Ben Richardson, CEO at SulNOx, confident they can cost-effectively decarbonise commercial shipping. Watch the video here.
Good read this, a blueprint for what will likely happen to Maginito / HyproMag
https://recyclingtoday.com/news/noveon-targets-rare-earth-magnet-manufacturing-using-recycled-material/
- In 2018, it began construction on a commercial site in San Marcos, Texas, with initial magnet production capacity installation starting in 2020.
- That was followed shortly by an investment from the U.S. Department of Defense (DoD) of $28.8 million
The company developed novel magnetic products and processes in 2012, and the first magnets using grain boundary engineering and recycling technology were produced commercially in 2014. It then set up a pilot plant in Austin, Texas, in 2016.
Once we prove commercial NDFEB we should really start to accelerate quickly (both in developing more plants and valuation)
Noveon seem to have done very well in NA to date (with Toyota)
Dunn says Noveon has developed relationships with original equipment manufacturers, including collecting all the rotor subassemblies from about eight Toyota Motors plants in North America, and recyclers in North America. The company is teaching its raw material suppliers how to disassemble items to facilitate rare earth magnet recovery.
This is an interesting snippet
- The supply-demand imbalance broadly for these materials is so significant that pricing is likely to grow. As Noveon proves its recovery model, Dunn says pricing will increase, encouraging additional recyclers to recover rare earth magnets.
Cant see how we don't end up with a valuation significantly north of £100m+ just for the RE magnets in the next 12-18 months, that would be a ~4x bagger from here (discounting songwe) and would just be the start
Critical Importance
Strategic
Multiple Bidders
Demand outweighing supply
Blue Sky Scale *(as evident by five potential plants already in the pipeline)
Profitable (rule of thumb $80m NPV vs $15m Capex)
Premiums (Less emissions vs mining)
Green discounts / tax reductions (10-15% in EU and US)
We will get there in the end folks dont worry about who is selling what
When we hit 12.5p yesterday we didn't worry about who was buying
I bought some just under 10p the other week, so will be a lot of profit taking as they see the share price struggle to break 12.5, they all panic and sell (probably some at a loss) we got really good press this week so will be tons of traders in this
Give it time, we own 100% of HyProMag! Just know that IT IS coming to fruition, we are making the right moves and it wont be long until we truly accelerate out of this price range and into a much healthier one
We have the tech
we have the partners
we are fully funded for initial production
Honestly enjoy it, these prices will be long gone in 6-12 months and when its 25-30p+ we will be feeling a lot better and regretting not picking up more, I still recall the days when the bid hit 2.5p and I felt absolutely sick, but I look back on that as one of the best opps I ever had in my lifetime
Everyone who sold then missed out on a rise to 38p, and there were some huge sellers
Of course anyone who didnt sell at 38p missed out on buying back at 10p, so it does work both ways, but the end game remains the same, let this one play out and if all comes as expected, we will do extremely well (and there's no reason to think it wont, we got some amazing news this week, we are on the right path)
Got cut off at the end
Was going to say you realise there is a path to a ludicrous $1bn valuation
And if we fall short by a few hundred million, I doubt any of us will be complaining :-)
$1bn USD in due course Jem
People laugh at that valuation, of course it is silly at £25m, and I dont mean overnight, but in 5-10 years time it could certainly 40x from here, how?
The patented HPMS technology can be deployed anywhere in the world
It also generates revenue at a very good margin (tbc)
To get to a billion dollar valuation, you need either a valuable asset or a valuable scaleable technology / service
We have the latter (songwe is valuable but itll never get us to a billion dollar valuation)
We currently have three plants in development, and likely another three to come
from the three plants, two of them are looking to produce 100tpa of NDFeB
(NDPR price is currently 555K yuan, I know its been dropping, but 400K is historic)
https://tradingeconomics.com/commodity/neodymium
Yuan to GBP means it is currently £65K GBP per tonne
100t per annum nets you around £6.5m at todays prices
At 50% margin (now we own 100% hooray!) that's £3.25m earnings per plant
We currently have two plants, three in the pipeline
So by 2025 let say we have five plants, all producing 100tpa
That's £16.25m per annum earnings
On a very small PE of 10x we are therefore valued at £162.5m on the recycling tech alone, however as it shows saleability and profit generation, I suspect it would trade on a tech PE of ~15-20 which would be a valuation of ~£245-£320m
Now we wont own all of it, we currently own 80% (after cotec certainly take their option) and we wont own 100% of the US plants, but then who is to say we stop there? What if by 2025/2026 we have say ten plants producing £32m per annum in earnings? What if we produce 200tpa or more? Now you are looking at £64m+ per annum in earnings, and at THAT moment you have yourself a billion dollar valuation
Lots need to happen
1. prove the product is commercial, will need to send samples to offtakers (automanufacturers etc.) and they will need to extensively test its performance in EV motors etc.
2. has to also be commercial, if the price keeps dropping at what point do you fail to make a profit? (of course if the price rises then we get to $1bn much quicker!)
3. Fend off rivals and have faith the there wont be substitutes for Rare Earths (namely NdFeB) tesla is trying to move away however companies like apple are adopting 100% recycling
4. we dont have to dilute to fund projects 3 4 5 6 etc etc.
Further boosts
- US inflation act allows us to recoup 10% in tax / production costs as we are 'green tech'
- EU critical minerals act proposed that all member nations must source 15% recycled critical minerals domestically (this is incredible)
Money is already moving in ($27m investment into Cyclic from BMW, they literally are doing what we do only using chemical processing route I think)
https://www.electrive.com/2023/04/27/bmw-i-ventures-leads-investment-into-rare-earth-recycling/
So, when a $1bn valuation is proposed, it seems silly at first, but then you realise, there is
For RE magnet recycling of course ,It doesn't, this is/will be the first
https://www.birmingham.ac.uk/news/2023/birmingham-to-become-uks-first-centre-for-rare-earth-magnet-recycling
Agree B99
Actually, I read an article late last year (I cant find it now but likely was in the Nyasa Times) which stated that once the EISHA was announced the MDA would follow soon after, this is usually the process in Malawi
However, it also stated that the two parties had agreed on most topics, however the stumbling block was to do with 'International bank accounts'
Make of that what you will - I suspect either the EU or the US will make a move in the short term
Just last week we met up with the Malawi president to discuss Songwe, at the same time the US announced a $300m+ investment in Malawi
The plot thickens, I suspect all will be revealed before the 1st anniversary of our DFS which if I recall was around the end of June!
Over the next 6 months I would expect a significant re-rate back to 25-30p
Pending newsflow
- MDA which unlocks enormous value at Songwe (NPV $559) would be worth the current cap alone (~15-20p in additional value)
- Creation of a US subsidiary for HyProMag/Maginito
- Realisation of value of Maginito (Cotec are currently getting the project/company valued as they are an investment company
- Feasibility studies / project start dates and funding for 3x NA plants (all funded by Cotec adding more value to the group)
- Partners and US government grants to help fully fund feasibility studies in the US (Cyclic metals got a $27m investment last week)
- First production in H2 2023 from the UK, MKA would then need to send this product to offtakers for analysis before ramping up production of 100tpa of NdFeB (which is currently valued at around $7-10m USD)
- Legislation like the EU critical minerals act being put into action which states that all member nations must source 15% of their critical minerals domestically from recycled sources / production (yes you read that right)
- The legislation above also states that within 3 years any products that contain critical minerals must be clearly labelled so they can be recycled with ease in due course
- Songwe MDA once approved will lead to either project financing (our cap is too small) or more likely yet an FSP (formal sales process) where we look to sell the asset, 10% of the NPV would be ~$59m USD much higher than the current market cap, would expect MKA to retain an interest or receive this and milestone payments (similar to the HyProMag deal today but with the shoe on the other foot)
- Pulawy separation plant and project financing, if this concludes, would add ~27% boost to the economics of songwe, not much to talk about on this one, we will see if it ever gets fully off the ground
So lots of value drivers to come in the coming months, why I fully expect with all the newsflow and increasing interest, we should be looking at 2x 3x from here in the next 6-12 months
This is the best news I could have hoped for, in terms of this investment
I cannot believe we own 90-100% of HyProMag for ~£5m
What this does for the company
Cotec have agreed to fully fund projects in the USA on a 50/50 JV Basis
So Mkango have agreed to buy the entirety of HyProMag and list it under Maginito, which means Cotec current holding (lets say 20% as they will certainly opt for it) is now a 20% holding of 100% vs a 20% holding of 42%, so Cotec are very happy today as well
The board clearly see unbelievably value ahead for RE recycling (WD added £100K at 12.9p) and wanted to get this deal done before they accelerate the US rollout and begin producing the NdPrFe powder
The next steps
We will find out in the interview tomorrow but my guess would be the following
- Create a US subsidiary on a 50/50 JV Basis
- Fund part of three feasibility projects (like UK and Germany have done)
- Partner with automanufactuers and/or the US government
- Plan to produce and scale NdPrFe Production in late 2024/2025 from the US plants
Each plant at 100tpa would produce around $5-10m in revenue (the reason that is so broad as six months ago it was much higher than $10m but NDPR has come down considerably in that time)
All of my previous estimates were based on a 49% holding, the face we now will own all of the revenue and profit is just beyond anything I could have expected at this stage
Songwe is arguably worth the current cap, when the MDA lands all the pieces of the puzzle will be in place and there will be no stopping this stock
Once we prediction and revenue, we can then list on the NSDQ at X rev or X PE, which with five plants globally and a 100% interest, will be considerable (likely way north of $100m USD)
This is the investment of a lifetime, if I weren't 100% convinced yesterday, I am today
Sadly have been here a few times before, and each time I have to admit it doesn't get any easier and every concern starts to manifest as if it were a reality
My approach it to simply remain focussed, we have done our research on this stock and the current valuation for me is highly attractive
We know the following
- we have a valuable asset in Songwe, albeit no MDA means we cannot realise the true value of the asset, but that doesn't make it worthless, it has had £14m+ spent on it
- We have a 33% partner in Talaxis (aka global commodity trader noble group) they paid 24p
- The CEO paid 12.75p only recently (£100K)
- We are fully cashed up so no funding concerns, placing done 30% higher at 12.5p
- We have two/three fully funded plants, both cost ~£6m each
- We have three or more plants in the pipeline with our US partners Cotec 'who will be funding the operations for two years' they are currently up about 20% since announcement
- We have sold 20% of Maginito for around £3.5m giving our remaining holding a ~£15m valuation (before German plant ownership increase) so arguably £17-18m+
We have blue sky tech and an asset currently being valued at around £2-3m (minus cash and HyProMag)
Dont let the market fool you into thinking we have no value here
Songwe could easily be worth double our current market cap if not treble, once the MDA lands which it will eventually, this isn't going to drag on forever even if it feels like it, we have seen the reports in Malawi, they have had a tough year with the typhoon and secondly the minister changes, plus a crack down on corruption, but I suspect it gets done
Songwe £25/£50m+
HyProMag £20m+
May possibly be an update tomorrow (Y/E MD and A)
Just my two cents, yes there are negatives (delayed MDA, NDPR pricing dropping) but it doesn't warrant this extremely supressed valuation
Personally holding strong and adding more, but this isn't a ST trade (been here since 2017) its a long term hold until we sell the assets (HyProMag and Songwe) which I still truly believe will be for £100m+ in due course, and we have a feasible plan in place for that and more importantly the right partners on board
I wouldn't worry about funding too much but more dilution of the second prized asset, Maginito
Cotec updated the market earlier this week (we will be updating I believe on Friday) and they had this to say:
The feasibility work for the roll-out of the Hypromag Technology and other REE technologies owned by
Maginito into the US in collaboration with CoTec will commence in the first half of 2023. The roll-out will
be in the form of a 50:50 joint venture between Maginito and CoTec in which, broadly, CoTec will provide
the funding for the first two years, whilst Maginito will provide the technology.
https://www.cotec.ca/investors/financial-reports/ (Management Discussion)
So if we need further funding, for working capital or US based operations then it clearly states it will come from Cotec - and they are happy to fund us, the issue would be diluting Maginito (or the US subsidiary) so we hold less than 50% of that newly created asset, which although no dilution takes place at group level, would still be 'giving away' the valuable technology due to issues in Malawi etc.
So as frustrating as it may be, there is a plan in place to 10x this stock in the next 18-24 months
It says in the RNS the company would likely be able to return 0.2p per share
In accordance with Rule 41 of the AIM Rules, the Company has notied the London Stock Exchange of the proposed Cancellation.
· Assuming the passing of the resolution to approve the Cancellation in general meeting, it is expected that the Cancellation will take place on or around 26 May 2023.
· If the Company is able to be wound up on a solvent basis, which is subject to a number of commercial matters being satisfactorily resolved ahead of the MVL, a distribution to Shareholders is anticipated but this is unlikely to exceed 0.2 pence per Ordinary Share. There is unlikely to be any distribution to Shareholders if the Company is wound up on an insolvent basis.
Key statements
- which is subject to a number of commercial matters being satisfactorily resolved ahead of the MVL
- a distribution to Shareholders is anticipated but this is unlikely to exceed 0.2 pence per Ordinary Share
No idea how it is all worked out, guessing they have a load of obligations not mentioned, so they are saying its zero or something (but 50% less than current SP by the look of it)
Interesting
Ascend elements are primarily a lithium carbonate recycler, I wasn't aware they were also recycling rare earths outside of the heavy RE Manganese (which the article is likely referring to)
MKA/Maginito technology recycles NdFeB (or better yet Neodymium Iron Boron (NdFeB) magnets) so a similar market under the rare earth umbrella and electric vehicle / ev / green umbrella, but a different part of the electric motor(s)
Looks like Cannacord selling out to me (13.5%)
A placing could be on the horizon but my guess is this isn't it, I think they needed liquidity and after Cannacord put a huge sell order in, MM's drop the price to whatever CC were comfortable with and create the liquidity frenzy, probably be a TR1 later, risks are if they have more to sell then it's going lower, if its a placing then its going lower, but if not and they are out then probably a bounce back to 55+
Really good to see a huge BoD subscription here, I dont know much about the company but will be researching it today, on the face of it appears to be in the right sectors (Gold and Lithium) but can't ignore a huge £195K buy for a company trading sub £5m market cap, that is quite some commitment
Also just looking at previous project level funding, I wouldn't be shocked if there is more BoD involvement with the share price so low, also removes any concern regarding dilutive funding (at least at group level) as what is the point in taking 5% if you are going to discount that in due course
Hope LTH are excited here as this should really attract the wider market, it has certainly got my attention
The bill has been passed today
https://twitter.com/Times360Malawi/status/1646480085162110978
Of course being on of a few RE recycling companies, partnered with top auto manufactures, to get to 100t/pa of ndfe3 I am not too concerned, we likely have the stockpiles as per Blades post
The key will be scaling this up to 200t/pa etc. in 2-3 years when all of the labelled e-waste comes into play, then we could be looking at astronomical figures
"its going to be many years before there is noticeable quantity of material available to recycle."
To be fair may be right there if many years is 2-3
EU proposed legislation states that all electronics / appliances that contain critical minerals must be labelled for recycling, to meet the 15% per member state quota
A huge amount of e-waste etc. will be made available in the coming years, since completion for magnet recycling is relatively low and we already have two plants in pilot stage, I suspect just as this legislation comes into age we will have proven our plants technology and commercial viability, which will then light a rocket under the valuation of the company
Todays price is just a dip in the wider market, give this 12-24 months and id expect many multiples, the legislation is all there (passed in the US) if the EU bill gets passed, then we are right on the money and who knows by the time it does get passed we may have proven the tech in the UK
Im happy to be on board with the cotec guys (self made billionaires putting in their own cash) a rarity on AIM, our BoD have always done well identifying HyProMag at a lowly price of £500K to where it is today, and doing a fantastic deal with Talaxis who own 33% of the group dont forget
To be fair if 10% goes into the pension fund which I suspect that is exactly where it goes, then at least you are aligned with the country more in terms of creating SH value
I still think 10% with option to acquire a further 10% is a lot but the royalty is right where I expected it to be fair
Maybe I am coming round to this deal after all