Member Info for esduk

3 MM’s on the bid now at 41p, looking good for a strong blue day.

Another happy Friday for Mkango and their shareholders.

Will let Myles confirm himself but as posted earlier I think the related shares have already been sold over last few days so don’t think it’s Myles as he was planning to convert in order to give the company some funds and was planning on holding long term.

Before I saw your post Tortoise I was going to write that no doubt we will be blue soon and of course we now are. This is the good thing about BB’s, those who have seen all this before and have seen how MM’s play the game are able to reassure others who may be newer to AIM investing/this share and prevent them being taken in by MM tactics and selling when they should be buying!

Tortoise, not sure how long you have been reading the board, but we have discussed warrants at length. I am absolutely of the view that warrant conversion RNS’s are positive, particularly as they always seem to have been forward sold which drags on the share price rise pre conversion (a la the last week).

As pointed out by SG, the last time the warrant related overhang was cleared the SP shot up. I’m pretty confident some of those big after hours reported trades were the warrant related shares being forward sold or that the holders sold their underlying shares and replaced them with the ones related to the warrants.

The company gets over £200k in cash and we remove the overhang, both very positive. Everyone has their reasons for selling, and they won’t have any more info than we do on the company prospects. Perhaps their original target had been hit, they were on a 6 bagger from the warrant conversion price of 7p.

Mm’s appear to be opening this down 0.5p, the dirty dogs… That RNS is very positive for us, so don’t be fooled!

Was listening to an podcast with famous natural resources investor Rick Rule last night. He was asked about the MP deal and his current view on Rare Earths. He said that while MP has really run up this year the rest of the industry and rare earth pricing in general still have a long long way to run.

Also provides the company with some extra cash which I’m sure will be helpful.

I don’t think it was dafad. I think the shares from this warrant conversion have already been forward sold over the past week. Was half expecting this RNS, which again is very healthy and should remove any immediate overhang like the last conversion did. Myles was planning on keeping his converted warrant shares long term based on previous posts. Anyway, a positive development to my mind.

Very good biffa! I’m on a self imposed pub ban for the next week at least, would need a pretty good set of RNS’s to land tomorrow and next week for us to get to £1, but never say never… My Irish upbringing makes abstaining from alcohol for more than a week or two a near impossible task, but I can always drink at home instead and make sure I eat something!

Thanks for the kind words folks, I certainly enjoy the chat, camaraderie, knowledge and news sharing on here very much and we have definitely done very well to build and maintain a really good culture on this BB.

My job was working as an infrastructure and corporate finance advisor at PwC for nearly 20 years, first in London and then seven years in New Zealand, until I moved back to the UK just over a year ago. Didn’t want to jump back into that world in London as have a young family and wanted to do something more flexible which allowed me to travel less, and be a lot more involved in family life. So I now do some consultancy in the infrastructure and energy transition space, and obviously spend way too much time watching trades on LSE!

Not sure I would have been clever enough to be an engineer, but I did build a few fairly complex project finance models in my early years, so I know my way around a DCF calculation.

Correction, NPV Julian mentioned at his last investor presentation was $650m. So replace $165m with $195m illustrative value for our share of first US project and $110m with $130m illustrative value for our share of the second and third. These are all values as of right now and have been adjusted for execution risk. If you don't apply execution risk we are talking $260m and $520m respectively. Also see below for my post from the time 31st July which also discusses what EXIM debt financing could do for our project economics.

"Nice one Myles. Yeh I also picked up on the $650m NPV point and would also say that the NPV of the project is also likely to be greatly enhanced by low cost finance from the US government's EXIM bank. They have assumed a real discount rate of 7%, so let's say c. 9% nominal discount rate. If EXIM are providing c.70% of the financing via a low cost loan e.g. 5% (nominal rate), this would imply a discount rate (cost of capital) of for the remainder of the 30% financing of over 18%!

In other words, the EXIM debt financing will greatly enhance the equity IRR of the project. Forget the 31% real IRR quoted in the feasibility study, we would be looking at closer to 50%. This is why project finance SPV's are always highly leveraged, the returns to equity can be enormous. This is without mentioning grant funding, pre-funding agreements with offtakers, and third party equity investment."

On a related topic I just got a call from Benchmark Minerals as I had expressed an interest in getting access to their ex-China rare earth pricing analysis, which is based on discussions with suppliers/customers. Very interesting conversation, with the guy complimenting me on my rare earths knowledge, apparently I'm way ahead of the curve! But more interesting was that he said that the phone is ringing off the hook at the moment and they all want to talk about rare earths / rare earth magnets. A very good sign for us I would say, it certainly seems that we have got to the party early (some of us very early!) and have the best seats in the house!

Haha, just re-read your post Kaeren and realised that you weren't asking me to explain my valuation, but instead thought I should make a similar post to my 12:52 one on a regular basis for newbies! Oh well, it was fund writing it. Perhaps it has wet my appetite... When I get the chance/time I might try and do some NPV calcs for our German and UK plants based on tpa scenarios, NdPr/magnet pricing scenarios and operating margin scenarios given that we don't have certainty over any of those three inputs/assumptions.

Kaeren, I often point newbies to the Corporate presentation on the company's website, last updated in July, which sets out the whole range of businesses we are involved in. That will give a good overview.

I haven't done detailed valuations on each part of the business as I don't have the detailed information to do this. Myles has done comparative valuations to peers which are great.

We have a DFS for Songwe, which is a few years out of date, didn't include Pulawy and has potentially been superseded by the indicative 91p implied valuation of our share of MKAR. We will soon have a market derived value for MKAR, not long to wait.

We also have the Feasibility Study for Hypromag USA, though the pricing and scope of this are now out of date. Julian is talking about $550m NPV for each of the US plants, of which our share is 40%. He has talked about 6-10 potential plants, with our first Texas one highly likely, the Nevada and South Carolina plants having a good chance of happening, and the others a little more speculative.

How do you value that our first US plant? Illustrative example:

40% share x $550m NPV x 75% chance of successful execution = $165m, but as we know the pricing is getting better an better by the day (25% up in a month and a half), the NPV would improve massively if we got low cost EXIM debt financing, and it doesn't take into account tax credits, potential municipal/state/federal funding, a deal with the DoD etc. So that $165m should be seen as a base, with massive potential to the upside.

How do you value the next two plants today? Illustrative example below:

2 x 40% x $550m x 25% = $110m, but with massive potential upside as above.

How do you value Tyseley and German plants which are already operational / funded? We don't have a feasibility study, NPV or project economics for either and it would be a big exercise (for which I don't have the info) to do the calcs from scratch to arrive at any kind of reliable NPV. But let's just say that having spent nearly all of the money to get them up and running, they are going to be operating at fantastic margins and generating considerable FCF when they are operating at full capacity at 330 tpa (a third of the size of US plants but little/no capex left to spend), which they have talked about potentially expanding.

Then there's the other potential global partnerships in Japan, South Korea and Canada, for which we should get even better free carry deals than we did with Cotec for the US JV, given we are in a much stronger position and will have commercial scale proven technology. Then there's the other potential US plants.

The more you think about it, the more the value keeps going up. Let's just agree to say that we are vastly undervalued at £134m!

Yes, as STN points out, if you want to understand more about Mkango's value, Myles' comparative value analysis on here (M.McNulty) and X is a great read.

That's a little bit of a how long is a piece of string question, but I'll have a go anyway, all just imo of course.

The NASDAQ SPAC transaction should/will have closed by this time, with the current indicative value of Mkango's share of the MKAR equivalent to 91p a share. As velcro and others have pointed out, a lot of positive developments have happened since that valuation was carried out including the MP / DoD deal and a roughly 25% increase in Neodymium price (since beginning of July). So potentially take 91p, add some for positive developments meaning the valuation will go up on listing, and potentially discount a little for the fact that we are on AIM and the 100% of the value of MKAR shares may not be reflected in our share price immediately. So let's stick to 91p given the combination of these two items.

Then the recycling business, where by the end of the year we should have Tyseley going gang busters, our German plant open and construction started on our first US plant in Texas. According to Cotec there is also potential that we will have announced intention to proceed on at least one other American plant by the end of the year. We will most likely have got announcement on further feedstock agreements, offtake agreements, US government EXIM low cost debt financing, potential US government grant funding and potential DoD/MP Materials deal. Add to this potential news on tie ups with partners in Japan, South Korea and Canada. It's hard to value all of this, but if most of it plays out then I think you can add £1.50+ to the 91p for our share of MKAR.

If I was being a little bit conservative I would say 120-150p by year end, if I was being bullish and most things materialised I would say £2-3.

Makes sense STN, and from what I've listened to filling gaps is healthy, but not filling them can also be a bullish signal.

Agree Bonker, retest of previous resistance, which has now become support, is very healthy too. And yes, the neodymium price continues to increase towards the DoD price floor set out in the MP deal, which is just fantastic for our projects' economics across the board.

Looks like a big chunky 161k buy from post close yesterday at 42.5p.

My understanding of technicals isn't too hot STN, but I have the highest trade of Monday at 39.9p, with the lowest trade of Tuesday (pre-open at 7.54am) at 40p. So if we are considering gaps between the trading range/full candle from one day to the next, the gap would be at 39.9-40p, which was duly filled on the (no selling volume) pull back this morning. So gap filled based on my rather basic technical understanding.

Congrats on 51 years LifeOReilly, quite an achievement to still be grateful for your other half after all that time! I certainly wouldn't describe my missus as happy go lucky, but in general she tends to accept my many flaws and I do have to give her a good bit of credit for that...