Gordon Stein, CFO of CleanTech Lithium, explains why CTL acquired the 23 Laguna Verde licenses. Watch the video here.
Ed, it's not just that LCM think we can win, it's that they've provided $13.6m in non recourse funding & our current market cap is pricing in a ~1.5% chance of winning...
The timeline is an unknown, Poland aren't in ISCID either and it hasn't unduly impacted Greenx's timeline, which saw them go from signing the LCM funding agreement in July 2020 to completion of the hearing against Poland in November 2022.
The main points in the near term are claim quantum & the outcome of the May auction.
Closing auction again interesting, 100k buy order at 45p went unfilled (as if someone is testing the waters after the 450k at 42p on Friday) and then a 50k buy order came in at 45.5 right at the end. Neither were filled, not a seller in sight.
Very strong trading into close, quoted 47.78p for size, there appears to be limited stock available & why should there be at these distressed levels with a buyback initiated?!
They hadn't started the buyback as of Friday close as they have to RNS each day the amount of shares acquired, once they do it will be really interesting to see how many they can buy at these levels.
The KPI's for Flexipay look really good indeed;
H2 Income per active account grew to £861 (6500 accounts, £5.6m income), vs H1 which was £605 (3800 accounts, £2.3m income)
Average month end balances per active account held steady (£56m / 6500 = £8600, vs H1 which was £34m / 3800 = £8900), I'd say this stat is especially impressive given the 71% growth in active accounts during the half who wouldn't have been using the product for a whole period.
In H123 they added a net 1800 active accounts, in H223 this increased to a net 2700. Should this cadence continue for the next 12 months, FY24 would end with 14600 active accounts, if income per active account stays at £861 per 6 months (£1723 annualised) , then revenue would hit £25m
What we can say with a fair bit of certainty is that Flexipay has good product market fit, now it's about scaling this product to as many UK SME's as possible. As of YE22 they had lent to 84k UK SME's since 2010, so there is loads of runway...
"I think it has value, but have worry about dilution."
GreenX have followed the exact same path as PAT appear to have ahead of them. Periodically raising capital at increasing share prices as their litigation process proceeds & using this capital to fund their other projects. It has worked just fine over there, with shares up 10x on where they were in the month preceding LIT funding receipt and trading at ~20% of the claim value.
If PAT need £2m per annum going forwards(what they've raised in the last 12 months) and raise at incrementally higher levels each year, then dilution will be minimal vs the claim quantum / any negotiated settlement amount.
I.e. Later this year let's assume they raise £2m at 20p, that would result in 10m new shares at a market cap of £35m, which equals just 4.5% of a $1b claim quantum
2025 £2m at 40p = 5m shares = 9% of a $1b claim quantum
2026 £2m at 60p = 3.33m shares = 15% of a $1b claim quantum
That would mean total dilution of just over 10% from current levels vs a 1000% increase in the share price (and still leave a market cap lower that GRX currently sits...)
Even if you halve those numbers it's still immaterial vs the potential reward.
The key is the rerating to a more appropriate market cap, the risk vs reward looks massively asymmetric to me.
Plus the fact the BOD own just under 10% of shares in issue and the CEO is on record on a podcast saying that avoiding dilution is absolutely critical...
Yeah they know exactly what they are doing IMO, but their strategy will be a masterstroke for PAT shareholders if the arbitration tribunal agree with the case we present. Frankly, I don't really care about how/when we get paid, all I'm interested in is the claim size & the verdict. I'd guess shares would hit 50% of claim size in the event of a positive verdict, I'd be happy to leave some for the next man at that stage...
Really good volume and consolidation today, it will be interesting to see whether they have started the buyback or whether this is institutional investors shuffling their cards.
I make it around 270m shares with notifiable holders & sub 3% holders specificed on Simply Wall Street's register (who must get the data from Bloomberg, date unknown).
So if FCH buy back 40-50m with this £25m tranche then there will be very few shares left in circulation. Hopefully we'll break above 45p early next week, there were very few sellers on the book in the last hour and none in the closing auction, there was a buy for 450k shares at 42p though which went unmatched.
Have followed De Grey for some time as it has a world class discovery, although appears fairly priced.
Here is their DFS from last September for their 6Moz @1.5g/t Hemi deposit; https://degreymining.com.au/wp-content/uploads/2023/09/20230928-ASX-DEG-DFS-Equity-Raising-Presentation-lodgement.pdf
P11 has the key info, at the DFS gold price used of $1800 it has a post tax NPV5 of A$2.9b (£1.5b)
De Grey's market cap today is A$2.4b / £1.25b
Bhukia at 6.7Moz @1.945g/t is certainly comparable to this, although obviously in a different jurisdiction with many unknowns regarding infrastructure & cost to mine etc.
The pre tax NPV will be far higher than $1.2b with gold prices at $2150 and rising, and I suspect that is a good part of the reasoning for the apparent gov strategy.
A brief review of the history of this deposit provides further clues as to why we are where we are;
From the PAT website;
"In 1993, Hindustan Zinc Limited (HZL) applied for, and was granted a PL, completing 4,000.3m of shallow diamond drilling which resulted in an unclassified resource of 8.7 Mt at 2.0g/t Au. Initially the focus of HZL was to see if there was the potential for mining the oxidised mineralisation processing via heap leach. The trial was not successful and the findings by HZL led the company to let the licence lapse in 2001"
When Hindustan Zinc got the PL in 1993 the price of gold was around $400oz, gold traded lower throughout the 1990's,and bottomed out at ~$250oz in mid 2001, they almost certainly let the license lapse because the economics wouldn't have made sense at $250oz, especially not via heap leach...
Indo gold picked up the Bhukia license in ~2003, when gold had recovered back to it's early 90's prices but was still in a 20 year downtrend... between then and 2008 that changed in a major way and I suspect Hindustan Zinc's feasibility studies looked dramatically different with gold at $900/oz!
15 years have then gone by to reach where we stand today, and now gold sits nearly 10x higher than when Hindustan held the license, the assets won't have changed one bit, but the economics will have utterly transformed.
A fascinating special situation the likes of which I've never come across before.
Some further media coverage of the impending auctions;
https://myind.net/Home/viewArticle/first-ever-e-auction-for-gold-mines-initiated-by-rajasthan-government#:~:text=Geologists%20from%20the%20Geological%20Survey,an%20area%20of%20940.26%20hectares.
"Anandi remarked that with the auction of gold mines, Rajasthan will now be recognised on the world map as a gold mining state."
Given the rhetoric in that article, is it any wonder that the local court dismissed our case?! Can you imagine the pressure that the judge would have been under...
Wow, so they paid 12.55% of 2016 spot, if they used the same calc here with gold at $2100 they would have to pay $263/oz... base case on the JORC resource of 1.74m/oz would value it at $457m, however based on the 6.7m/oz defined by the GSI it would be $1.4b.
Looking good to me
"With 25 million buys needing to be executed under 45p, I don't expect this stock to move much higher anytime soon. GLA"
What on earth does this mean? The price will only stay sub 45p if there are sellers out there to match the £25m buyback money flow + PI buying volume. The aim of the buyback is to increase the share price to fair value, which is clearly well north of the current price.
No surprise to see a little profit taking this afternoon, I suspect there will be a few US shareholders who will sell up with the US business being on the verge of disposal. But get the next few days out of the way & let the buyback do it's thing, I'll be amazed if an uptrend doesn't form.
I'm here for Flexipay growth, £256m of transactions from 6.5k businesses last year, and now they've introduced a Flexipay card to further aid business spending. The best part is that these products are interest free, so they should be extremely sticky and therefore valuable. £50m income by FY25 was the previous guidance, they are guiding for £24m for FY24 so that still looks attainable.
Very interesting to see where this goes over the next 12-24 months. Target price £1.50 based on them achieving 8p EPS in FY26.
Notable that it's being sold as a mining license, tells you everything you need to know about their plans going forward.
£18k registration fee to access the docs - presumably they will have to disclose the size of the resource...
A £25m buyback on a share with a current market cap of £160m is highly unusual, add in the growth element via Flexipay and it becomes an even better opportunity.
I've just had a quick look at trading volume over the last 12 months, if we strip out the 19m shares traded on one day in mid Feb + 2 other high volume days where multi million block trades went through then total volume in the last 12 months was 50.9m shares. We can estimate total value traded by multiplying this by the daily close price, which gets you £21.9m.
If shares were to remain at the current 44p then the £25m buyback could sweep up 56.8m shares, reducing total share count to 305m. This volume of shares across a 260 day trading year equals 218k bought each and every day, vs the 204k average over the last 12 months (excluding the 3 days of block trades).
The main question is where do they think fair value sits? With the IPO price of £4 and no dilution since, it's surely a long way north of here...
Great spot Deckchair, very much on the ball :)
The below really caught my attention, looks very interesting indeed considering the overall market cap + share buyback
"Our newer FlexiPay business, which helps small businesses manage their cashflows, delivered strong growth in 2023, building on a successful full launch of the product in 2022. Transactions near quadrupled to £234m, compared to £59m in 2022, as we saw FlexiPay quickly become an essential and ongoing part of customers cashflow management toolkit. We more than trebled the number of active accounts to c.6,500 at the end of 2023 and we have been encouraged by the increasingly predictable repeat behaviour among users. We also continued to innovate and expand our product set in 2023. In the second half we launched our integrated FlexiPay card. Whilst this remains at an early stage, with its launch, customers can now borrow, pay and spend with Funding Circle."
Really pleased to see that they've settled into a steady cadence on the buyback, with 10 consecutive trading days of 10k shares bought. If they continued this for the year they would repurchase ~2.6m shares at a cost of £44m (at current share prices). As I mentioned a few weeks back, this is a material proportion of the free float & once sellers are extinguished, this should rapidly move back higher. With interest income of ~£80m PA they can comfortably afford to continue this beyond the current £20m buyback IMO.
Changing to the SETS order book with a 250 listing will improve liquidity no end, with international buying able to purchase shares via the likes of interactive broker.
Liberum said the below on the main market move in an updated note last week;
"While the company has not given a specific date for the move to the main market from AIM (first announced in March 2023), we believe this is likely to happen before the end of 1H24. This would be on the back of the FY23 prelims in March and the publication of the FY23 annual report in April"
Not impacted in the slightest, however given the circumstances leading up to the placing it's hard to believe they have changed the REX offer to only allot shares to existing shareholders... So any unfortunate individual who got spooked by the 2 week long fall, or had their stop loss taken out by forward sellers / insider trading can't participate? Simply awful.
Ps. Posting this link again in case it was missed last night
https://www.businessnews.com.au/article/The-Use-of-Disputes-Finance-in-International-Mining-Disputes
One option that wasn't discussed yesterday which is unlikely but possible; India auction off Bhukia for $1b and use a portion of this to offer PAT settlement?
I'd give it a 1% chance of happening, however it would explain why they are planning to sell it during the period when the NOA has been filed.
This strategy would be win win for everyone and avoid a drawn out process & Indian legal costs, however it shouldn't be completely dismissed IMO.
Like others, I'm 99% sure this is heading for arbitration, and am delighted to be able to buy PAT with the market currently given a 1-2% chance of winning the case :)