The latest Investing Matters Podcast with Jean Roche, Co-Manager of Schroder UK Mid Cap Investment Trust has just been released. Listen here.
Merry Christmas everyone and a Happy New Year.
KOD has risen nearly 40% YTD. I would be very happy if I can say the same next year. I hope that it contiunes to compound for all subsequent years at this rate.
Johnny, I would be surprised if KOD did go as low as you believe it will. If you are shorting I think you are on the right side of the fence until at least January/ new RNS which could change the current narrative of the stock.
From my perspective I am waiting for the mine to go into production and beyond before the share price became a concern.
Johnny at what price would the SP need to be before you bought in?
As far as Mali goes I am not seeing anything out of the ordinary. There were a couple of news articles one pro-europe one pro-africa that I saw at the weekend. As usual the truth will be some where in the middle.
https://www.france24.com/en/africa/20231202-burkina-faso-and-niger-to-quit-g5-sahel-anti-jihadist-force-following-mali-move
https://www.africanews.com/2023/12/02/burkina-faso-mali-and-niger-look-to-form-a-federation/
04-Dec-23 11:03:11 0.3998 477,738 Buy* 0.39 0.40 1,910
gobble gobble
I'm sure hes there some where ;)
14.51% Hainan Mining Co., Ltd. 2,937,801,971 UK£12.7m
11.85% Suay Chin International Pte. Ltd. 2,397,614,425 UK£10.4m
7.35% HBOS Investment Fund Managers Limited 1,487,450,311 UK£6.4m
3.97%A J Bell Holdings Limited, Asset Management Arm 803,277,814 UK£3.5m
2.95% Barclays Bank PLC, Wealth and Investment Management Division 596,503,923 UK£2.6m
2.73% HSBC Global Asset Management (UK) Limited 552,807,794 UK£2.4m
2.27% IG Group Holdings Plc, Asset Management Arm 459,555,953 UK£2.0m
1.51% Killik Asset Management 305,000,000 UK£1.3m
1.24% Bernard Aylward 251,364,799 UK£1.1m
1.18% Fidelity International Ltd 239,636,033 UK£1.0m
* Figures correct as of 01/09/23 except for Hainan who updated on 15/11/23
The top 25 holders now control 54%.
Following on from what I said last week. For me KOD is now a buy rather than a hold. So I will be looking to buy more next week at these prices.
Yes Lav, I completely agree. This is very much like playing Happy Families sometimes its a honest game like I feel KOD plays. On other shares it's like playing with your cousin who is never completely truthful about the cards they hold.
RNS 27/10/23 "Kodal has agreed warranties and indemnities up to US$100 million in relation to the waiving of these conditions precedent for the transfer of the Bougouni mining licence and the Sogola-Nord concession. The warranties and indemnities cover the period from Completion (as defined below) to the point of transfer of the licence and the concession, with a two year period for claims to be made. Kodal will warrant the good standing of the licence and concession at the time of transfer."
The words "up to 100m" is an important distinction, there are two items which need completion and they are viewed as separate to each other in the agreement. I would read the "two year claims period" part as we have from date of completion agreement plus 2 years (Nov 2025) to complete the outstanding items. It could also mean 2 years from the date of transfer if for example Hainan felt KOD had not acted in good faith. Unfortunately the RNS wording is not explicit on this.
Lastly KOD will warrant the good standing of both items to be completed, this is possibly the only thing which could bring the two year timeline forward. BA is a very diligent man with many years of experience in Mali, I cant see a scenario where he allows either items to not be in good standing.
This is a good faith agreement, all parties understand the path they are on and are happy to remain together for the journey. Hainan has taken the real risk and has chosen to entrust us with a lot of money with the expectation that we use it wisely. In the event we do not, they would like some or all of their money back, which is perfectly reasonable.
Merc I would caution against that line of thought, for two main reasons; One being that determined spam/troll accounts could quickly reach for example 200 posts. Two a welcoming board to new accounts reflects positively on the company, yes the same questions must be answered repeatedly but I would rather those answers come from established members on the BB.
Yes Roman the cash has been given, there was string attached though because not all parts of the agreement (Jan 23)had been satisfied before completion.
27/10/23 RNS
"The agreement for completion of the Transaction follows from the waiving of certain conditions precedent relating to the reorganisation of Kodal's Mali lithium assets, being (i) the transfer of the Bougouni mining licence from Future Minerals SARL to KMUK's new Mali subsidiary, Le Mines de Lithium de Bougouni SA ("LMLB"); and (ii) the transfer of the Sogola-Nord concession to Future Minerals SARL, which will also be a 100% owned subsidiary of KMUK. The Mali government will become a shareholder in the subsidiary mining company following completion of the transfer and finalisation of shareholder agreements and LMLB has been established to be the holder of the Bougouni mining licence and operator of the mine. These transfers will occur at a later date once formal approval of the Direction Nationale de la Geologie et des Mines ("DNGM") in Mali has been received. Kodal continues to liaise with the DNGM to seek completion of the transfers as soon as possible and in the meantime these assets are deemed to be held on trust for the benefit of KMUK, whilst Kodal progresses the Bougouni Lithium project with the funding from Hainan.
Kodal has agreed warranties and indemnities up to US$100 million in relation to the waiving of these conditions precedent for the transfer of the Bougouni mining licence and the Sogola-Nord concession. The warranties and indemnities cover the period from Completion (as defined below) to the point of transfer of the licence and the concession, with a two year period for claims to be made. Kodal will warrant the good standing of the licence and concession at the time of transfer."
The cash was given in trust with a 2 year timeframe to complete outstanding items. Im confident that these items will be achieved as they are in the hands of the Mali government to complete if they want to then exercise the option on LMLB and make money for themselves.
Hi Accionista, thank you for the numbers.
So in Sep 22 our partners valued KOD at: (100/14.81)17.75=119.8M
And Valued KMUK at: (100/51)94.34= 184.9M
At today's prices that's certainly a strong buy signal.
So if we do reach the end of the 2 years without transfer there could be a range of outcomes. But if I just use a good and bad one.
Good; Mine is producing, revenue is about 56m pre tax end of 2025 (i believe, please don't quote me. It's from an analyst on simplywallst). I would expect we could secure separate finance to repay 100m or Hainan could convert into a bond which could then be repaid.
Bad; Mine not producing. Hainan could look to really turn the screw on KMUK and take our 49%. KOD today would be wiped out, but KOD in 2 years time after using 17.5m to explore and prove who can say.
Badomen it could be suggested from the RNS, that as the company is targeting production in the next 12 months and the Mali government will no-doubt be keen to have exercised the option on LMLB before production starts that they will complete the remaining transfers to the Mali based company before this date.
It wasn't my intention to start an argument when I posted my thoughts. I have been building a position in Kodal since mid 2021. The way I do this is to cut out potential value and try to buy the most tangible value for each pound invested based on the company's reported accounts/ major news. I like everyone else am confident that over the next few years the price will be several multiples of where it is today.
I do not see how saying now is a good time to buy was interpreted as a de-ramp, but I guess my methods for picking entry prices is not the most usual way and may have caused confusion/irritation.
I am in no way saying my method is better than BA`s, Cannacord or Hainan`s. My methodology is just different to theirs.
P.S
Hi Lav, hope you are well. Merc, Daz, Elc, Acconista and yourself to name a few, do a great job at keeping the BB up to date.
Yes Paul, that's how I invest. The share is at a very nice buy in price right now. All my calc does is show the market is not really factoring in potential. I'm using rough figures given to us by the company to show this.
Others chose to invest based on potential. I like to look at value on the day of purchase isntead.
No, I understood very clearly. The company's assets were included using the Mar 2023 accounting (this doesn't include the recent 40% JORC increase) about 15m. That's what it's worth. There is great potential but at present that is its value.
Bougouni West sale has yet to complete, I don't count cash unless its already in the bank. Yes 6m will come back for costs for exploration etc but again that has not yet happened so I don't include it. I did say it was a very rough add up of company value.
I'm not sure how you arrived at the conclusion that I said the company has zero value? The company has roughly a value in cash and assets of 85m with a MCap of 95m. So you would be buying at a premium of about 13%, pound for pound on a cash basis.
I'm saying that currently market expectations are zero, the company's book value is essentially at 1. This shows to me the market has not yet noticed what a solid entry price the share is currently at.
Apologies- *13% premium not discount
I've been thinking about the recent milestone KOD reached when the funding was completed. Moving from exploration to pre-production junior miners. As we progress further toward pre/post initial production the share price will in my opinion be driven by larger investors (high capital PI`s or sector specific specialist`s) rather than a high volume low capital PI purchases.
What I think we are seeing here is the "loss" of interest in people trading the share (holding for less than 12 months) and the associated SP swings. It's not that I don't think there is good money to be made here, it's just that KOD would not feature as a pick for me if I was looking for high returns in a short period as now the stock carries less risk there is less volatility. There are better stocks out there if you're looking for a quick 20-40% however those stocks carry a much higher risk than this one.
My thought is that as positions are taken the SP will start to look a bit like a staircase and any real deviation from this will be from the get rich quick brigade returning for a quick pump (or 3). Or some random trend/hype which happens to include us/product/industry.
V. rough calculation on SP:
KOD cash on hand: 17.5m + 3.5m + (0.5m Mar 23 accounts) = 21.5m
KOD tangible assets =15m
=36.5
49% ownership of KMUK
KMUK cash on hand 100m so = 49m
TOTAL: 85.5m
KOD`s current MCap is 95m so we are trading at about 13% discount id say this is a fair price in a depressed market, £ rising against the $ (3ish % this month), and the product that we hope to sell currently decreasing in price this year. Importantly we have cash, but this cash needs to be spent on building a functional plant. As this happens I'm sure more people will begin to value KOD not just on a cash basis but also on a production basis.
Interim results out on 27 November. Discount to NAV is around 22% at today's price. There is also talk of a buy back next year due to a possible continuation vote.
I think buying at this price or anything below £1.10 should be a serious consideration.