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It has been another month since a heads-up on what might be upcoming from MAFL. In the absence of awaited news, sellers (including a 1% trade) have greatly exceeded buyers, the sp has dropped and some holders understandably appear to be losing confidence or patience. MAFL is an outstanding value stock IMHO so I do not believe charts or other tools apply to it. A detailed understanding of its fundamentals and dynamics supports a positive view. Perhaps $2m+ has been spent on drilling 10 holes at the 13,000ha Lagoa Salgada resource over the last 18 months, with some outstanding results. All confirmed by January's mineralogy report followed by a top-of-range resource upgrade (from 4.5Mt to 9.6Mt, now �Portugal's third largest Zn/Pb/Cu resource�). Using historic management figures, at least $2bn of diverse minerals lie in the relatively small drilled section alone out of the much larger LS property (sources: RNSs from about June 17 onwards). A purchaser is now being sought for LS. (A purchaser, however, could only be expected to pay a tiny fraction of 'in the ground' value but might perhaps also offer deferred consideration such as royalties on future production, which would cover the unknown assets in the unexplored remainder of the site.) Apart from other minerals present in good grades, the recent additional discovery of Tin might add to the resource estimate. But the main market focus will be any sale announcement and clarification of any increase in MAFL's 49% interest in LS through its partner THCrestgate (due to MAFL's advisory and financing role in exploiting LS). One can only imagine it takes time to negotiate a sale for such a diverse and attractive asset as LS. MAFL is also looking for other strategic opportunities and has a portfolio of other assets and cash together thought to be worth around $3m, the same as current market cap! Thus any value of LS is COMPLETELY UNREFLECTED in the current sp. There is also no debt, low annual expenses plus a highly experienced board of undoubted integrity and with substantial skin in the game. Continued patience is required. DYOR, GLA
Sellers greatly exeed buyers so some drop is inevitable, including one very big recent sale (300k, �1% of shares in issue). Interestingly, the offer has remained pretty static around 9.50. The big news cannot be far away so that will hopefully produce rewards for the patient.
The 300k+ shares sold earlier today represent 1% of the stock. Along with steady sales recently, no liquidity normally and three months of quiet sideways movements during the delay of expected news, today's dip is hardly surprising. When LS sale news arrives, even sale for $6m (a theoretical number but hopefully modest given the quality of what has been found) would double the NAV so provide support for a healthy uplift. It might be a bigger percentage if the THC situation is clarified. Ma5k, there is undoubtedly IMHO more to look for in this stock longer term (from LS (deferred consideration?), from its other investments and from its other plans) but I would agree that re-articulation of the reasons to hold would be a useful addition to upcoming announcements. I am sure there will be plenty of sellers but one might hope there would be buyers too.
Nom: Whilst I think the feature of low contaminants improving recoverable minerals was positively commented upon at the time that RNS came out, its strength may not have been emphasised strongly enough. It is yet another positive for this stock and for its potential sale price. Whilst it may seem to some that the bulls of MAFL are rampers, this is a stock with extremely strong fundamentals IMHO. It is actually hard to point to many negatives in the MAFL story so far, however critical one might try to be! I am hopeful that the biggest 'negative' (more of an uncertainty with good potential upside) is clarifying the THC involvement. DYOR, GLA
It has been more than a month since a heads-up on what we might expect from MAFL in the not too distant future... After January's good mineralogy report followed by an excellent resource upgrade for the Lagoa Salgada resource (from 4.5Mt to 9.6Mt, now Portugal's third largest Zn/Pb/Cu resource), we now believe there must be at least $2bn of diverse minerals in the relatively small drilled section of the 13,000ha LS property (sources: RNSs from about June 17 onwards). A purchaser is now being sought for LS. (A purchaser, incidentally, could only be expected to pay a tiny fraction of 'in the ground' value but might perhaps also offer deferred consideration such as royalties on future production, which would cover the unknown assets in the unexplored remainder of the site.) There are other minerals present in good grades and the recent additional discovery of Tin is being separately assayed, which might add to the resource estimate. But the main focus for the market will be any sale announcement and clarification of any increase in MAFL's 49% interest in LS through its partner THCrestgate due to MAFL's advisory and financing role in exploiting LS. MAFL is also looking for other strategic opportunities and has a portfolio of other assets and cash together thought to be worth around �3m, not much below the current market cap of �3.8m. Thus any sale of LS is hardly reflected in the current sp, IMHO. There is also no debt, low annual expenses plus a highly experienced board with substantial skin in the game. DYOR, GLA
6z, ma5k: Interesting. LS has, per the recent resource upgrade RNS, in the small area so far assayed, about 550M/lbs of Zinc and the same of Lead, so well short of 500Mt but wonder if the quantity of ore is measured differently? Anyway, both below the drilled area and in the much wider and unexplored 13,000ha LS site must lie untold quantities of additional resources? As now the third largest Zn/Pb resource in Portugal, LS must surely attract the interest of serious miners? We have not been told if LS would be open or underground mined (I would guess a mixture of both).
To respond to Wentsland's question, whilst I can make no comments on the sp movements (they seem to have a mind of their own, but encouraging to see some reasonably meaningful buys recently), I do not think a sale announcement should take months. We know that good news about this resource has been public since at least the autumn (when last series of drill results started appearing), if not before. So one might expect marketing to have been underway for quite a while and therefore a bid emerge soon? Only question is whether the excellent upgrade (+114%) might be bringing in other players? Patience should be rewarded!
Shaz: I completely agree with you that 49% is not being focused on by the wider market - but those who have analysed MAFL are looking for the THC position to be clarified. It could make a big difference! Euclid: The resource update was actually 114% larger, hence my $2bn+ number in the ground (ITG). But THC/MAFL will not mine this. Any purchaser would not pay more than a tiny fraction of ITG, due to capex and mining costs as you say. May I suggest any calculation should be extended to show "per 1% of ITG", which should encourage focus on "nearer reality" rather than "fantasy"?! Its a big valuation spectrum otherwise!
Cadbury: Valuation of LS (rather than THC, the holding company of LS): The only valuation provided that I know of is extrapolated from the June 2017 RNS when 15% of LS was bought-in from the Portuguese government, that portion valued at $145m (so valuing the whole at $960m in the ground, using historic mineral prices and 4.5Mt resource). Scaling that up to today's 9.6Mt resource (any addition from the Tin assay is still awaited) gives a still historic priced valuation of $2,048m 'in the ground'. Clearly zinc is a big part of that which, along with other valued minerals, would at current prices only serve to raise that value. But a purchaser would no doubt only pay a tiny fraction of in the ground value, perhaps recognising all the unexplored areas of the larger LS property by some deferral such as a royalty on future production? MAFL's economic interest in LS is thought to be more than its 49% stake of THC since it seems to have both financed drilling and advised on the LS activities, so one also hopes for clarification of that situation upon any sale announcement. Fingers crossed we can then arrive at the value of LS to MAFL. DYOR, GLA
Shaz: Thanks for the correction, am carrying too many facts in my head! Indeed zinc prices at 10 year high, zinc stocks at a significant low. Many other valuable (in demand) minerals found at LS too so that all should stimulate interest amongst prospective purchasers. All grist to the MAFL mill!
Ma5k: Always good to see you and for a more moderate tone to be sounded. As Wentsland seeks to make a distinction between JV and sale, I see them as one and the same. The sale, as and when announced, could be straight cash, shares or royalty (the latter due to the presence of large unexplored areas) and, most likely IMHO, a combination of those. Some might say retaining shares or a royalty is a JV but a true JV where they retain a minority stake is most unlikely given MAFL's objectives (it is not an operator). Yes there is the THC anomaly to be resolved and I would expect MAFL to resolve that when announcing a sale. Despite the no doubt heavily complianced RNS today, I have little doubt we will hear more before too long given this is now Portugal's 3rd largest Zn/Pb/Cu resource in an easy location and with zinc at a 2 year high with low stocks. I do think we slowly become wiser. The above is just intended as a more bullish analysis against your reasonable moderate one. I am patient and confident (and agree we've been tested) - but I might sell a few to feed the demand when the real news breaks! DYOR, GLA
Shaz: Actually, I believe LS is only reflected in MAFL's NAV at book cost (perhaps about $200k but even that might be THC's book number and not MAFL's!), not at the 4.5Mt or any other 'In the ground' value of the LS resource. The investment portfolio plus cash is �2.6m from today's RNS so with a market cap of �4m, there is a premium to NAV of around �1.4m which may not be wholly attributable to LS. So essentially LS is in at peanuts and has yet to be reflected meaningfully in the share price. DYOR, GLA
U69: You are right, THC involvement has to be clarified. But there are other reasons such as the low profile of MAFL and the difficulty in valuing what LS itself represents, a complex cocktail of minerals which one might roughly value 'in the ground' at $2bn (using earlier RNS data) but how much is that worth now to a purchaser? Plus all the unexplored sectors of LS, even more difficult. Lots of unknowns but plenty of value there, for sure IMHO!
After a longish period of low trade volumes and few chats here, nice to see someone showing faith by placing a 100k buy order today. May well be a few weeks before any sale announcement (or other meaningful update, perhaps on Tin assay results?) but patience, as ever, is the watchword here. (NB Holding your breath is bad for your health but not holding MAFL shares may be bad for your wealth!) DYOR GLA
Shakey: You are right to note that there are good grades of minerals other than the bulk commodities I mentioned but, if I read the situation correctly, it has been suggested that the Central Sector initial deposits alone are expected to be economic. But, as you say, the prospects of exciting quantities of resources in the yet-to-be explored remainder of the property must be a significant attraction for a purchaser.
Following a rare lull in postings here, here's a heads-up on what we might expect in the not too distant future from MAFL... After a good mineralogy report followed by an excellent resource upgrade for the Lagoa Salgada resource (from 4.5Mt to 9.6Mt, now Portugal's third largest Zn/Pb/Cu resource), we now know there must be at least $2bn of diverse minerals in the relatively small drilled section of the 13,000ha LS property (sources: RNSs from about June 17 onwards). A purchaser is now being sought for LS. (A purchaser, incidentally, could only be expected to pay a tiny fraction of 'in the ground' value but might perhaps also offer deferred consideration such as royalties on future production.) The most recent surprise was the additional discovery of Tin which is being separately assayed and might add to the resource estimate. But the main focus for the market will be any sale announcement and clarification of any increase in MAFL's interest in LS given the involvement of its partner THCrestgate and MAFL's advisory and financing role in exploiting LS. Not to be forgotten is MAFL's portfolio of other assets and cash together thought to be worth around �3m, not much below the current market cap of �3.8m. Thus any sale of LS is hardly reflected in the current sp, IMHO. There is also no debt plus a highly experienced board with substantial skin in the game. DYOR, GLA
Yes, JV and JL seem to combine an ideal set of skills, both for getting the best from the upcoming sale of LS as well as for seeking out equally attractive mining finance opportunities going forward (which, lest we forget, is the longer-term gameplan of MAFL).
Alaska: A further resource estimate on Tin is now awaited but everything else is now pretty much in place for a sale of LS to be negotiated, which is the understanding of the next big step for THC/MAFL. One suspects some discussions have been underway for a while but perhaps the excellent recent mineralogical report and resource upgrade may enable the net to be cast to a wider audience. Not seen any reports on timing except the speculation here - deals can take time (and this is a somewhat complex whilst excellent resource) but I'd be surprised if it was more than a couple of months.
6z: Agreed, we know it is their policy to sell. That being the case, with the high price/low stocks of zinc and with LS being described as the third largest Zn-Pb-Cu resource in Portugal and located within the fabled mineral rich Iberian Pyrite belt, it is almost inconceivable imho that industry players would not be interested in approaching THC/MAFL. Shakey: I completely share your caution about statements being made here about purchasers or deal timing without that being backed-up.