit self-fulfilling. Traders sell because they expect a dip and believe there is no further news coming in the short term. After a few days, weeks or months (depending on the company) they buy back in to try to ride the next wave.
If done well it maximises profits. Personally, I've done well at trading on GGP and ARS but have got it wrong on others. Overall, I'd have been as well off simply buying and holding.
ARCM looks like a great hold to me, as it has lots of potential positive news in the short and medium term.
There has been no RNS to report further GGP purchases so I assume they've not bought more. Our holding in GGP is now fairly small.
But our original investment in 2016, buying at 0.10p, with warrants at 0.20p, has helped put us where we are now. Mtr 15-bagged on the original shares then converted the warrants and sold them at 2.40p. That paid for quite a lot of drilling in Botswana and is one of the reasons why we PIs have been diluted less than we would have been otherwise. It's part of the reason why we're soon to be 3.5% shareholders in a mid-tier miner (a holding beyond our current MCap) with lots of cash and the prospect of annual $1 Million dividends.
Last week Cashking was asking about Sandfire's SP. He'll be delighted to see it has risen to $6.97.
At that price, MTR's putative holding in SFR is valued at £24.25 million. So that alone is higher than its current MCap. Placing a negative value on the £2m T3 net smelter royalty, the potential net smelter royalty from the wider JV area, Thailand, Spain, gold, lithium assets, GGP, THR, etc.
Yes, I noticed the SFR SP. It's funny that Cashking didn't mention it this morning. SFR is now at $6.77 - up 3% today.
Remember the terms of the SFR takeover of MOD? If it goes through MTR get 6,296,990 SFR shares. So at today's SP that's £24 miilion in highly liquid stock, plus annual dividends of perhaps $1 million, plus $2 million in smelter royalty once T3 is producing.
Yet the MCap is just £20 million.
So trading at huge discount to NAV.
Bought more this morning on the back of last week's news (not 1.5 million!). This looks very undervalued and a great long-term hold. Lots of possible upside, not much possible downside IMHO.
Hi Docmonkeyman
All good points. Yes, if taken on board (and I agree re NSR and the small investments; hard to value Spain; yes, Thai must have some positive value).
I hadn't seen KML valuation in accounts and couldn't on a quick look just now - but KML is most exciting part of the portfolio - can you point out the accounts valuation?
In an case, I agree now sufficient to take it over 2p per share SOTP.
Casey
Hi zanmantate
Here's a rough MTR SOTP valuation - it comes to 1.9p per share. It's a quick update of one I did a few months ago, to reflect the terms of the SFR improved offer and MTR's most recent investment in KML. I'm happy to hear reasonable corrections. There are some assumptions in it, of course.
Casey
MOD/JV
£7.78m – 31.8 million MOD shares
£9.96m – 40.7 million MOD options to be exercised at nil cost
£5.46m – 22.3 million MOD shares in payment for JV
£0.75m – Net smelter royalty from T3 deal (capped at $2 million – I’ve used $1 million)
£0.25m – Net smelter royalty from JV (not capped – I’ve used $0.33 million)
£24.20m – Total MOD/JV
Others
£1.71m – Kalahari Metals (simply the investment made so far by MTR)
£0.50m – Pan Asia Metals (based on 9.25c/sh most recent purchase)
£0.14m – Veta Resources (simply the investment made by MTR)
£0.59m – Thor Mining (73.8m shares @ 0.80p)
£0.24m – Greatland Gold (14.7m shares @ 1.60p)
£0.04m – Arkle Resources (4.87m shares @0.8p)
£3.22m – Total Others
Cash
£2.08m – Recent placing (less costs plus money in the bank – I’ve assumed one cancels out other, less cost of recent KML investment)
£29.50m – Total (£24.20m plus £3.22m plus £2.08m)
Shares in issue after placing – 1.5575 million
Based on accepted SFR offer and giving zero upside to its many other investments, that gives a SOTP valuation of 1.90p per share