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Hi All
Thanks for the responses - so despite myself I decided to read the last few years of RNS's and get at least to a high level up to date.
And as far as I can tell is a pretty low risk bet between a breakeven company vs the transformational Leigh Creek - which as I understand it really does seem to be imminent in July
From reading the RNS's I have a thesis clearly back end of 2019 H1 202was an annus horribilis for SML. I imagine the board were almost totally focused on the Cobre debacle. Clearly they had planned to use cashflow from Cbore to invest in Leigh creek and then leigh creek to invest in Cornwall which on the face of it I cant fault. Turning one low capex project into 2 high capex high return projects is fine work. Board were knocked for six and then again with covid. They tried to get the Leigh creek project up and running in 2020 but due to covid know one was interested. (This isn't to much of a surprise. Noone in their right mind was investing in 2020. I personally delayed a 600K capex decision). I expect the attempt at getting finance and the project of the ground was pretty bruising with no one interested due to (1) Not enough upside to make it attractive for external investors (2) Deficiencies in their model that couldn't be answered easily (3) to much capex upfront . As a result they took some advice did a rework and made the plan more sexy. To get it to market they were advised to go for a listing. I expect this advice was taken reluctantly - the project looks to have extremely near term revenues and I'd be loath to do it via equity - I think you can see this in the comments re debt financing which I expect is the board preferred method . Allof the above basically Ki-boshed the start of this project. I have a some sympathy for the board. getting anything going in 2020 was basically impossible- having said this though I note in the last RNS they have stated that clearance will occur in July. That's clearly a near term catalyst . If I was the board I would also have my finance solution lined up or close to on the back of the clearance. Basically, why would you invest in a JV when the clearance is outstanding - you'd just wait until the company got it. I guess what im trying to say is that I expect in reality funding of any sort for practical reasons is contingent on the clearance. Even if the company haven't communicated it is. with the clearance clearly imminent I expect the funding is too. If thats the case we would be looking at H2 production (based on funding) which I expect is in place if the clearance is given
Does the gibbbersh ? make sense ?
Couple of other things I like. Board allowed shareholders to take place in the placing - they clearly should have raised more when they could. But they obviously didn't think they need too
Publishing quarterly cash is extremely transparent - def a good sign
The results talk about operating profit not adjusted EBITDA - what you get is what you see
Hello all - haven't been looking at AIM shares for quite a time as main US market has performed so strongly. Nevertheless after a year of making money I'm now ready to lose some again....
to that end I took a look at SML and it looks very cheap to me and not sure I can work out why there is such a discount.
Some fag packet calcs.
Cobre on its Q1 sales will do 3,084 over the year - assume same overhead as last year thats operating profit of 583USD *7 for a value of the enterprise is 4m USD - £3m.
They have a claim of 21m USD of which there are 8m liquid assets from the other party - none of its booked in the accounts but lets assume 20% recovery that's 1m USD in cash £700K
They are listing a business for 10m AUD (looks like they wanted to do it with debt initially which means they assumed the cashflow could support the debt) 10m AUD is about £5.5m
Cornwall resources they own 50% - that limited companies value is £3m on its net assets so 50% of that
Adding it all up is £3m cobre + £700K claim+ £5.5m Leigh creek +1m cornwall resources = £10m
The above back of the fag packet maths basically treats future cashflows from leigh creek and cornwall at zero.
So question is why the discount -it took me about 3 hours to work out the bits of the business and I guess that might be the discount? But the total here seems to me be very much less than the sum of its parts? AIM resource company with operating profit and cashflow for just shy of 9m? I also note the exec director purchased a load at 0.4
There doing just fine. Not entielry sure what peoples exoevtautons are just bottom draw it and check it once a month
Intersting payback could be in 12 months. I cant get the numbers to work at 250bpd and indicates possibel much higher production. Thats great by the way pay back of capital in 12 months lol.
Have a look at the proactivr pressie from 10mims in to see what i mean
All good here
Gl all
Hi Pawnsacrafice
Yes thats correct - I emailed the company for a bit of clarification. They acquired more seismic data from a local party that allowed them to bring the drill program up about 18 months which is excellent news
I asked for clarification on 900 bpd target which assuming the response was understood correctly by me will be comprised of the work overs on Norio and 2 side tracks on W.rustavi
I have assumed schlum's drill must be looking interesting too. Increase on W.rustavi also opens the route to farmins ect - pure speculation here, but Block seems a cheap way to get access to region
Im pretty bullish here and think its cheap at this level. If I didnt have so many I'd buy some at this price
Credit to the co on the PR they are doing - but nothing is moving either way until they actually start getting the drill bit turning.
Market doesn't understand/ doesn't care about Schlum drill and I cant find any information on their drill so till then i imagine this will tread water
Next few months will be interesting when I think the veil of whats going on on the ground will be revealed a bit more. 900bpd isnt exciting but Schlum J next door is - and no one seems to get that. Neither that Blok is one of the few ways to get quickly into the country. If parties have men and material idle and Blok has something that needs to be drillied it makes sense to do a deal.
Hi Diggedy Many thanks in taking the time to offer a prompt and comprehensive response. Re the ICAP, that's really interesting and fundamentally different to how I assumed the book would be managed. I was operating under the principle that in house traders would directly hedge the exposure on specific stock indices, FX ect and not via the reg capital provided by the asset mix on the balance sheet. re: "You are correct about the FCA driving out the small player in the UK...." This to me is either the tradewind or the storm and is clearly IG's view too . Taken from their press release "The Company notes, however, that the FCA’s proposals do not appear to directly apply to firms operating from outside the UK offering CFDs and binaries to clients in the UK on a cross-border services passport from another EU member state." My view on this is that regulations are nearly always advantages to the lead operator and really the basis of my investment - although I would concede its to early to tell One final question - whats the typical punter spend? Couple of grand a year or hundred. I'm not clear on who these regs will really affect. My personal experince of spred betting is as betting - i,e a tenner here and there. Is a significant bit of the business really novices who lose £30K £40K? Many thanks for your time.
Hi Diggedy Thanks for your insight - it is always great and useful to hear from an industry head, particularly when its not an industry I know well (at least not from the inside - I am a real expert at contributing to their profits) Firstly - I agree that regulation needs to happen and I am glad it is happening. No punter should lose his house on a £10 bet. To this end the FCA's proposals in the white paper seem to go some way to fixing the mischief in the market. I also agree that this will be in the short term a hit on the market and will probably limit the total size of the market in the long run. However, in the mid-term I view this as a positive to IG and CMC and Citi. This is based on the theis that the FCA is aiming the legislation at the modern day equivalents of the bucket shops. Not IG. However, undoubtedly it will be IG who it consults on the final drafting of the regs. The end point of this is I expect business will be pushed to IG not away. I can't really comment on impact on profitability but my view on this is that as long as the punter can still very easily make money they will keep comping back and as long as IG ensure that it is marginally easier for the punter to lose money the business still works . One last question when I was in practice I was informed that spreadbets only 50% hedge and that they are actively taking positions and prop trading is this true? Many thanks!