Roundtable Discussion; The Future of Mineral Sands. Watch the video here.
And another correction just now. Which is helpful because I’m pretty sure this is saying Jeffry Quinn did put cash in at £412 per share which has to be a massive vote of confidence in the tech being likely to work. The announcement last summer said…
“Finally, Fodere also announced that in addition to the formation of the joint venture, Titanium North America has made an equity investment in Fodere and Mr. Quinn will join the board of directors”
Thought the share issue wording left open possibility was some sort of signing on bonus but looks like it was cash now, to me at least.
https://www.businesswire.com/news/home/20220720005068/en/Fodere-Titanium-Limited-Announces-Construction-of-Pilot-Plant-and-Formation-of-North-American-Joint-Venture-Fodere-America
Have to be positive or investing in this space can drive you nuts!
Since this post, another correction posted to the confirmation statement from a year ago. Paid lip service to filings before now so can’t believe doing it out of the goodness of their heart, hopefully it’s a sign of a data cleanse prior to an IPO! Pilot plant in Zambia was meant to be operational this quarter, so hopefully news soon. So my investment thesis is now…
Pilot plant is huge success. Fodere IPO (maybe in US to leverage ex-Tronox board member connections) to fund main plant at Highveld. Tech proven to work too on Pitombeiras ore. Massive offtake deal announced. Dual listing for #JAN on TSX because Luis is famous there now (Bravo). Brian gets off the beach and gives us an interview!
The latest annual confirmation statement came out and always think it’s worth a look to see what’s changing.
1) Seems to confirm the #JAN shareholding is around the 7-8% mark as per the last RNS. The September RNS for the interim results saying it was 3.6% seems now in my mind a bad copy/paste job of the wording from the previous year’s interims.
2) doesn’t look to me like Fodere raised significant new cash in 2022. The main big jump in the share count was for the shares issued to the ex Tronox guy for coming on board, I suspect this was not for cash but not certain of that. There are 3 new shareholders added and looks like they were transfers from one of the founders rather than new issues, so that suggests Fodere was sufficiently cashed up at the time. Googling these, one of the new ones looks like he’s linked to the investment company for the Barclay family (i.e Ritz hotel, Daily Telegraph).
As much as the companies house filings still suggest the Fodere admin is not brilliant, does seem they’ve pulled together quite a big share register. Suspect there’s some serious high net worth’s in here.
https://find-and-update.company-information.service.gov.uk/company/09362025/filing-history
I’d bank on very little of the 22kt orders carried over from 2022 getting shipped/invoiced in Q1. And as for getting to 50kt, have a look at the chart on page 4 of the latest presentation which shows the seasonality of customer buying behaviour…
On what basis do you say the profit is likely to be about a quarter of the market cap?
If you're talking about 2022 you can pretty much work the profit out from the working capital numbers published and building off the interim accounts at June. The profit will be nowhere near a quarter of the market cap imo. I'd already reduced my profit expectation when the A$10.5m sales number got mentioned and I've had to reduce it again now we know the working capital. What I haven't figured out is the reasons.
As much as the endless bashing of HMI from one quarter is wearisome, equally the apparent optimism from some posts on here makes me question motives. Think I was right to challenge those posts that indicated 150 kt would get blown through. I hope anyone chasing this from here has got their calculators out on the already published numbers.
Actually on reflection I think it’s going to depend also quite a bit on where the 150kt to 200kt growth comes from. Deriving the H2 average pricing from the A$10.5m annual sales figure Brian quoted suggests to me average pricing in H2 was materially lower than in H1 and certainly way short of the BRL300 figure Brian mentioned in the presentation. And to be honest the year end cash position was lower than I expected (based on the previously mentioned 30 day payment terms) so I’m now expecting the year end working capital (excluding cash) when it’s announced to be highish (unless my profit estimate is completely wrong). Poses the question as to why – maybe there are other possibilities but both could be explained by some sort of bulk deal with a distributor (at lower prices) to get tonnage out the door. And if more of that’s the main route to growth in 2023, then the growth will be that much less attractive. Just have to wait and see, I’m certainly not chasing this until I know more.
I get to something similar although at some point annual profit will need to take tax into account. No doubt there's a big chunk of losses in Brazil to cover this in the near term. Think there may be some witholding tax (15%) on dividends from Australia though if we do get a dividend - not sure I totally understand franked vs unfranked dividends but imagine the company has not paid much tax in Australia itself.
after lots of of huff and puff in previous interviews or presentations, this is the first time I've listened to Brian and thought he was serious about the practicalities of some sort of cash return to shareholders actually being worked on...
Dcat, I thought the reason given about not taking the titanium to feasibility was a bit odd and was left feeling whatever process the technical consultants were previously banking on working is no longer viable (financially or practically) one way or another - so the main way the titanium might be exploited now was via Fodere tech. I've felt for a while the interest in Fodere was pretty important here, which is why I've posted quite a bit on them in the last year or so, but it's mildly frustrating that the comments about Fodere in the RNS seem so light - and also not in line with statements by Fodere themselves (i.e. Zambia pilot plant, not South Africa - and much lower than 22,000 tonnes!). Why can't they get this stuff right - I'm just a poxy small shareholder and can tell something doesn't stack up about what's written in the RNS, it's like nobody has reviewed it - there's a multitude of advisers who must know more than us about what's going on and we even have the Fodere chairman on the board. If the 7.7% interest is correct (and I hesitate on that because that disclosure has jumped around like a yo-yo in the last few months), it implies we've recently put a bit more money in during 2022. Good our interest has gone up, but boy it's frustrating how long that pilot plant process is taking.
Swingy, judging by H1 and FY (and deriving H2) accounts for 2021, I think there is likely a fair chunk of fixed cost in the gross margin calculations, so I expect a better gross margin percentage in H2 than H1. So for what it’s worth, I think your number is possibly conservative. My modelling gets to Aussie dollar 8.8m of gross profit and 4.8m of profit before exceptionals but I caveat that because I think Brian is more of a M&A man and I’m not sure yet how well he controls costs as an operations manager. Ultimately we just have to wait for the results.
David, I think the RNS is clear. Already though this morning there are posters on Twitter and the bulletin boards chasing shadows - some is probably deliberately mischievous, some is probably a legacy of confusion from past poorly constructed communications that will take a while to shake off. Time to move on though IMO.
Fair point. I accept historically expectations have been set higher/faster etc. and there have been lots of missed targets. I was just talking about 2022 and what’s a reasonable expectation for how the year will finish given where things were up to at the end of September. I’m definitely not trying to excuse management, just challenge possible exuberance cos I don’t think it helps anyone. I’m invested and want the best for the company.
As much as this company gets bashed from certain quarters for slow progress, it feels to me also there are some overly optimistic expectations that management in fairness to them have not set.
Hopefully 2023 can make progress beyond the 150k tonnes, but I don’t get where the expectations that 2022 will blow through that number come from.
We know orders to the end of Q3 were 153k tonnes, and sales revenue/shipments were of the order of 93k tonnes (per investor meet presentation in October, and similar figure was quoted in the Total Market Solutions interview at same time). Shipments in H1 (based on the H1 results) were 35k tonnes, meaning shipments in Q3 itself, to my understanding the busiest quarter for shipments, was 58k tonnes. So to get to the 150k tonnes, Q4 shipments (not the busiest quarter to my understanding) needs to be something similar to Q3. I think they’ll do well to get there personally.
I know no more than the next man, and possibly 2022 will be way better than I expect but I fear some people on here are setting themselves up for a fall. Rein in the expectations and then management might stand a chance of meeting or beating them.
Agree it doesn't seem so popular to post all that much balanced stuff on this bulletin board. It's really pretty easy to argue a bull or bear case, nobody wins any big prizes for doing that. Personally I think the current share price is about right given where things are. Will come back when there is more news.
Thumbs up emoji, Dcat!
Have been looking out for news on developments but not seen much recently. Still looking out for it though…
JM and SR each got a £800k bonus last year for securing the project finance. Think they should rightfully pay the money back, but more likely they’ll get another dollop of cash for diluting everyone to hell and getting the bank finance drawn. Disgraceful, quite how they look their colleagues in the eyes baffles me.
Extract from the remuneration report below.
“During the year the company secured a project finance package to fully fund the Araguaia project through construction therefore triggering one of the key performance conditions of the LTIP. The bonuses paid during the year to the CEO & CFO represent those due upon the settlement of the equity portion of the project finance as this closed during the financial year. All awards due for the debt portion of the project finance package including 50% of any awards due to certain Non-Executive Directors have been deferred until first draw down of the senior debt facility in order to align with value creation for shareholders.”
Brian has so far stubbornly refused to give any forward looking guidance. But when the Nomad benchmarks the BOD’s remuneration, I bet they ignore that important fact. For me, it’s part of the job and for this company it should be easier than most. How hard should it be to get some guidance on H2 revenue, gross margin, opex and capex based on 150kt of sales?
For me, there are too many of this company’s advisers asleep at the wheel, including the various communications advisers and Nomad.