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Given the strength of the conviction of some of our lost friends, I wonder if they may not just have tucked some MAFL away and gone on to pursue more active pastures. I am not sure what the investing equivalent of watching paint dry is but we have been near that with MAFL. I may even have bought my first shares in 2015 but mainly built up more recently. But the end is now in sight and I expect it to deliver fully!
Good morning all. I was recently brought some "pasteis de nata", the Portuguese version of custard tarts. Strongly recommend seeking them out, irrespective of when the LS boat comes in! I too am hoping we will see some long lost friends come out of hibernation. This has been a rather longer journey than I had imagined when first investing.
I can fully understand some impatience for PR and so on but I am quite sure that the bod will feel there is little point until their story is clear. That will now pan out quickly with the sixth hole results imminently due followed by the Canadian geo's overall source assessment. IMHO they are doing their best by issuing timely news which is presented informatively and as upbeat as possible.
It is actually quite hard to access indium pricing - many Google entries take one to other sites or to blank or historic prices. I found a Kitco chart with today's price (USD340/kg) but this shows a big fall from about $980 when it hit highs over 2014/2015. However, as JV our leader says, the presence of these "minor metals" (and let's not forget the gold and silver precious metals in good concentrations too) does add to the commercial value of the LS resource. Nonetheless, I suspect that zinc/lead/copper must remain the primary value components and that minor and precious metals are worthwhile but "icing on the cake". The upcoming geo's report on the overall resource will make interesting reading.
Just to put some of today's comments in perspective: :: Zinc prices are substantially up over the last many months, any recent fall being a relative small blip in the overall upward trend (see, e.g., http://www.kitcometals.com/charts/zinc_historical_large.html); :: LS is predominantly a zinc/copper/lead play, any indium, gold, silver etc (even though some are present in unusual concentrations) providing most likely much smaller value contributions and probably "icing on the cake" (but all will be revealed in the geo's upcoming re-assessment of the overall resource); :: The remaining sixth and last hole for which results are awaited imminently is numbered "5" even though it is the last to report.
You comment that "significant cash flow seems to me to be years away". Remember that THC/MAFL are not mining companies so the stated intention is to find a sale/JV partner. That event is expected by year end and will be preceded by a geo's re-assessment of the whole resource. Any caveats expressed in previous RNSs (really a standard form of disclaimer) will soon be overtaken by a professional re-appraisal of the fundamentals for the LS deposits. However the RNS results for the last 9 holes (one to come) also show quite exceptional mineral grades, so good to excellent results are reasonably expected IMHO. DYOR etc
At these levels MAFL is still a strong buy IMHO, so one might expect investors to realise this at some point. Only a short time now before final drill results are announced (a week or so?), followed by the geo's estimate of the overall Lagoa Salgada resource then JV/sale by around year end. Each of these steps could be expected to give support to the fundamentals - but, this being AIM, who knows at what point the sp will reflect this and find support at appreciably higher levels. Consistently good news has in the past been met by selling and falling prices. This trend must change at some point soon. DYOR, GLA etc
Mask: Hardly surprising give some large buys earlier, absorbing half the large sale order posted last week? Limited liquidity will at some point become a major factor for this stock when news breaks and the price turns. GLA
Hardy 78 - please do not encourage our wizard friend as he/she has not the slightest understanding or interest about the fundamental values of a share such as MAFL nor (according to those who seem to understand charts) much expertise in charting either. This bb has long been subjected to countless column inches of negative, meaningless stuff from that source - whilst we appreciate genuine counter-balancing views here, some of us have had enough.
Lewis: Thank you for pointing this out and I would not disagree with your calcs. I had forgotten about that RNS but I did look at your post quickly, focusing more on your bottom line value rather than working thru the calcs. Your result interestingly was not far off from my scaling-up of management�s 4.5Mt base case in ground valuation and taking a hypothetical 3% of 8-10Mt (but not making any other adjustments). To ignore an implicit $960m in ground base case valuation as some do is incomprehensible but then they are not accustomed to value investing. So it will now all depend upon what the geo comes up with and what a purchaser is prepared to pay. DYOR etc
The nature of the THC relationship is not entirely clear but I suspect it was more a question of MAFL finding THC as a partner than the other way round. The extensive resource experience of JV does not need to be re-stated but THC is a private investment entity run by a fund manager called Maurer with, per the August 2015 RNS, only a �43k book value when the Iberian assets were bought. Whilst THC may have re-capitalised, RNSs refer to the possibility of MAFL providing secured financing for the drilling (and part of MAFL's objective is finance and advisory). This all tends IMHO to point to JV and MAFL's finance being primary. As an investment company, MAFL is restricted to owning 49% of an asset but perhaps there may be future conversion or participation rights for some of the debt financing and advisory functions. Few further details are known but I believe any uncertainties here are merely potential upsides to the MAFL investment case. More will no doubt become clear. DYOR etc
Wentsland: No one here has yet come up with a meaningful percentage or range for what might be paid for in the ground resources. Perhaps the make-up of LS's own resource cocktail will influence that too (e.g. good demand, say, for zinc and indium over other minerals). Guess it may not be more than a few percentage points, given mine development costs and lead times. And, as U69 reminds us, there are some other interesting possibilities in the portfolio plus we know MAFL is looking out for other ventures.
Wentsland: We are very near to having a geo�s estimate based upon all LS drilling results, perhaps followed by sale terms around year end. Whilst there are indeed unknown factors, they are mostly, if not entirely, upside factors. However, we do have a base case from the management when the 15% government interest was bought-in this summer (RNS 7.6.17). On the original 4.5Mt resource, the imputed 100% resource value then was $960m in the ground. The new 6-hole drill programme is designed to confirm and increase the resource by 75-125% (to 8-10Mt). If achieved, that would imply a total in the ground value between $1.68-2.16bn (simple scaling up, no account of changed mineral values or anything else). There is good reason to believe from excellent drill results that an good increase will be achieved. No ideas offered for what price "minerals in the ground" will fetch but, on the same basis and assuming a 75-125% increase is achieved, every 1% of price in the ground would come to $16.8-21.6m (the base case would be $9.6m). MAFL�s interest is 49% of that (49% is a fact, not as you say 'believed by some'), with some speculation that % may increase under its financing terms (one of the potential upsides). There is no suggestion this is worth billions or even hundreds to MAFL and, yes, it is hard to value. Whilst we really need to wait for further information, the city will do what the city will do. It won�t be long, patience required as ever. DYOR etc
Mike: It's worth adding that neither MAFL nor THC (the owner of the LC resource) are mining companies but investment companies. It is the stated strategy that the LS asset will be sold for that reason but we are imagining that a purchaser will only pay so many percentage points for indicated or proven assets in the ground, as a whole mining infrastructure needs to be set up. A geo's assessment of the value of what's in the ground is due in the near future (the value you quote is hypothetical). DYOR, GLA
Wizard: Once again, you cannot necessarily use the Toral deal as a basis for valuing LS, every resource is different. Toral is lead-zinc (rather different) and in NW Spain and only 2,000h instead of LS's 13,000h. MAFL is an investment and finance company. The Spanish assets went for cash and shares plus a seat on the FCR board. I suspect that THC might have considered a royalty from FCR but felt a decent slug of FCR shares was a sufficient ongoing interest. So additional value will be derived from the sale to FCR as its shares start to benefit from developing the Spanish assets. THC might be expected to seek a royalty or an equity stake from an LS purchaser. Whilst that may depress the total booked consideration in the shorter term, THC/MAFL take a longer term view of these things. Again, you make your own mind up and remain focused on a book cost return if you like. We know you are hard to convince otherwise on MAFL but it is good to have debated are least some fundamentals with you!
Wizard: I am pleased to see you focusing on some fundamentals at last. That is what this stock is about. To your points, I have not closely followed up the Spanish deal, where THC received cash and shares. But each resource asset must be looked at separately and a 4 hole programme was carried out at LS in 2016, followed by the announcement of further 6 holes. The management's own June 2017 RNS (when the 15% LS stake was bought in from the government) gave an in the ground resource value attributable to that 15% of $140m (thus $960m for the whole), based upon 4.5Mt. On top of this base case, we now have very significantly greater than expected grades being proven from drilling; unexpected findings such as indium; rising zinc and copper prices due to low stocks and reserves; only part of the LS 13,000h resource being drilled; the speculative possibility of MAFL's interest becoming higher than 49% based upon its financing terms (it seems to be bearing most of the risk); the sheer convenience of the LS location compared to many such finds which are in far flung places; and the $/� fx rate has improved since 2106. It seems inconceivable some significant increase on 4.5Mt will not be confirmed. Forget the book cost as totally irrelevant. Every 1% of the management base case for the in the ground resource would be worth to THC $9.6m (so before any resource increase proven). You do your sums as you wish but the fundamentals for MAFL speak for themselves (and go beyond what I have covered above) and are what the value investors here are considering. DYOR, IMHO etc
Charlotte, nice to hear from you. I think this is a very sound view, particularly at this stage of the game. "Hard to trade stock likely to become harder"? We are, by the management's own indications, only 2-3 months away from a revised resource estimate for LS (which could surprise us all) and a potential sale announcement. The renewed interest this week also shows some sizeable deals going through.
There are clearly some people who are completely blind to the principles of value investing. To base one's opinions by slavishly following charts and be constrained by an asset's book cost whilst apparently completely ignoring any fundamentals is irresponsible. I am all for encouraging differing opinions and approaches here but please let's not give airtime to this meaningless stuff. I strongly suggest just ignoring it when it appears. MAFL is very fortunate to have a significant stake in a top top quality asset which the bod itself has implied is worth at least $960m in the ground, probably more, so on a sale one has to be looking at dollars rather than cents IMHO. DYOR etc