Capital Share Discussion Threads

[adamb1978] 31/5/2023 17:58

With what is happening to the share price, the board's refusal to do a share buyback is even more inexcusable. To have the share price below NAV and for the board to sit on their hands really isnt on.

Does anyone have experience of trying to rally institutional shareholders? Was wondering whether it might be able to get the requisite 10% of the cap table needed to force a shareholder resolution?
Thanks

Adam

[rivaldo] 30/5/2023 07:20

More from Leo Lithium - they've raised A$106m from China's largest lithium producer at a 6.5% premium to their share price at the time:



Leo's share price has rocketed up to A$0.935, so CAPD's 10.35m shares in LLL alone are now worth £5.1m and have almost doubled since the year end.

[rivaldo] 25/5/2023 07:30

Leo Lithium's share price has risen 55% to AUD$0.745 since the year end, which with CAPD owning 10.35m shares in Leo is good news for this half year if maintained.

They've just announced "excellent" drilling results from their Goulamina Lithium Project, and CAPD are namechecked in the announcement as the driller, with drilling continuing:

[mr doughnut1] 22/5/2023 14:23

CAPD tweeted this am. https://twitter.com/_capitallimited/status/1660547827054043136?s=61&t=CLV69rsYHhlGEXhb4g2D8g

[rivaldo] 22/5/2023 07:32

Shanta Gold have this morning announced good progress at West Kenya where CAPD are contracted, with drilling recommencing on a $10m budget this year:



"West Kenya
· Current resource of 1.76 Moz grading 5.55 g/t expected to increase to approximately 3+ million ounces over time
· Up to 26,000 meters drilling across 80 holes
· Centered around the Isulu and Ramula deposits
· Targeting both conversion to Indicated category plus resource extensions
· Third party consultants are now being engaged to accelerate technical studies
· Workstream toward mining licence application and permitting is now underway
· Total 2023 budget of up to US$10 million, consistent with previous years"

[adamb1978] 21/5/2023 20:19

Hi tightfist,

Ok, understand your angle. If it's about bringing external technologies into the drilling/mining/labs businesses then definitely makes sense. However I think thats unlikely as that is essentially just looking for other tools to bring about efficiencies so why call it a separate division?

I think its more likely to be either (i) trying to develop new innovations which they can license to thrid-parties or (ii) taking that a stage further moving into corporate venturing (ie. investing in start-ups).

They simply dont have the scale for (ii) and even for (i), if they had say 5-10 people in this unit and spent say $1m p.a. I still think its egregious when they're trading at current valuations and not doing some of the basics to boost the share price like a share buy back (despite trading below NAV).

I think CAPD is very cheap but that the governance and some of the capital allocation decisions are weak.

Adam

[tightfist] 20/5/2023 21:20

Hi Adam,.What I am exploring is that Caterpillar (and Komatsu, Sandvik, the Chinese such as XCMG, Sany, etc) are undoubtedly investing big bucks in technical innovations associated with advancing mining techniques and decarbonisation. I am curious how/if Capital are going to differentiate and market themselves in the Innovation space. .Maybe this pillar will become more about how advancing technology can be imported into the other Capital business verticals, rather than marketing technology/IP to third-party companies..As I said, wait and see? tightfist

[adamb1978] 20/5/2023 10:53

Hi tightfist,

I'm not sure what you're saying. CAT is a huge company and market leader in what they do, and I've no doubt CAPD use plenty of their stuff. What has CAT got to do with this newly formed Capital Innovations unit? Capital won't be investing in them!

Adam

[tightfist] 19/5/2023 22:32

Hi Adam,FYI, here is a very general overview of CAT's take on electric mining:.https://lnkd.in/gmVMfWJF.I think CAPD use a lot of CAT equipment, and CAT has enormous technological fire-power. Wait and see? tightfist

[adamb1978] 18/5/2023 16:33

I dont think the valuation is anything to do with London. They should be taking advantage of it though by hoovering up shares at these levels.

My concern about the Innovations thing is that I can see it being morphed into 'Capital Ventures' and them starting to play at being VCs and investing in mining tech start-ups.

[hpcg] 18/5/2023 15:02

spooky - I'd put valuation as much to do with a sclerotic and dying London market rather than anything specific to Capital.

[spooky] 18/5/2023 14:58

Management are behaving as though they want to establish a long term diversified business. Not exactly sure what current shareholders are looking for but the valuation would suggest its something else.

[hpcg] 18/5/2023 14:57

Confirmation in the AGM results RNS that efforts are under way to replace Davidson.

Tightfist - bearing in mind where customers work in terms of sunshine, remoteness, and developmentness of the countries, I am surprised there is not a lot more solar installed. Equally I'd expect electrification of equipment should also be front and centre. Sandvik has a piece here:

I would guess this is the direction Innovations will take, though I could be wrong. Given the success of MSLABs just having someone looking at novel techniques across the value chain is worthwhile. They didn't say it was raw R&D.

[tightfist] 18/5/2023 14:42

IIRC I think they fleetingly mentioned Site Power Supply as an Capital Innovation initiative? I suppose that would be quite complimentary to their mining services business in remote territories. Reminded me of Aggreko that eventually got bought-out in August 2021...... That business was operated in two halves; the headline ROCE was not particularly sparkling.

[adamb1978] 18/5/2023 14:07

I was surprised they mentioned in the Innovations thing. Increases the pressure on them to actually produce something from that investment and disclose how much is going into it. There's a risk that it comes across as a vanity project otherwise

[rivaldo] 18/5/2023 13:42

I agree with hpcg that the position on Allied Gold was more nuanced - my impression was it may not fit with CAPD's criteria for investment post-IPO, so selling is definitely an option. Of course there may be lock-in arrangements post-IPO for major holders for say 6 months to a year, though these are often flexed if there's "institutional demand".

Good to hear that conditions in CAPD's markets remain "buoyant".

Guidance for MSA Labs revenues was reiterated at $40m-$50m for this year.

Interesting to hear about the new division recently launched, Capital Innovations. Could be a useful source of new business and ideas.

[adamb1978] 18/5/2023 12:25

Agree about not flagging in advance hpcg, however he implied that he wanted to hold it as he felt the discount to comps would narrow. From a financial perspective that obviously makes sense, however it also highlights my concern that these guys think that they're a mini hedge fund as well as operational business.

I wouldnt have a problem with them selling the stake and retaining the cash as you say, but retaining the Allied stake beyond the short-term to me is unnecessary given the size of that stake relative to the size of Capital. I dont feel that most people invest in Capital because of their investment portfolio, and therefore in my view they should look to exit the large non-core stake in Allied before too long

[hpcg] 18/5/2023 11:54

The position on Allied I think was more nuanced. I completely agree with their stance on not informing the market of what they intend to do with any equity. He noted that Allied would IPO relatively cheaply on a NAV basis and those a post listing pop might well occur. Most listings in the US are priced to attract follow on buying from retail and thus get a good start. Selling in the market would make more sense in this situation. I'm doing a lot of interpretation there, and it could be their intention to hold.

I'm fine with the company retaining the cash and reducing its interest payments, or being able to borrow at a cheaper rate. In terms of the share price I do think the company does get some credit for its holdings, even if it is just investors looking at 'naive' headline figures.

[adamb1978] 18/5/2023 11:40

will be on the investormeetcompany website

[deanowls] 18/5/2023 11:38

Any linkage to a playback?

[adamb1978] 18/5/2023 11:34

Similarly clear from his answer about Allied that they're going to hold the position once it IPOs rather than sell down and distribute the funds.

I think CAPD are good operators, but I don't think the investment portfolio adds anything to the share price and becoming just a toy for them (their operational business is becoming more slanted towards v large clients so there's less need to invest in their client base to win work)

[adamb1978] 18/5/2023 11:29

They dont seem to have any intention to do a buyback despite the share price being less than NAV. Really don't agree with that

[adamb1978] 18/5/2023 11:25

Hi hpcg

I'm on too and heard that large number of votes against. Typically a NED stays on for 9 years max and then should leave otherwise their independence can become difficult to maintain.

One of the other NEDs should become Chairman - JB being an Exec Chair isn't great from a governance perspective.

Adam

[hpcg] 18/5/2023 11:22

On the AGM. Who are these people voting against director appointments? Particularly the small number against Boyton? If I heard correctly there was actually quite a substantial number voting against Davidson. I guess as an NED he has been in place since 2010 and so I guess there is some doubt as to how independent he is. This would probably be a signal for the company to look for a replacement.