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Yeah I definitely think that at least the 7.4m dollars of current de-commissioning liability should be considered debt, however this is more or less offset by the 5.8m of cash at 30th June plus the cash they will have accrued since period end. Which is why I left the cash out of my calculations and went with straight market cap of 20m instead of a reduced EV number.

GL

A lot of the focus here seems to be on sancrai and other potential production increases and rightly so but I think it’s worth pointing out just how impressive current trading could be even if we assume (amongst some other assumptions/guesses) that production remains stable from the first six month period of the year.

If we take the 13 figure for gas mentioned in the interim investor presentation vs the 6.59 realised price in the report then gas revenue will double and oil revenue is also up but not as much. Most of the revenue comes from gas so a decent guess is an 80% increase in revenue, that’s 28.6m.

The royalties tax should go up in line with revenue however the windfall tax jumps significantly as the realised price goes up therefore I’ve calculated them at higher rates of plus 80% and 200% respectively but I admit this is guesswork so if anyone has worked this out precisely, I’m happy to be corrected.

Royalty tax 2.9m
Windfall tax 5.1m

I’ve assumed production expenses and admin expenses remain stable.

Production 4.6m
Admin 2.2m

I’ve assumed that depletion and
depreciation will increase due to the higher price realised and perceived increases in capex but again this is pretty much just a guess.

D&D 8m

Zero finance expenses as we are now debt free.

That gives a pre tax profit of 5.8m dollars. That’s 4.25m GBP for the 6 months or 8.5m GBP in a year.

I know that these prices are exceptional and it’s anyone’s guess how long they are sustainable but at that rate and without any production increase, SENX would make the entire market cap of 20m GBP in under 2.5 years.

They usually RNS investment updates at 1230 so there is still time.

You will only see the Cerrado holding in the NAV update at it's carrying value as of 30th June which was 1.32, about 475k gbp once you convert the currency, the value today is more like 580k gbp.

Got to reckon we’ll see an RNS this morning to report that Cerrado PEA. Hopefully we see the Lagoa Salgada PEA soon after that too.

Hi mate,

The Argus broker coverage released at the beginning of the month seems to suggest August so im assuming they've spoken to someone at MAFL or Ascendant that has steered them. I doubt it's important but we might have to be a little more patient.

https://www.argusresearch.com/PDFDownloader3.aspx?id=MDAwMDAwOTk0MQ==aAB0AHQAcAA6AC8ALwByAGUAcwBvAHUAcgBjAGUAcwAuAGEAcgBnAHUAcwByAGUAcwBlAGEAcgBjAGgALgBjAG8AbQAvAHIAZQBwAG8AcgB0AHMALwAwADAALwAwADAALwA2ADAALwAyADUALwA3ADAALQA2ADkAQwBEADEARQAyADYALQA1AEYANQBGAC0ANAA2ADgAMgAtADgAMgAzAEQALQBEAEQAMABBADMARgA2AEEAOAA0ADUAQQAuAHAAZABmAA==

This is good for those of us that believe in the story here. Nothing has changed. Market cap completely underpinned by a combination of cash, liquid securities and future earn ins, promising non-listed assets in the price for free right now, millions in net present value at lagoa salgada etc. If you believed there was value in that story at 13p a share then you should really believe it at 10.30p a share. I certainly do.

Trading at about 5x cash adjusted pre tax profit. With liquidity of 8m on hand ready to deploy to increase those profits substantially.

Sherlock,

I think we’re pulling in the same direction here.

I’m referring to the 1m usd received in June 21, the 1m usd due in June 22 and the 2.5m dollars due to complete the arrangement in December 22.

Total 4.5m usd, approx 3.27m gbp

GL

Yes the addition of that cash to the stated 6m NAV is unknown as we don’t know the discount rate applied to future payments. However, I’m not talking about what these payments will add to NAV, I’m saying that the actual cash received in an 18 month period will be 3.27m gbp, which is almost all of the market cap at this price.

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!