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So where is the chequered history…
Banks were fully supportive of company strategy and rejection of opportunistic offer from Iluka.
SGRF put up the cash and all parties received full payment of all loans.
More selling from FIL.
I think I’m going to go back through and look for the last time our BOD secured a new shareholder of note….
It’s been a while, if the current team cannot get new investors to buy into the story they need to go.
$250-300m EBITDA, 12% dividend, 65-75% discount to Net Asset value blah blah it’s a decent story and when explained that there is a market supply issue, new developments will need materially higher prices to secure developmemt finance blah blah
What the hell are they doing…. The funds are clearly not coming to Dublin for lunches so perhaps the BOD need to put more effort into the Share Price and gaining institutional support.
This is becoming a joke and the Company is a sitting duck for an Offer, I cannot see the Shareholders protecting the BOD but they would still do well…..
Maybe they don’t care, but I do and I’m really annoyed but the lack of effort/results over the past 6 months
Peaky, DH basically said it is on the “big boys radar” already but it’s not sitting ready for them. He was clear they will continue to push forward on basis no Offer comes but he can’t see an offer coming until the market is valuing the asset closer to its true 💯 value.
Keep trucking, if you build it they will come.
Plus peak cash flow reduced by $200m
With modelling assumptions to become reality this could be significantly lower. As they have stated drilling multiple laterals from a single pad, which are likely to out perform the current (not next iteration) assumptions.
This is starting to look like a short term development facility of c. Three years which is 💯 achievable considering the vast sums of capital expenditure it secured with the Compajy suppliers.
Tep, that is exactly the question. Many people and funds have supported the Company, and its board, to deliver the value of the true value of the asset, which I firmly believe to be $1.2-1.4bn.
The question I am posing is, do you believe this board are capable of delivering in excess of $800m in 3 years time?
If not, and many people believe in the asst but not the board, then what would happen if an opportunistic Buyer made an Offer of $600m now?
Since the Tender Offer, we have seen consistent II selling. Therefore, if an Offer was received would the board get support to carry on (under delivering in many people’s eyes) and defend the true value of the asset. Or would, given the higher rates environment, the II’s accept the Offer, realise a reasonable return and deploy their capital into lower risk investments delivering a similar return.
In my view, the II investment world has been through a sea change, capital that is high risk and under delivering is at an acute risk of being sold off at a discount and redeployed into lower risk investments.
The II’s could realise a return on KMR and reinvest it into a senior secured Corporate loan at 15% so why leave it in KMR?
The reality is the board is paying a dividend (less IWT) and the capital appreciation is currently extremely poor.
If the II’s were given a chance to realise a good return (say $600-800m) would they really feel leaving the capital in KMR for 3 more years look attractive versus lower risk similar return investment opportunities.
In my view, the board may serious struggle to defend a reasonable Offer of 2x the current share price which for me and many others would be hugely disappointing.
The board appears to be asleep at the wheel again. They are not driving the investment story. II’s are not buying in to replace exiting II’s and that is why the share price is on its knees. The global macro story explains why the share price should only be around £5 not £3.20.
Top quartile miners are not trading at 1.2x EV/EBITDA and I feel the company is a SITTING DUCK
Fair comment, I think £5 per share would be a miserly sum but indeed, right now (Friday evening, long week, need a 🥃) I would take the £5 per share and run.
Monday I may be a little brighter but let’s see….. obviously there is no Offer……. Yet!
Thanks Saga, always value your comments.
You know I’ve been a big supporter but I feel like the board have fallen asleep at the wheel, much like they did before the Iluka Opportunistic Offer.
For me, with much regret, I’m in the same boat. Bring on the offer and time to move on.
DH said I a recent interview that if the Company could cherry pick the various packages it was possible that the entire $120m would be secured without any dilution.
He caveated the comment with but we know that can never happen. He has previously indicated that it could be less than $50m of dilutive equity. Again he caveated that it could be less.
All in all, the board are still negotiating terms and I expect the dilutive requirement will continue to decrease.
In my opinion, the next round of data will strengthen the boards negotiating position. Therefore, I’m firm in my position that the final equity requirement will be less than $50m.
If you carry the view that institutional investor have masters and will wait for certainty on dilution before coming to play. Then there is significantly more than $50m to be deployed when the Vendor Financing packages are in place.
With the right strategy, the share price will be allowed to rise and to determine the equity valuation in advance of the equity raise.
The comment, that, the current Vendor Financing partners are ”valuing the asset” not “looking at the current market capitalisation” indicates that a correction is current part of the negotiations.
Hence, DH’s comments “you could wake up one day and the share price is significantly higher” and”we know the share price can run, and when it runs it runs”.
Form your own view, accept the risk and place your bet. Good Luck 🤞🏻
Looking at the announced information (not available for H2 2023 yet):
H2 2022 EBITDA = $298m - $106m = $192m
H1 2023 EBITDA = $110m
Last 12 Months (LTM) EBITDA = $302m
Market Cap. Today = $368m
EV/EBITDA Ratio = 1.22x
Even if H2 2023 generates $140m EBITDA that means the current EV/EBITDA is 1.47x
Forgive me, and I hate to say this, but the Board has got to be feeling very vulnerable. I cannot see the Institutional Investors sitting back and saying its ok we will look through 2024, 2025 and 2026 with reduced dividends before we get a capital return of Net Asset Value.
If we assume a 3 year window to return $800m as an Acceptable Return and 15% as a Discount Factor, or Return achievable on cash over same period.
Then Selling today at $526m (or £4.64 per share) would allow the Selling Institutional Investors to exit. This represents 1.74x on LTM EBITDA and 1.77x on 2022 EBITDA.
In my opinion, the Company is a "Sitting Duck" for a Global Competitor to Buy KMR on the cheap and arbitrage several turns on the multiple.
Of course, I can turn this into a Buy the Dip argument and I do feel with the right approach KMR could realise $1.2-1.4bn on a sale. But if the current approach was right the Share Price would not be £3.25.