Gordon Stein, CFO of CleanTech Lithium, explains why CTL acquired the 23 Laguna Verde licenses. Watch the video here.
Looking at the recent newsflow, this does look very interesting given it's trading at ~30% of early 2023 highs and there has only been 10% dilution since then. Need to do more research, but it appears a maiden JORC resource is due imminently? The $500k grant from BHP certainly looks very interesting & I like that the CEO owns >10% of the company and they have only raised once in the last 2 years. Today's news could be the catalyst needed for a re-rate, volume already 12x the 20 day average...
History here https://www.jpmorganchase.com/about/our-business/historical-prime-rate
Been above 7% since Nov22, average is 5.86% since March 21.
Yes definitely an interesting day, top work on the CEO engagement & confirming timelines.
It's at the date of expropriation as per the BIT, which is 15/03/21 when the mining laws were changed and MMDR2021 was introduced. Gold was ~$1750 back then. The flipside is that interest on any award accrues from that point. Usually they apply the US prime rate, which has sat at 8.5% since July 2023...
Good to see the Stocko coverage, PI ownership here is abnormally low (HL & II clients only own ~2% of shares) so any sustained PI buying should be a favourable wind.
Alpha currently 2 analysts providing coverage, Liberum and one other that I can't locate the name of. Liberum are valuing the treasury income of a PE of 3 with the cash flow discounted at 9%... Most 250 stocks around Alpha's level have 6-10 analysts covering them, so we should expect to see several 'initiation of coverage' stories in H2. Where they place their price targets is likely dependent on how much info Alpha want to provide them, if they can get hold of some 5 year forecasts then look out!
Kitrash, do yourself a favour and read some of the posts today before making such unnecessary comments. For one thing, the resource size in today's RNS is now 7.2moz vs 6.7moz in prior releases, so that is relevant and highly material new information for a £12m market cap.
I'm glad that the collective view agrees with my first impression at 7.30am, companies that go into these scenarios like a bull in a China shop aren't going to come off well. It needs to be managed in a highly professional manner, which is why you need experts like LCM driving things.
It's all moving in the right direction as far as I'm concerned and we are steadily building a solid community of shareholders who hold a similar opinion. The next key date is 2nd May for the Bhukia auction, between now and then there is a window for a surprise RNS which could be utterly transformational given the market cap. Impossible to say what the likelihood of a deal being reached is, but I'd say it's a fair bit higher than it was last autumn. If no deal is reached, then we'll have the NoA and claim quantum.
Nice to see the first £20 on the L2 order book spread, still trading at an EV/FCF yield of 16.3% & an EV/ Equity ratio of 2.8x vs the IPO to end 2022 average of 6.2x. A return to the historic average provides a share price target of £36.60 (and a much more sensible EV/FCF yield of 7.5%)...
Gallmat, great spot on the updated resource. This is all in conjunction with the auction, here is the gazette notification with quite a few details. Notably 124k tonnes of copper too
https://mines.rajasthan.gov.in/dmgcms/Static/files/Mineral%20Block%20Summary%20of%20Bhukia-Jagpura%20Block%20district%20Banswara.pdf
You have to read between the lines, if India had stonewalled Faskens/LCM/PAT then surely the NoA would have been filed. LCM have similar experience in the GreenX Metals case vs Poland and Poland blanked everything. LCM aren't amateurs.
I'd imagine that any discussions with India will be under strict NDA, so even disclosing that there had been a response could be difficult. That's why we have got the cryptic RNS this morning.
Hold for gold IMO.
Hmm. Doesn't this suggest that they are potentially in negotiations though? IMO it's all tied to the 2nd May auction date, clearly if they sell Bhukia to a 3rd party then any 'amicable' settlement is impossible.
Always remember that this process is being driven by Fasken's & LCM, LCM don't give a company $13.6m in funding and then let them interminably drag out the process.
Reading between the lines, a settlement prior to the auction date now looks possible.
If India have received strong interest in the pre auction process and are confident in a bid of >$1b then paying us a significant % of that would seem to make a lot of sense.
Either way, the end of the beginning is very close, imagine selling now and missing out a £1 share settlement agreement!
@sheepy, the UK ISA hasn't helped much? It hasn't even been launched yet! It's likely to start from April 2025.
Alpha has suffered far more from fund outflows than the average LSE share due to the fact it was the most popular UK small cap stock in many fund portfolios. The outflows have been none stop for the last 24 months and Alpha has gone from being a highly rated (for the UK) growth stock on a PE of ~40 at the end of 2021, to a value stock on a PE of ~9x today.
Obviously some of this derating can be explained by Alpha's exceptional prudence with it's treasury income stream. Had the same product been created by 99% of other listed companies then I suspect it would have been dressed up very differently in the accounts and used to pump the share price so that certain parties could benefit. Not so here, which is a great sign for long term holders.
As @koolhead and others have posted over the last few weeks, I think it's fairly obvious that Alpha should continue to thrive over the next 5-10 years. On healthy stock markets like the US, Australia & Scandinavia, it is eminently feasible for £800m small caps to grow into £5b+ mid caps. In the UK it is exceedingly rare, with the only FTSE 100 examples in the last 8-10 years being Diploma, JD Sports & Dechra, (now acquired) . There are more success stories in the 250, with Games Workshop, Softcat, Greggs, Computacenter making it to ~£3b. Behind them you have the likes of 4Imprint, Globaldata, Keywords, Yougov & Alpha who have developed from sub £500m to where they sit today.
Alpha graduating from AIM and leaving market maker derived liquidity behind is a major step in the right direction. They'll need to get more analysts on board and start to provide more colour on medium term revenue & strategy, which should allow shares to reach fair value, i.e. valuing the business on the financial metrics it will produce in 3+ years time...
I think the main risk now is a low ball takeover offer from a US PE outfit, taking advantage of the ridiculous FCF yield that has been created by Alpha's prudence. By low ball I mean £30-35, which judging by recent M&A activity on LSE would likely get a thumbs up from the mainly short sighted bunch of UK fund managers.
My view is that this can be a £100 share in the next few years, perhaps sooner if European equity markets properly recover. That would only see it reach the low end of the FTSE 100. They certainly tick all of the right boxes.
There has been no online quote for 100 shares since 8.10am, no doubt due to the 5k buy above the ask at £18.45. Peel Hunt are advertising £18.40 on the offer, but there is nothing available. The real bid is £18.32 for size, yet at 8.43 Liberum saw fit to drop the advertised bid to £18...
The last time I can remember such an imbalance in liquidity was this time last year, shares promptly broke above the then £19.40 resistance on 6th April 2023 and didn't look back until they hit £23 resistance on 11th May.
Of course, fundamentals 1 year on are dramatically stronger, with an £84m increase in net cash (worth ~£2 a share), a 5 quarter track record of treasury income, an ongoing share buyback & imminent move to a FTSE premium listing. The macro picture is also steadily improving, with inflation seemingly tamed & interest rates stable, meaning conditions for business are much improved, which is of course positive for Alpha's underlying performance.
All in all, with a >15% FCF / EV yield, Alpha is incredibly cheap, which is almost certainly why liquidity has dried up... I think £25 a share would still be cheap, given FCF / EV yield would still be over 10%
Ps. Peel have finally moved off the offer, now it's NT for 100 shares at £18.45 with Invesco blocking online dealing. We're on the verge of a proper breakout IMO.
I thought it was notable that they didn't mention their North American & Asian regulatory license applications in last weeks report, which we know were started at lease a year earlier;
"Whilst we are only scratching the surface of the European market, the service providers we are partnering with are global, and have already expressed a strong desire for us to expand our offering to North America and Asia. These regions are currently outside of our regulatory scope, but with the benefit of the interest tailwind, we have taken the opportunity to begin regulatory applications in the US and Singapore. These applications are just one such example of our accelerated investment in scalability that is being carried out to secure our global expansion. Providing these applications are accepted, this will open up new revenue opportunities for the business, from existing partners who have already shown a strong appetite to work with us in these jurisdictions."
I also spotted the below Prequin research which was released on the same day as our results;
https://www.globenewswire.com/news-release/2024/03/20/2849698/0/en/North-America-is-consolidating-alternative-assets-as-region-holds-almost-two-thirds-of-global-AUM-Preqin-reports.html
And finally linking to the commentary on the main market listing;
"As a business that is growing in size, becoming more global, and gaining interest from increasingly larger clients, we believe a Main Market Premium listing will serve to further enhance our reputation and support our market penetration as we move into new countries and engage larger clients."
To me it all points to a launch into the NA market in the very near future. It wouldn't surprise me in the slightest if it coincides with the May uplisting, it would make a lot of sense & explain the ~14 month lead time from first announcement of the move to it actually happening.
Entering the worlds largest alternatives market armed as a highly profitable business armed with £200m cash would certainly be very exciting, and I agree with @Koolhead's vision for a NADSAQ / NYSE listing in the medium term, once they are firmly established in the US and revenues are substantially larger.
Solid buying that's for sure, it's just a matter of patience really, 250k shares a day / 5.5m shares a month will soon see off any sellers. Any guesses at the share price come end of September? With falling rates & an improving economy I'm hopeful we can get back towards £1
I was reading some comments on Stockopedia's SCVR yesterday and it struck me that there is a big divide in opinion with Alpha. There are a group of investors like we have in here who think this company is outstanding and offers unbelievable value at present. However, there is a quite obviously much larger group that are completely oblivious to the fundamentals, and who still think a £750m market cap for an 'FX business' is expensive by default. I don't think any non investor has the foggiest about how the ABS business model works and particularly what is driving the treasury income...
Funnily enough, I was in the second camp until the Jan 2023 trading update flagged the interest income and I spent a lot of time looking at how the business had developed since 2017. Once you do this and realise the scale of Morgan's ambition (and how much of the hard work they have already achieved) then this becomes an incredibly exciting growth story. Now it has been 'supercharged' with incredible cashflow, it's gone to another level - particularly given the share price.
The fact is, most private investors haven't realised that the fundamentals here are second to none, once the wider market does so, then Alpha won't be trading anywhere near £18 a share. Add in that fund outflow's which have been plaguing UK small caps for the last 2 years will likely reverse when rates fall + the UK ISA + other mansion house initiatives aimed at boosting pension fund investment in 'unlisted' UK shares + the move to the 250 (and tracker funds) and I think you have the recipe for huge appreciate in value here over the coming years. It's the strongest of strong buys for me.
Great points @koolhead which I'll reply to when I have more time. There was no quote for more than 1k shares at £18 into close, so a breakout looks very likely tomorrow IMO.
It's up because even a moribund UK market can't ignore cash generation like Alpha produced in H2! Shareholder equity increased by 31% in H2 alone and 56% YoY, truly stunning figures.
I note Liberum have another note out today, I find them hard to take seriously but here are some excerpts;
"We also note that by end FY25, adjusted net cash is forecast to equal c. 50% of market cap." - A truly crazy fact in it's own right...it would mean that FCF to EV yield for FY26 would be nearing 30%
"Our target price for Alpha is derived from a simple average of a target P/E multiple and a DCF for the core business plus a modest valuation (3x P/E) of the interest income. Our TP is 2675p, implying upside of 63%."
The target PE they refer to is 31x underlying FY24 EPS + 3x DFC P/E for the interest income, which comes to £178m / £4.25
Why on earth are they valuing it on an underlying PE basis when in the same report they refer to the fact that by the end of next year they could have half of yesterday's closing market cap in cash?!
A much more sensible method would surely be to pick a prudent EV/EBITDA multiple - let's say 10x and value it based on the forecast FY25 closing position.
Based on today's note, Liberum are forecasting £55m in FY25 EBITDA + £80m in treasury income. That would result in £135m EBITDA (as of today, the treasury income isn't classified as finance income, so it's not interest...), So £1350 + £335m cash = £39 a share, assuming 43m shares.
And 10x EV/EBITDA is cheap as chips for a business of Alpha's quality - note LSE listed mobile payment providers Boku & Fonix are valued at 21x and 17x EV/EBITDA respectively, and neither come close to Alpha's fundamentals or track record..
Pleased to see other operating income rebranded to something more logical & also the uplisting date confirmed.
Results are spectacular, how this is valued at less than £1b is anyone's guess, £89m PAT £198m cash and £700m cap is outrageous. It could easily justify a £3b+ cap on a better exchange. Just extraordinarily cheap, even vs other LSE listings.
Two things would rapidly change the picture here;
- Material director buys - CEO/CFO both currently own pocket change vs their basic + bonus packages, this doesn't encourage new PI's to buy and hold
- Raising a decent amount of capital to strengthen the balance sheet and remove the debt overhang. The finance charges are punitive for a company that would otherwise be heading for genuine profitability. They quote $3.6 to $4m for the phase 2 expansion and say they can finance this from current cash & FCF, however this looks tight to me. I'm not sure why they seem so against raising growth capital for expansion? Is it purely down to the share price being below where they would consider raising?
It's a really nice growth story, but with such a weak balance sheet they are one problem away from a crisis. It's frustrating and typical of the UK market right now, can you imagine how different it would look with say $20m net cash on the balance sheet?
Yes that's really useful to know and makes a lot of sense. Again this is something that wouldn't need asking if they did a CMD / investor presentation / any kind of investor interaction!
There are happy to sit on the bid at present, probably sensible if they intend to buy back 50m shares. Likely consolidate for a bit unless their tactics change