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They also dropped the bid from 36p to 35.5p on nothing a minute before close. Lowest sell in the last hour and a half of trading was at 36.26p, yet we close at a mid price of 36.25p and registered closing share price of 35.5p due to a 3k UT. Smoke and mirrors…

Well they stuck in an uncrossing trade for 3k shares at 35.5p at the end of the closing auction. That’s 0.775p below the last reported sell. Tell me again that that’s not tricks being played…? It’s recorded as our closing price for the day and the week. Anyone who has MM’s down as innocent parties whose only aim is to create an efficient market hasn’t read enough/listened to enough (including interviews with former MMs)/experienced enough MM behaviour to know the truth.

On my phone so can’t see which MM’s are sitting where. But currently there’s one on the bid at 36.50p vs four on the ask at 37.50p. But two of those have been there for a few hours, when the SP was lower, and are therefore unlikely to be actively offering shares at 37.5p, so probably more like one on bid vs two on ask.

They seem to have let her go, if it continues this way the ATH close of 37.5p from November 2021 has a chance of being equalled or beaten…

As people have said before, a lot of the other rare earth plays (particular in the US) are already pricing in all the recent macro developments and the opportunity for big multi-bags is potentially now much lower. Mkango, being on AIM and TSX, is the obvious exception. If they want rare earth sector exposure but with potential for 10x/20x, then this is the place to be.

Second that. It’s been great not seeing any green boxes recently, let’s try and keep it that way.

Well, well, well, Friday does seem to be our special day of the week. Long and strong.

Thanks for confirming again Myles.

Yes, good point about negotiating power velcro. The good thing is we have plenty more opportunities to do even more advantageous deals now in Japan, South Korea, Canada and India!

Haha, yes agreed flundra. Cotec have a great strategy and have found some real resource tech gems, including Hypromag of course. Which is why I’m also invested there.

I’m pretty certain that we are tied to Cotec in the US. If we were doing the deal again in today’s market / macro environment then I’m sure we’d have our pick of major companies wanting to partner, but that wasn’t the case a few years ago when Cotec first took a stake in Maginito (Hypromag global parent company) or even when Hypromag USA was formed.

I agree that we probably could have moved a bit faster (noting Trump only arrived in late January) with a bigger company who could fund this from their own balance sheet, but don’t necessarily think Cotec being based in Canada is a material issue. The Trump administration cares about secure domestic supply chains in the US and re-shoring skilled manufacturing jobs. It cares less about who the ultimate owners are, unless they are actual adversaries like China. Julian certainly has plenty of ambition, and in a few months time there is a good chance that we will all be a lot happier with the progress in the USA.

Jimzi, I’m afraid to disappoint, but I’m not actually a qualified accountant (ACA / ACCA). Though I did work for PwC for 18 years in infrastructure and corporate finance advisory, and did my CFA, which covers accounting basics.

I also did a lot of financial model building for complex project financing deals, so had to know my way round a spreadsheet, balance sheet, P&L, cash flow statement, UK Gaap, IFRS, tax treatment and CFADS calcs etc. We did have tax and accounting experts to consult though.

Yeh props on the write up Myles, puts Shard to shame. Just a whiff of an announcement about either Hypromag USA or Hypromag global including USA being listed on the NADAQ would double the share price immediately I reckon.

Agree with comments on the thread. Think they have struggled to know how to value the recycling business as velcro says, so have been ridiculously cautious and applied a further arbitrary discount of 60% to the NPV.

If they hadn’t applied this then I think 70p for the recycling business as of today, and some discount on 91p for our share of MKAR (say 33%) to reflect that the SPAC has not yet listed and we don’t yet have a market approved valuation, would be appropriate.

That’s £1.31 based on where we stand today, without reflecting future prospects for US and global recycling business, a macro and pricing environment that is just getting better and better, and an executed SPAC at $400m valuation for Mkango’s share.

I have a problem with their double discounting methodology, but I also have a problem with them not even going to the trouble of providing an opinion on the value of the combined business. The good thing, as previously mentioned, is that even with the ridiculously cautious methodology, their valuation is still far in excess of where the SP is today.

For what it’s worth, their current valuation of Mkango’s share of the three recycling projects (UK plant, German plant and one US plant at current capacity) if you don’t apply the double discount is 70p.

91p + 70p equals £1.61, and that’s without any further expansion of our UK or German plants, any of the remaining mooted 6-10 US plants, any expansion to Japan, South Korea, Canada or India, and any: improvements to rare earth pricing, corporate deals, government deals, tax credits, discounted financing from EXIM/EBRD or government grants.

Exactly, a bit amateur really. Looks like they are being intentionally over conservative. Whether the reason for that is nefarious or they are just very cautious, I don’t know.

It seems like they know the business reasonably well, though are definitely not as clued in / up to date as we are on this board. They also say at the bottom that there is lots of potential for big upgrades to the value of the business in the near term as the UK and German plants continue to be commissioned, as things develop with the US plant and once we get a market value for MKAR.

I just think their methodology for valuing the recycling business doesn’t make a lot of sense and seems a bit thrown together. I worked in corporate/infrastructure finance and we often valued projects or businesses using the discounted cashflow method, but we didn’t then further discount the figure we got to. You either adjust the underlying cash flows based on what you think is achievable, or you reflect the risk to the cashflows in the discount rate that you use. Their methodology seems a big hodgepodge by comparison.

Anyway, a 28p valuation of the recycling business, even if it is ridiculously conservative, should provide any doubters with some comfort that we are well underpinned at this level, particularly when we have a whole other business (indicatively valued at 91p) to add!

Thanks for posting Razza. Am I being a bit dim or do they not provide a valuation / price target for the whole business?

I see they say current risk adjusted value of recycling business is 28p, and that they calculate this based on 0.4x their “un-risked” NPV calculation based on predicted cash flows of currently operating/planned UK, German and US plants (only one plant in the US). However, they use a 10% discount rate for the “un-risked” NPV calculation, before multiplying the result by 0.4 to get their 28p value. Given that the 10% discount clearly includes risk I don’t really understand their methodology fully.

Maybe they think Hypromag/Mkango’s cost of capital is 10% and think the execution risk is 60%. Clearly with Hypromag USA likely to get EXIM debt for 70% of its financing and potential for grant funding too, a 10% cost of capital would be much overstated. The German and UK plants are already built/nearly finished so not sure why you would be discounting cash flows from those at 10% and then applying a further 60% discount to get a valuation for them.

Anyway, even with a current risk adjusted value of 28p for the recycling business (based on very conservative assumptions as alluded to above), and a 91p value for our holding of the Songwe/Pulawy SPAC, we’ve got a long way to go when we’re sitting at c. 35p. Their calcs also don’t take into account any further growth in the UK or German facilities or any of the remaining 6-10 US plants that Julian mentioned in his recent interview, nor any further explanation into Japan, South Korea, Japan or India.

Some real strange behaviour from the Mm’s today. Three of them moved from 35.5p to 35p on the bid at 2.44pm, despite a load of buys at full ask at the time. Must be some big things going on in the background, or they’re just completely taking the p*iss.

Looks like next tick up could be about to happen based on L2 activity.

No worries. Of course, the actual reporting on this site is often wrong as it just uses a basic algorithm that reports anything above mid price as a buy and anything below as a sell, and anything that is delayed as unclassified. On high volume days or days when MMs are using large spreads (like earlier today) the reporting can be quite inaccurate, often intentionally…