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Looks like everything in results was good for FY22. FY23 will be tougher as they adjust to new interest rate environment but should be back to decent profits again thereafter.
They make mention of two large players in the industry, Orchard would seem like an ideal takeover target. The opportunity to acquire a 16.5m net loan book that is almost completely free of impairments at a discount… Chuck a couple of synergies in there and it’s an acquirers dream!
Thinker, I thought you were out at 12.7!?
I will be flabbergasted and delighted in equal measure if the price rise doesn’t hold this time. The opportunity to buy at a 3-4m market cap with the increased certainty we now have would be a rare gift indeed.
The difference this time around is that we have just received 1m dollars in cash and are now certain to receive another 2.5m dollars imminently which underpins a significant portion of the market cap. All the previous jumps in the share price have been caveated with the uncertainty that we may not reach the point that we have now very definitively achieved.
Well there you have it
Yes it would be nice to get clarity. However, 5% of an operational Lagoa Salgada, £2m of listed shares, £0.9m Ideon stake, £1m or thereabouts cash in the bank, £2m payment due in December and the value of Golden Sun has to be worth multiples of today’s market cap.
Admittedly there are a couple of assumptions in there but im not gonna be far off with those numbers.
Trading just above cash does seem a bit silly.
I don’t think it’s complete madness, there is a case to be made that some of that cash is going to be burned opening and closing a warehouse in Europe for 18 months while, at the same time, demand is destroyed at home for 3/4 years.
But that’s the worst case scenario. Anything other than that and it’s good value.
Possible funding sounds promising. I’m all for anything that goes towards solidifying that December payment.
Once that’s in we have a £5m-ish tangible floor in the price. Then it’s just down to letting peoples imaginations run wild about a Portuguese polymetalic deposit, a Costa Rican Gold mine and a possible Canadian tech IPO.
Got to be worth another £5m at least!
Jeez results weren’t that bad! Still profitable and now trading below net cash.
If you discount the hedges which should even out over time, you have 1.1m of net profit (2.2m annualised). With impairment provisions significantly increased to 9.6m.
If those impairment provisions are accurate then at 38m market cap it’s probably fairly valued, if not, slightly expensive at 38m or 17x net profits.
It’s a big play on impairments now. If those provisions prove to be too high it could easily make 4m or 5m this year but if they’re too low it could be loss making.
So the long and the short of it is that you have a business with £57m of tangible equity that just made £4m which was less than last year even though they had much higher revenue. The drop is attributable to increased finance costs from the $50m loan and increased general costs as they grow the asset base.
They should make more than that in the next few years as the fund money gets allocated. Save for the risk that they have one big boo boo that costs them millions. Which is probably more likely now than before as they are operating in larger cases, in unfamiliar territories and with the added pressure to allocate investors money possibly leading to riskier investments. That’s not to say that more likely is necessarily very likely though. This may be an increased but still very low risk.
I’d say it looks attractively priced at £90m when you consider the LCM only tangible assets, the growing third party asset base and the historical record for compounding those assets organically.
Large buy went through earlier by the looks of it when the bid briefly dropped back to 11.50.
I’m not surprised to see the interest in this picking up now. We have a £2m payment due in December that would take tangible asset value above the current market cap.
Ideon has just taken its first major step on a long road to a potential IPO, if it gets there then a 300-400m valuation would value our stake at today’s market cap.
If Lagoa Salgada gets funded we will make tens of millions in cash flow over the next 14 years whether we own 5%, 20% or anywhere in between.
We have very little info on Golden Sun so far but we would have said that about Ideon a few months ago too so who knows, maybe there is decent value there too.
In short there are lots of ways for this company to be worth much more than £4.5m but it would take a number of disasters all happening at once for it to be worth much less than £4.5m.
That’s definitely true but don’t forget that we also received the $1m from Ascendant. We know that is carried in the NAV at a discount to full value until it is received, we just don’t know what that discount is. I use 50% but admittedly that’s a guess.
If 50% is accurate then we have $0.5m to add to the NAV in June plus £0.65m just added by the Ideon uplift.
That would more than offset any drop in the listed portfolio.
It also doesn’t account for the $2.5m to be received in December which could add another $1.25m to the NAV if my estimation of the discounting method is correct.
Either way JV deserves a lot of credit here. To have announced a 9x valuation uplift validated by a third party VC who are actually putting their money where their mouth is… that’s no mean feat under current market conditions.
Possibly Nom.
But it could also be that he means the NAV is so high now that the cash from Ascendant is fully recognised (or will be soon) that a 650k uplift isn’t that much of an impact?
I haven’t gone back and checked but I remember working all this out from a JV proactive interview a few months back. I believe I had our £237k stake marked to a $12m valuation.
Worth noting that $16m is the amount raised not the valuation. We would have to know how much equity was sold in order to get the valuation.
In that same interview JV hinted that Series A funding rounds tend to be minimum $50m valuations. If we assume the Ideon valuation was around that then the £237k carried value is probably worth more like £1m right now.
We can’t know for sure until we know how much equity was sold in the fundraising though.
Anybody want to own up to these buys!? I know it’s got to be one of us regulars!
Whoops I meant 100m minus costs
Interesting update from Greenx making a lot of references to the recent rockhopper award.
They are saying that rockhopper were awarded about 2/3rds of their claim and will pay 20% of that to the litigation funder.
If those numbers are the same in this case, that would be about £50m to LCM minus costs.
The recent dollar strength has meant that the December payment of $2.5m, at today’s exchange rate, is now worth £2.17m. Exactly a year ago it was worth £1.8m.
So that’s 10% of the market cap gained in one year from the currency difference of one payment from Ascendant.
The actual payment itself currently equates to 58% of the market cap.