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I have to second that, as much as I am frustrated with the MDA / Songwe at 8p we are currently undervalued simply on the HyProMag venture so, the as I said before the investment case is still strong
I think MGMT are putting the asset up for sale, hence why there is no rush or sacrifice to hurry up and get to 'production', and personally I think that is that is the best route as I don't believe constructing in Malawi would be a smooth process, both political and financial (inflation and debt issues)
Lets hope we do, but that article suggests both sides are WAY off
They also said the MDA would be concluded by June 2022, Dec 2022, January 2023, MKA said in Feb 23 'in the coming weeks' IMHO nobody knows when this is going to be signed within the state, company or else.
That's the end of the MDA for me
Scratching it from the investment case
As long as the value and potential of the recycling technology continues to outweighs the current market cap, which it does, then this remains as it always has, a viable and solid investment.
As for the MDA if it is agreed on any form of favourable terms then I will be pleasantly surprised but moving forward I am now completely discounting it, and according to the share price at 8p, the market has already discounted it so no harm done to the current valuation, just a shame for future value creation.
At least we are not adhering to these terms, many a company would have met in the middle or given up too much like Lotus, 5% gate 10-15% interest and 30% tax.
Maybe the Govt would be better just making an offer for the entire project?
Pretty good RNS
200m shares at 0.5p per share, a slight premium albeit a discount to the previous raise of 0.6p from the Dutch fund who took 5%
Dilution is largely irrelevant at this market cap, with 600m shares in issue the enlarged capital only increases by 33% to 800m or thereabouts, so the market cap isn't impacted too much (which it would be if they raised £3-6m for example)
Only half of the raise allocated for now until a 'commercial agreement' is reached, so that should add some substantial value to the market cap, one could argue equal or greater value than the dilution incurred.
People forget this is a microcap, at this end of the market you are not going to get solid gold balance sheets and its rare you even get great management teams. I think they've done a pretty good job to date but it really is time now to start delivering that value. They've teed a few decent things up like the CS2 men's team which could attract a top sponsor, they've done some good deals with Sky, lets see if they can really push the company forward now leasing up to the major world cup next year etc.
Conference should be interesting
Shame they don't have a recycling panel, or a presentation from MKA but suspect we will be able to present on a smaller scale during meet-ups etc.
Some big hitters there (Lynas, GM, DoE)
https://metalevents.com/events/19th-international-rare-earths-conference
Familiar names also, Rainbow, LCM et al.
Probably the reason for the new presentation out today, I am sure it will be showcased over there
I think this is great exposure for our tech, it is truly at the breakthrough stage so where other companies presenting will be the 'same old same old' we do truly have a new ground breaking technology, with near term production to show off. Not to mention we have already established a US subsidiary and have proven tech in the UK to rollout in other territories pretty much 'ready to go'
Silver did you read the press release from malawi?
They dont trust us, they think we are middlemen and trying to offload it once mda signed
We are asking for 10 years exemption from corporation tax
Alex lemon said in the most recent call, this is the biggest investment into Malawi in over a decade
Maybe it will involve infrastructure too, US seem to be heavily involved now in Malawi.
As much as we would like this to conclude, it is a vital project for Malawi and the new government are playing hard ball because they cannot afford to get this wrong
Malawi is in trouble, their debt has risen to $1bn USD, they are frequently now bailed out by the IMF, in the last 3 years inflation has crushed their economy, rising and currently at 28%+, also they have no FX reserves, no access to fuel / constant shortages.
When you take into account all of the above, and the fact we are clearly playing hardball (and do we know if we are not middlemen, we dont know if we are planning on flogging the 'package') then you can see why this could take up to 2 years perhaps.
I hope it is concluded soon and a deal that benefits both Mkango and Malawi
Spent £1m on HyProMag in August (completion)
£350K was it for the wind turbine project?
2.5m euro of that cash position will be the loan to HyProMag Germany actually
So maybe £750K or thereabouts left?
Should find out end of this month
Think we had £4.5m at the end of June 2023
£1m has gone to HyProMag + £1m stock (1 year lockup)
May be other outstanding funding requirements, the windturbine project, that cost us a few hundred K?
Id love to see £2m in the bank perhaps more
Amazes me this seller, it has to be a Tr1 (some one with at least 5% I would say)
When there are say ~80K in buys, but could be over multiple trades, boom an 80K block sell goes out. Same 100K in small buys 20K 10K 5K 5K etc. etc. get to 100K in total buys, boom another 100K block sell goes out. Been like this for most part of the year. Soon as they are out we can lift off here as the news has been tremendously positive since the placing which was at 12.5p!
Sorry - read your second post again
'The JV is stated as 50:50 not 40:60, and whilst I see that it can be construed as 40:60 due to the 80:20 of the UK company'
Yes you are spot on, if/when we commence production, who knows who will end up with what. This is one of my concerns as I hope we manage to keep a large percentage of the US operation (I cannot see us obtaining more unless we structure a deal with Cotec to give them a larger percentage of the UK and EU) but the risk is should we need further funding due to the delays with the MDA (and any other costs before we become profitable, we may end up giving away more of the 'technology asset' - I hope not and costs do appear to be minimal at the moment.
Hi MyIPA
Cotec have a 60.3% interest in the newly established US subsidiary 'HyPromag US'
'60.3% based on the 50-50 JV right (CoTec-Maginito) for US roll-out, and 20.6% equity ownership of Maginito, leading to an effective interest of 60.3% in the USA'
It says this on the Cotec Presentation slide also
https://www.cotec.ca/_resources/presentations/corporate-presentation.pdf?v=0.193?v=0.049
Good RNS
We finally get visibility on the economics
35% EBITDA or thereabouts vs $10m revs per plant per annum
CAPEX at least $30m (lets say $45m) however for the financer, it could be half of this as it may be backed partially or in full by government grants, so very attractive
$30m capex
govt funds 50% (hopefully)
EBITDA of 35%
$10.5m EBITDA per annum
Payback without funding = just under 3 years
Payback with govt funding = just under 1.5 years (now that's fast!)
What I liked about this RNS is the figures are realistic, we all know the songwe DFS is very much out of date in terms of pricing and economics, this is much more realistic and almost negative in some ways. Ofc should RE prices drop I suspect a lot of our material costs / input costs will drop too as it will likely be an overall market impact vs just one product. There are also proposed tax breaks etc unsure if these have been taken into account
An RNS with Tesla would make this do multiples
I don't expect that until likely 2025/26, but it was good to hear that they would be an interested party, along with the department of defence and general motors.
In the current, real world. I was happy to hear that we are still on track for revenues this year, after being slightly concerned by the lead times on the equipment needed for the large pilot plant. The revenues were predicted to be tiny this year, remember Cotec only get 20% of the UK revs so it could be a significant to us but just going from pre-producer to producer and generating cashflow of any size, is a huge achievement. Julian was confident revenues in 2024 would be significant, if we can get the German Plant running early (q1 24) we could be looking at 150t in 2024 at the current price of around $70KG, who knows what legislation and tax advantages will be passed also. Once we start producing and OEMS / GOVTS are happy with our product, the scale will then be off the charts, that's the moment we should see a monumental re-rate.
Will id guess $150m USD
Even if the 35% need clarifying, the initial CAPEX was around $350m, 35% of that is more than the current cap and ~3-4x the allowed cost overun
In cases like this, assume the worst, so likely 35% of CAPEX to date which was nearer $550, therefore likely another $150m USD to finance it, and there's no guarantee because this will be the second time costs have increased.
Right now thats over 2x market cap
Just look at other companies that needed to raise cash 2x their market cap, it never ends well for SH.
There's a reason Glencore and Orion are who they are, they will be looking after number 1, especially since without them none of this is possible. Its a real shame, HZM I always held in real high regard. This is a huge lesson in the dangers of constructing an asset in a high inflationary environment. You can ofc blame this and that, but the Marco situation has really not helped and likely pushed a lot of this over the edge. I have no idea how bad it is locally either.
Hope my post earlier was informative
If you are trading this be very careful, this isn't a microcap, its mid cap with massive insitiuational banks holding stock who can do whatever they want with the price
no matter what you post here or on social media, it will have zero impact on a stock like this
best of luck, as before IMO this is insolvent and will be very fortunate to negotiate favourable terms for SH on any grounds close to the current valuation without massive dilution
Nope Parker, that's exactly how we all feel
Also, just a further note
the CLN terms were proposed before the following add on values
- placing to fund a 6m EURO german pilot plant
- 1.5m funding for wind turbine project
- 50/50 JV with Cotec for US operations, which didn't previously exist
So one could argue the HyProMag holding now comfortably eclipses the current cap, regardless of Songwe
The worrying part is HZM cap is £100m and they require likely £150m (or thereabouts)
So equity is off the cards, unless its massive dilution
If the backers don't stump up further cash (and who is to say they wont need more next year, they must be furious with management) then HZM is obligated to start paying back the debt in march 2025, the mine should be in production by then but if it was not, then in theory HZM would not be able to pay its debts.
Those debt payments are now going to be significantly higher, regardless if the mine is in operation or not (some at 15%)
The backers/banks will be fully aware of this, and will take all of the above into account when they negotiate new terms and funding.
I cannot see the mine being left 'as is' I think it will go into production, but the risk here is as HZM has been hammered down, it cant use its equity to fund the requirements (like it could have at 130p)
Ultimately, I dont see how in the short term this ends well for SH, anyone coming onboard post financing at least will be on new terms, but right now its very likely that HZM could be taken to the cleaners here by the backers, because they simply (as far as I am aware, but please correct if wrong) have very little to no options other than hope the backers quickly start financing the mine, so they can make their march 2025 payments, and carry on with construction.
Again the backers know this, if they play hard ball (not saying they will) they could likely come up with a strategy to take all of the mine / asset due to HZM having to meet that March 2025 deadline and/or not having enough equity to finance it elsewhere.
A very, very tough situation and if management do negotiate a good deal here for SH then I will be giving them tremendous credit, good luck.
Apologies if any of this post isn't factual it is all in my option based on what I read in the financial accounts.