Roundtable Discussion; The Future of Mineral Sands. Watch the video here.
What a price 10.6 for 10k is! 3.72m market cap! The 1m dollar earn in payment received a few weeks ago plus the 3.5m still to come underpin almost all of that at current exchange rates. As close to risk free as it gets in micro cap IMHO.
Just to add to Nomlungu’s point- and if the mine doesn’t get built but we do get the remaining earn in payments (which seems practically inevitable now) then we are now buying around 5.5m of cash and marketable assets for a current market cap of 4.25m with Ideon/Cap Energy/Golden Sun thrown in for free.
Just posted on ascendant website
And if they don’t deploy any of that capital then at current market cap you are buying a business for 20m EV that makes 3m PBT albeit with no growth prospects.
I thought that sounded really promising yesterday.
I could see a situation in which they quite quickly and easily deploy around 6m of capital 30m total on a 1/4 leveraged basis. They borrow at 4% on that (slightly less as 6m will be free of interest) and lend out anywhere between 8 and 18% so I’d assume an average gross profit of 9% or 2.7m, assuming some extra admin expenses and defaults that could reduce to around 1.7m PBT to add to the 3m they are currently earning.
If they show a 4.7m PBT in a years time it’s very possible they could trade at 10-15x that given they have also outlined a plan to double the loan book from there. Of course that stage of the plan is a lot more difficult to execute than deploying their balance sheet capital but I think it’s possible the market would give them the benefit of the doubt having seen them execute the first stage.
Yes I think so.
Plus another 1m usd that is due in the next few weeks from Ascendant.
Of course if you include the NPV for Lagoa Salgada then you get multiples of these stated numbers.
Worth noting that their three (I believe) largest equity stakes Barrick, Cerrado and Ascendant are up 18%, 50% and 58% respectively since the 31st March stated NAV
Lots of buying the last couple of days, wouldn’t be surprised if we a major holdings RNS on Monday
I had a look at the Ascendant trades from Friday, exactly 400,000 were bought in a 90 minute period so seems likely that it was one person/institution that has recognised the opportunity.
haha yes absolutely i think we're broadly saying the same thing but you're correct it is 17%
also it's more appropriate to use the after tax NPV not the pre tax
thanks Nom
I believe the remaining earn in payments from Ascendant are 4.5m not 3.5m
the 36 month payment of 1m
the 48 month payment of 1m
and the final 2.5m should a feasibility study be conducted within 54 months of July 2018
Also, if you take the 137m net present value discounted at 8% from the PEA of September that would imply that the residual 20% ownership of LS is today worth 27.4m dollars however Ascendant also stated in a recent zoom presentation that the annual production will be 50% higher and life of mine more than 50% longer in the new PEA so that could double.
I completely understand that you might not want to consider that in a conservative NAV estimate until we are further down the line and funding for the project is secured but I think that's what is so attractive about MAFL, the payoff is huge if LS is what we believe it is but if not you are paying 4m for at least 6m cash and tangible assets once the earn in payments are secured.
It's a bit like betting a tenner at 20\1 but if you lose you get £15 back!
It’s unclear to me whether or not they still hold that as elsewhere in that presentation they refer to information only up to the 31st of December, the reporting period in which they also mentioned closing a short copper position although that appeared to be a put and the one in the presentation is a short etf so they may well be different positions.
Even so it is one of 14 positions that make up their tactical portfolio which itself is only 19% of NAV so it’s very small. Shouldn’t do too much harm.
Cerrado, Barrick Gold and Ascendant all having really good weeks, all direct shareholdings for MAFL, all good for the NAV
Hi nom,
Haha yes I was trying to be conservative so as not to be accused of `pumping’ but yeah all the noises since the PEA suggest that it could be even better!
Agreed but I think liquidity is a problem that solves itself when the numbers are this attractive. Maybe not today or tomorrow but once the market sees an 8-9m NAV update that is made up of cash and mostly public assets, it becomes too attractive to ignore (I hope!)
They’ve appointed a guy from redcorp due to his expertise of Portuguese mining. They even specifically mentioned the 80% earn in as part of the press release. As far as I can make out, the NAV is now almost guaranteed to become 9m GBP in the very near future which is the 5.6m at 31st December plus the remaining 4.5m dollars (3.24m GBP) of the earn in from Ascendant.
If Lagoa Salgada goes ahead we will also be due 20% of the 202m dollars of post tax cash flow generation over 9 years per the PEA published on the Ascendant website. If accurate this would equate to a further 4.48m dollars (3.23m GBP) every year for 9 years.
Am I missing something or is this one of the best bargains in the market right now!?
Thanks GS
That’s really helpful
Did you happen to notice when they mentioned the 38m dollars in the bank towards the end? When I saw that in the results I had assumed that was after the placing but before the 26m acquisition so today’s cash balance would be 12m dollars but he seemed to be suggesting that it’s 38m post acquisition.
If anyone has clarification on this it would greatly appreciated. Thanks.
Hi Bismarck,
Personally I’m invested because despite some restructuring costs and write downs, the underlying business has remained cash flow positive throughout. I agree that a lot of the problems were pre Covid but a significant amount of the recent drop in profits is due to fewer people on the roads etc.
If you discount the exceptional items from the 2019 figures (I think mostly impairment of goodwill and some restructuring) then the underlying operations made a circa £9m profit, if they return to those numbers once the Covid/restructuring is out of the way then it’s very, very cheap, in fact around a 4x EV/net income multiple.
Of course though that is a big 'if' as the new legislation regarding road traffic accidents will likely cost them some business, exactly how much remains to be seen. In my opinion the share price is currently factoring in a catastrophe where we may only see serious distress.
All IMO of course ????
Hi All, I'm new to MAFL. looks good to me, 5.6m of NAV which could soon be more like 6.8m if the Cap Energy write down gets reversed with oil prices buoyant again plus a $1m cash payment due in June (assuming all other holdings being equal of course) and that's all before the potential large earn out from Lagoda Salgada. Also has a couple of years of operating expenses in the bank and mostly publicly traded assets so the stated NAV is reasonably transparent.
If there are any risk factors LTHs think I've missed i'd be grateful of any input. Thanks and GLA