focusIR May 2024 Investor Webinar: Blue Whale, Kavango, Taseko Mines & CQS Natural Resources. Catch up with the webinar here.
Come on Cotec, show us the money
Could be in for a cool £1m this week if all things are as planned
I doubt they still burn £800K a month
At least 33% less now they reduced the headcount by said amount, so maybe £500K or less as the last updated stated most of the costs and burn were down to the DHSC and ABC test
Not putting much hope on Vatic, I think they are all talk, they haven't achieved anything to date in terms of commercials
Taiwan order could be a good one, EUA is taking a long time though
Regardless, at this price, I dont think they really need a huge order, just a change of direction, onboarding reliable customers even if they only pay £100-£500K PA, all about growing the business sustainably, id like to see them achieve that over the next 6-12 months
Bought back in after a long absence
Surely cash must be pretty close to the market cap now?
I wonder if they are still interested in expanding to the USA, they did originally plan to do this with the DHSC money, probably a much healthier market than the UK (at least they wont have to sidestep bankrupt partners and court cases)
Unsure on the cash burn here but they did reduce costs recently, so I think this is the turning point, they've probably got a good £6-7m to have a go at it, maybe more
MKA
Mine = Songwe
Huge RE resource, DFS competed, economics lined up just need to finish the MDA and financing
Recycle = HyProMag
Patented technology currently undergoing various fully funded pilot programmes, looking for first plant next year in 2023, Cotec 10% / £1.5m investment in the holding company Maginito suggests current fair value of ~£15m - Cotec have also signed up for £2m of CLNS at 27p (£1m already acquired)
Refine = Poland Processing Plant
DFS underway with JV partner to look at constructing a processing plant in Poland, would improve Songwe economics by 30% and regardless, if commissioned will produce a quality secure supply of RE's for Europe from any source
Funding concerns
As per above, another £500K advanced from Cotec
£1m more to come from Cotec between now and October 15th
Cotec to close investment in Maginto of £1.5m before Y/E
Total Cash £3-3.5m (In other words more than enough, max cash burn was £500K and that was during the DFS which was very expensive ~£7.5m)
Who knows how high the SP could go
Bonker you are correct, I recall the days of 2.75p (covid) and at the time we were all saying the Talaxis deal valued the project (pre-dfs) at around 24p, behold a year later Talaxis took 33% of the group for you guessed it, 24p
don't lose sight of the true value here just because the market is getting spooked or playing silly games, we have great management (as evidenced by the cotec deal and funding) and they will deliver serious long term value here, the country is also very supportive, this is a huge deal and project for malawi, everyone is on the same page and true value will be realised I suspect very soon
Suspect it could be US PE
Started rising at around 2pm (US open) so they may be building a small position before making an offer
With the strong dollar and relatively low PE of UK stocks (vs US stocks) - UK business is very attractive at the moment
NEX also has a large US base
13p Paid
Looking a bit better, suspect we will attract new large players here
Newton (ex HSBC) was adding at 18p not too long back, taking his holding to over 4%, hopefully he will be back and looking to get a bit more like the rest of us
Superb news yesterday from COTEC, a really great supportive partnership underway and they must see tremendous value in HyproMag
HyProMag news from yesterday, pilot plant to be commissioned in 2023
https://www.birmingham.ac.uk/news/2022/pilot-recycling-plant-for-rare-earth-magnets-launched
Good Morning all
Yesterday Cotec advanced a further £500K as per their agreement to advance £2m GBP to Mkango before October 15th
***CoTec may extend exclusivity to 31 December 2022 by completing the £2 million (C$3 million) convertible note to Mkango ("Mkango Note") by 15 October 2022***
The nature of this is a CLN however it is only convertible AT THE EXCERCISE PRICE OF 27P, a significant premium to the current SP
COTEC could have walked away from the deal, however with MKA shares sitting at 12p they decided to double down and go ahead with a second £500K payment, an extreme vote of confidence if you ask me - they had already committed £500K but to literally double down again on the same terms at 27p and advance another £500K bodes well not just for Mkangos current valuation, but funding in the future
COTEC according to plan, should advance another £1m before the 15th October 2022 - if they do they will then have until Y/E (extension) to complete the transaction to aquire a 10% interest in Maginito (and HyProMag, which announced very good news yesterday)
They will hopefully close the deal on this transaction before Y/E (deadline 31st December 2022) in which case, MKA will transfer 10% of its holding in Maginito for a £1.5M CASH PAYMENT
Therefore, at 30th June 2022 (post DFS) cash balance stood at $1.3m USD
Post period COTECT have advanced a further £500K (yesterday)
In the next 4-5 weeks MKA will receive a further £1m GBNP (1.15m USD) in which case the CLN will be completed and COTECT will have £2m worth of options at 27p to convert over the next 2 years, +5% interest
Again, all going to plan, MKA should have the transaction completed by Y/E for £1.5m totalling (including yesterdays £500K) £3m GBP between now and the end of the year, enough to fund another round of drilling but with the DFS out of the way, I would suspect enough to see us right through until April next year (in which case, we should have hopefully received funding and WC for the Songwe Project and/or the Pulawy Plant)
It's looking very, very good here but the market is refusing to see it for whatever reason, I am unsure - I do think we will attract huge buyers once this fully digests (and maybe the extra payments come in, which should be the next 4-5 weeks)
Can see us trading back near 20p in the short term
The whole company will eventually bring in a valuation north of £200m+ once all this nonsense is over
HyProMag is worth more than the entire current market valuation, and that has no known issues including fully funded by grants, it goes about its business expanding and proving ground breaking RE technology
The fact Songwe is now trading at 3.5p (if you remove HyProMag from our assets) is both sickening and incredible
Not much we can do, buy hold or sell
These are the risks with investing
Long term it gets a bit easier to predict, current market cap now £22m
Cotec seemed happy to pay a £15m valuation for HyProMag, I've always thought HyProMag would be the future of MKA post Songwe (recycling RE's will be a huge business)
That's £13.5m + £1.5m cash, which now leaves £7m valuation for Songwe and the other assets (if we dont dilute)
Or ~3.5p (songwe valuation), back where it was in 2017 without any of the exploration work
*correction Talaxis 24p
Same here
We will see, at least we will all be feeling it
DL added £700K at 24p
Talaxis moved all their holdings in at 27p
Cotec have already given us £500K at a HyProMag valuation of £15m (with 27p CLNS)
Newton was adding between 18-20p (added 1% of the company)
if all of the above are happy to do a discounted placing at 12p or below 12 months later (or less) then I dont know what to say, I will be truly baffled
Very odd to see this trading under £1bn market cap again
Yes prices are dropping but they are not exactly low, futures still at 425p and day ahead 335p, plus nobody wants prices to remain this high, it is not economical and puts far to much pressure on the consumers
At 335p/t I have SQZ making around £40m PAT per month (from the gas only) with another £25m of Levy, so about £65m in added value at 335p/t
August was a big month for SQZ I think they have made a lot more than that, would est. the average ppt was around 425p/t so possibly around £70m of value added in August alone
With £500m cash likely on the books, SQZ would only need therm to average 150p in 2023 to make around £338m (PAT + WFT allowance) pretty incredible that considering it is still double
Just goes to show how cheap this is, not sure there is a cheaper gas play on the market if I am being honest, I see the price falling and think am I going mad?
This isnt pricing in neigg as well
When they do need funds they always do it at a premium or via some shrewd investment scheme
Cotec are signed up for £1.5m so I don't think cash is an issue, if it is the last few have been at a premium so could be a good thing Sp wise
Gas prices are generally at their lowest in the months of July/August and typically at their highest at the end of December/January, trending throughout
To see gas at record highs in July/August is for lack of a better word... very usual , unprecedented actually
What is causing gas prices to skyrocket?
Pent up demand post covid lockdowns, a rush to manufacture and create - remember, energy in energy out, to make or create anything you need energy, in the past this was once wood, then coal, oil and now natural gas - each more powerful per cubic metre than the last, you need acres of woods vs tons of coal vs some barrels of oil vs a barrel of gas
For an economy to thrive, it needs energy - energy is used to manufacture, to grow food, to heat homes and fuel transportation, without energy there is no economy
This is why a gas crisis quickly leads to an economic crisis and worse, a food crisis
However, there are more events impacting Europe
Russia had three pipelines supplying Europe (Germany mostly) with naturgal gas, two are gone and the one that is left is operating at about 17-20% capacity - Germany received over 40% of it gas from Russia
Also, over the last few years there has been a war on nuclear power and anything that isn't green, with many nuclear plants scheduled to close this year (and in previous years - worsening the crisis)
What do you do when you dont have natgas? you need to import it AKA LNG (liquified natural gas) however, in this market you are competing with Asia and the rest of the world, who are also experiencing high gas prices, a food crisis and inflation, they want to fuel their economies as well
And finally, climate change
Heatwaves or extreme cold cause gas demand to rise - however, what also happens when you cant get access to natural gas? you need oil and coal (urgh coal) which is what the europeans are doing - however to use coal you need to transport millions of tonnes of it - usually by train or barge
Well the water levels are dropping due to extreme heatwaves, so many barges now cannot transport the coal (eek!)
Also, heatwaves cause river temperatures to rise which makes cooling nuclear reactors much more difficult, further impacting power generation
So its not just the war, its everything from covid, to climate change, to cutting back on nuclear/going green, to the war in ukraine, to an east vs west divide, a global scramble for LNG, inflation etc.
All connected to create the current 'energy crisis' - what people dont always link is that an energy crisis really is the same thing as an 'everything crisis'
GBP day ahead now 360-370p for the month of August
Futures up nearly 20% in the last week from 350/360 gbp/t to 425gbp/t
Meanwhile nothing is being done to help the UK public in the face of will likely be the biggest energy crisis since the 1970's
Dont worry about it
UK therm futures are at 362p today
Day ahead is 266p
May 2022 we had £396m Cash
Made £157m cashflow in 2021 with average therm of 113p and boepd of 22K
Boepd is now 29K and average therm last recorded was 173p (we know its way over 200p now)
Cash at Y/E should be in the region of £700-800m (that includes profit tax) higher if prices are sustained above 200p
Also got upside from Neigg
It's also July where demand and prices are historically at their lowest
Actually pains me to say this because it appears countries are not urgently acting on what is about to become a severe European economic crisis, so I am here as a hedge to soaring gas bills