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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.

Crazy that the market is willing to sell you £16m of tangible assets for £11m right now. Not to mention £2m of profits a year to compensate you for as long as you hold on to them.

I will accept that those profits may take a short term hit in the current interest rate environment but I’d be shocked if anything happened to the tangible asset value. The cost of living crisis would have to get unfathomably bad for people to stop paying their car insurance. That’s going to be the last thing to go.

20m operating profit, even better than I’d hoped for.

I think this is too cheap now. They were in a real sweet spot of government help combined with COVID related sector tailwinds. This was always likely to give them impossible YoY comparables.

However, they are still profitable and the strength of the balance sheet makes it very unlikely that they will need to dilute shareholders anytime soon. Indeed net cash underpins about 80% of the market cap right now.

Considering these factors the risk/reward here looks good over the medium term IMO.

Results announced along with ‘exceptionally strong trading in the current financial year'

They could be on to make as much as 15m this year I reckon.

https://youtu.be/DNqUFqHlWP8

So we are now trading below the value of cash - debt + working capital.

That makes us very cheap if you believe two things…

1. The net value of the two operations is more than zero.

2. The cash in the bank will be used to make a value accretive acquisition.

Personally I believe both of those things to be true and will be adding when money becomes available.

Anyone see that Finsbury Food update yesterday? Apparently they are looking to make acquisitions.

How about we offer them Shire at a decent price if they promise to take Indulgence with them!?

Thanks Nom.

The bit he says about funding within a month or so makes a lot of sense with Friday’s RNS IMO.

It may well be that he has an agreement with a lender/partner but the only thing holding it up was the possibility that Ascendant might have ended up with 68% of the project under the old agreement. Ironing out that crease, which Friday’s amendment achieved, may have been the final piece in the puzzle.

Let’s hope so

So in summary.

At the beginning of all this MAFL made a deal with Ascendant to earn in to 80% of the project by acquiring 80% of Redcorp which, at the time, everybody believed was the same thing because Redcorp acquiring the 15% government stake seemed a formality.

As the situation with the government dragged on Ascendant essentially said 'We’ve honoured our commitments up to now to earn in to 50% of Redcorp if you want us to continue to 80% which you told us was akin to 80% of the project, then we need to know that the government stake is your problem and not ours'

MAFL have now said 'ok fair enough that is what we said, give us a bit more time but if we get to production and the government still wants their 15% then we’ll change the ownership structure of Redcorp so that Ascendant’s ownership of Redcorp represents 80% of the project, the government 15% and MAFL 5%'

This is obviously speculation but I think the broad strokes are correct.

This might be cause for concern if we were coming from a 20m market cap but at 3.5m I see this is a really positive step.

Once we get the 2.5m dollar payment in December we’ll have about 4.5m of cash and listed shares. If Ascendant had any concerns about their ability to make that payment, you would think that this would have been an opportunity to amend that too.

Once we have that payment in the bank, MAFL is practically a risk free investment from these prices in my opinion. I feel more confident that we will get that payment now than I was before yesterday’s RNS. We already knew the 5% ownership situation as it was noted in the full year results so nothing has changed in that regard.

I’m really pleased. I was concerned that the 2.5m dollar payment would also be delayed but that is apparently not the case. If we get 2.5m dollars plus 5% of a mine that has government backing, we’re all gonna make a lot of money.

Maybe, it’s very confusing isn’t it!