Capital Share Discussion Threads

[concentrate] 16/3/2023 10:15

hpcg - Sounds good, I'm not suggesting it's a bad idea, it just raised an eyebrow that the new CEO dedicated about 20% of his end quote to a JV that in strategic direction/materiality terms hadn't even warranted an RNS.

I have no views on the new CEOs, only time will tell. I'm glad to hear your positive feedback on the project.



"..we are now aiming to provide solar hybrid power solutions both to our mining customers and our own operations through our new 50:50 joint venture Mine Power Solutions Limited with our partner Enerwhere Limited. We are also trialling a number of other technologies that could add significant value to our customers in years to come."

[rivaldo] 16/3/2023 10:12

Tamesis's update today reiterates their Buy and 160p target:



Extracts:

"it is impressive that this is the third consecutive year Capital has delivered material growth in revenue, with full year sales increasing 28%, following
68% YoY growth in 2021 and 18% YoY growth in 2020. Moreover the company is guiding to $320-340m for FY23 (140% higher than 2020) and we see no reason for this growth not to repeat in 2024. One day the market will accord the valuation metrics the
company deserves for this increasingly high quality growth. EBITDA has followed with a 19% growth to $86.4m and margins remain intact at 30% vs last year of 32%. The investment portfolio valuation fell but excluding that net income rose 16%. In recognition of this the company has awarded a dividend of 3.9cps (final div of 2.6cps) equivalent to a yield of 3% which will grow in 23/24. We remain very comfortable with our 160p Price Target."

"MSALABS segment growth coming through. The company is guiding to 21 PhotonAssay units by 2025 and has six units commissioned across Africa and Canada. Each Chrysos unit is expected to generate annual revenues of US$3-5 million so with full roll out there is the potential for more than $80m of annual revenues from MSALABS versus just $3m in 2019. As noted above we expect EBITDA margins to strengthen as this segment matures and utilisations of the units increases."

"Investment Case

As has been the case for nearly every announcement in the last three years these results are strong and point to further strength and growth. With activity in the mining sector still strong and long-term contracts locked in, we believe revenue growth is assured into the medium term (5yrs) and margins likely to remain firm. The Chrysos business in particular adds heightened impetus.

Meanwhile the shares are trading on EV/EBITDA and PER multiples for 2023 of 2.9x and 6.5x respectively and a dividend yield of 3.1%. We see the current share price as an attractive entry point and maintain our price target of 160p."

[hpcg] 16/3/2023 09:37

concentrate - miners and processors across Africa are installing solar. A) it is cheap power, B) it is predictable and reliable power where the grid is not, C) it has a predictable cost, D) reduces fuel inventory, E) lots of brownfield cleared land to put it on, etc etc. It is just an obvious thing to do.

[adamb1978] 16/3/2023 09:25

Given CAPD's increasing focus on A list miners, the investment portfolio should presumably become less important (as a share of the group) given those A list miners wont need investment from CAPD?

Would be nice if material further new capital doesnt go into the investments IMO as they don't seem to get credit for it

Adam

[hpcg] 16/3/2023 09:12

Actually we get some decent information about the investments later on:

"Investments in listed entities at the end of December 2022 amounted to US$30.4 million which provided additional flexibility as these investments could be converted into cash."

Which puts the listed values exactly in my mid range and means the Allied portion is estimated to be worth $8m

Predictive Discovery, and especially Lo Lithium (A$450m market cap) have the liquidity convert to cash without having to work too hard.

[hpcg] 16/3/2023 08:51

Beat my estimate of the portfolio value, post 2463:

(I reckon FY valuations will be somewhere in the $24-36mn bracket with mid to upper mid value favoured depending on the Allied estimate and their actual holdings to which we aren't party.)

[adamb1978] 16/3/2023 08:41

Agreed Chillpill. I expect it will close around flat

[rivaldo] 16/3/2023 08:40

Taking the $330m midpoint of forecast revenues and $45m of MSALABS revenues, that indicates that separating out the surging MSALABS revenues the remainder are set to grow at over 8% - certainly good enough for me.

Especially given that we know CAPD are usually conservative in their guidance - they've consistently underpromised and overdelivered for some time now.

Looks like the usual traders on results have been skewered by the MMs once again in CAPD's usual results day scenario. Hopefully the price will bounce nicely at some point soon.

[chillpill] 16/3/2023 08:39

Predictable as clockwork. They always go down in the first few hours of trading after results.

[chillpill] 16/3/2023 08:04

I like businesses that have a ROCE over 25%.

[astreix] 16/3/2023 08:01

Given they expect MSLAB to grow from $27m to $40-50m, this seems account for a large portion of growth in revenue guidance ($290m to $320-340m). Overall good to see them growing MSLAB, but looks like mining revenues might be growing at slower pace

Does anyone have any guestimate of how profitable the MSLAB business is?

[rivaldo] 16/3/2023 07:40

Also just noticed adjusted EBITDA is also well ahead of Tamesis' expectations.

Tamesis forecast $86.1m EBITDA, whereas CAPD achieved $90.1m EBITDA - a substantial beat.

[rivaldo] 16/3/2023 07:22

The results are out and are as flagged, except the adjusted EPS, which we now know is 21.9c or 17.9p (before paper investment losses) - a P/E of 5.8.

Most importantly, guidance for this year is set at $320m-$340m revenues, which at midpoint is well ahead of Tamesis' current forecast of $319.4m.

Upgrades are in order methinks.

Net debt is also better than Tamesis' forecast at $47.2m.

Chyrsos revenues are surging ahead, expected to grow another 60%-70% ths year to $40m-$50m. Mining services as at Sukari has also been an outstanding initial success, overdelivering on performance. And the core drill business continues to thrive, with no major contracts due to renew this year, so continued security of long-term revenues.

With the gold price now above $1,900 mining budgets should remain generous for some time to come. CAPD really should be seriously re-rated from here.

[chillpill] 16/3/2023 07:20

Good update. The investment portfolio obviously takes a bit of gloss off the results but pleased they have stuck to their guns and it will be retained.

Next step seems to be to steadily reduce debt and increase returns to shareholders.

They are in a good space and MSLABS is going gangbusters.

[johnrxx99] 16/3/2023 07:18

Who will be first to say investing in clients is a good move?

[rivaldo] 14/3/2023 13:51

Intriguing excerpt from Endeavour Mining's accounts release a few days ago.

It seems Endeavour sold a mine to Allied in 2021 for which it received part-consideration of $40m of Allied Gold Corp shares. These can be sold "back to Allied at the issue price which expires on 31 December 2022 or earlier if Allied conducts an IPO before then".

This option has now been "extended to 31st December 2023".

Which kinda suggests that Allied still have intentions of IPOing, and hopefully that IPO may well happen this year.

See note 4c on page 26:



"c. DIVESTITURE OF THE AGBAOU CGU

On 1 March 2021, the Group completed the sale of its 85% interest in the Agbaou mine CGU to Allied Gold Corp Limited ("Allied"). The consideration upon sale of the Agbaou mine included (i) a cash payment of $16.4 million (net of working capital
adjustments of $3.6 million upon closing), of which $10.5 was received in the year ended 31 December 2021; (ii) $40.0 million in Allied shares of which Endeavour has the option to sell the shares back to Allied at the issue price which expires on
31 December 2022 or earlier if Allied conducts an IPO before then. The option was subsequently extended to 31 December 2023 (note 14)"

[rivaldo] 14/3/2023 08:37

Gold is now above $1,900, which has to be good news for CAPD's customers.

And Golden Rim (CAPD are the driller) has announced overnight it's "commenced a 5,000m aircore drilling (AC) program at its flagship Kada Gold Project", together with ongoing diamond drilling, and "new multiple prospective target areas" have been discovered:

[rivaldo] 09/3/2023 12:06

1m shares just reported at 107p. Difficult to tell for sure, but hopefully positive news via either being a buy or the closing of an overhang.

[shanklin] 08/3/2023 17:20

The statutory earnings have an element of volatility due to the value portfolio of shares they're holding moving about quite a lot. Suspect the 3.5 related to a time period when there was significant profit on said shares.

[welsheagle] 08/3/2023 17:04

Thanks Rivaldo - PE of 6.5 still indicates under valuation

[rivaldo] 08/3/2023 10:11

Welsheagle, to answer your question above - never trust ADVFN's figures :o))

Tamesis Partners' latest forecast for last year is 15.7c EPS, i.e around 13.1p EPS, so a historic P/E of 8.1.

They forecast 19.6c EPS this year, i.e 16.33p EPS and a P/E of 6.5.

Tamesis also have the investment portfolio at $47.3m at the end of last year, backing up almost exactly 20% of the entire m/cap. They currently have a 160p target price.

[davebowler] 07/3/2023 16:14

Capital Limited will host a webcast covering their full year results for 2022. The presentation will be followed by a live Q&A.

[kaizenkid] 07/3/2023 13:48

Geodrill Transcript worth a read:
n short, the outlook for 2023 remains very strong. The significant growth in our financial metrics does not truly reflect the real and growing momentum that we are currently -- that we are continuing to experience on the ground.

In 2023 already underway, our financial outperformance remains very robust. Our pipeline for new business is exciting, and we look forward to sharing updates with the market as they transpire. This is not only as the outlook for gold exploration remains strong, but also the potential for new metals, such as lithium exploration and development in West Africa, which is really only just starting to be understood.

Little exploration for lithium has been done in this region, a district, which is really renowned for its gold. And therefore, the Bluesky potential remains completely untapped. With significant global demand for lithium to our easy car battery forecast and current mine supply well short of its ability to meet it. West Africa could play a significant role in decarbonization of the planet through lithium supply.
lastly, you're starting to see just some pricing with utilization across the industry picking up. We do have some increased costs, but you're also able to offset that and see better pricing. So really, there's a few things. Just in summary, the margin increase is really economies of scale. Full -- kind of full smoothing for 2022, and then you're also seeing a pricing impact here.

And so we're seeing -- we've got really, really positive things to say about Egypt at the moment. And just generally, in general, around that Nubian Shield area, we think it's completely under explored, completely under drilled. All the very -- all the same themes that sort of attracted us to West Africa many years ago. And I think that just in these 2 new markets, there's enormous growth potential. And this is on the back of what is already a robust operating and financial environment with 25 years. This is now on 25th year, by the way, of building a brand in West Africa.
We start to see pricing move north, and that's just a normal supply/demand-driven thing. We're kind of there now. I would say that the industry is not at 50%, we will be at 50% sometime this year. That's the global average industry average utilization, I'm talking about there.

Now when the -- sorry, back to the capital markets, the only pushback we have seen recently is I think juniors were having a tough time through 2022 in the back half. I think that seems to be changing at the moment. I'm seeing a lot of financings going through.

So we actually stated in our in -- on our call today that we believe the junior market is improving and will continue to improve. At least that's what we're seeing at the moment anyway.