Valuation update

Lepidico 8 July 2019 Update
Download PDF

Lepidico

Valuation update

Acquisition, alliance and rights

Metals & mining

8 July 2019

Price

A$0.03

Market cap

A$97m

A$1.4494/US$

Net cash (A$m) at end March 2019

4.9

Shares in issue (post rights issue)

3,737.7m

Free float

68%

Code

LPD

Primary exchange

ASX

Secondary exchange

N/A

Share price performance

%

1m

3m

12m

Abs

(7.1)

1.2

(22.6)

Rel (local)

(8.8)

(5.5)

(27.1)

52-week high/low

A$0.04

A$0.01

Business description

Lepidico provides exposure to a portfolio of lithium assets via its wholly owned properties, JVs and IP in Australia, Canada and Europe. Uniquely, it has successfully produced lithium carbonate from non-traditional hard rock lithium-bearing minerals using its registered L-Max® process technology.

Next events

Desert Lion merger implementation

July 2019

Pilot plant results

Q3 CY19

Feasibility study

Q1 CY20

Analyst

Charles Gibson

+44 (0)20 3077 5724

Lepidico is a research client of Edison Investment Research Limited

In May, Lepidico (LPD) announced a trio of transformational initiatives. The first of these was an all-share offer to acquire Desert Lion (TSXV: DLI), according to which LPD will pay 5.4 shares for every one Desert Lion share. The second was a one-for-nine renounceable rights issue to raise up to A$10.8m via the issue of 372.9m new shares (plus warrants) at a price of A$0.029/share. The third was a supply and marketing alliance with Gulf Fluor for the supply of sulphuric acid, including the provision of land for the construction and operation of Lepidico’s Phase 1 Plant project in Abu Dhabi. Our last note considered the strategic rationale for the three initiatives; this report looks at the valuation implications.

Year end

Total revenues (A$m)

PBT*
(A$m)

Cash from operations (A$m)

Net cash/(debt)
(A$m)

Capex
(A$m)

06/17

0.1

(5.4)

(3.6)

3.3

(0.9)

06/18

0.2

(7.2)

(3.0)

4.9

(3.1)

06/19e

0.0

(6.0)

(5.9)

6.7

(6.9)

06/20e

0.0

(7.6)

(12.2)

(9.4)

(44.8)

Note: *PBT is normalised, excluding amortisation of acquired intangibles and exceptional items.

Potential to double life of Phase 1 Plant project

To operate its Phase 1 Plant at a rate equivalent to 5,000tpa lithium carbonate equivalent, we estimate that Lepidico will need to mine c 0.6Mtpa of ore to produce c 58,000tpa of lepidolite concentrate. Whereas we had previously assumed that this would be supplied from Alvarrões, LPD’s acquisition of (merger with) Desert Lion holds out the possibility that this could now be sourced from its Namibian resources. While neither asset has the resources to supply a Phase 1 Plant for much beyond a decade, both together could supply it for more than two. As a result, we are provisionally (subject to resources being upgraded to reserve status) assuming that Lepidico will be able to extend the life of its Phase 1 Plant project from 10 to 20 years. Self-evidently, either or both could also contribute feed to Lepidico’s Phase 2 Plant project in due course.

Valuation: 7c per share (fully diluted)

In our recent report Alvarrões resource increases 290%, published on 12 April 2019, we estimated that execution of a 7t/hour (5,000tpa lithium carbonate equivalent) Phase 1 Plant would result in free cash flow to Lepidico of A$71.2m per year once steady-state production had been achieved, which we valued at A$0.0684/share, after assuming US$30m (A$41.8m) of equity funding at the then prevailing share price of 3.1c. In the light of the three initiatives announced in May, our per share valuation has increased to 6.92c, notwithstanding a 30.0% increase in the number of Lepidico shares in issue which, all other things being equal, would normally imply a 20.5% pro rata decline in value. More than anything else, this increase demonstrates the effect of the Desert Lion resource potentially extending the life of Lepidico’s Phase 1 Plant project from 10 to 20 years. Note that this valuation does not attribute any value to Lepidico from the Phase 2 Plant or any other development options.

Three transformative announcements

During May, Lepidico announced three transformative initiatives. In the approximately chronological order in which they occurred, these were as follows:

A one for nine renounceable rights issue involving the issue of up to 372.9m new shares at A$0.029/share and 186.5m new listed options (exercisable at a price of A$0.05/share in three years’ time) in Lepidico to raise A$10.8m. The issue closed oversubscribed on 31 May, such that the company then decided to place a further 8,620,690 fully paid ordinary shares at A$0.029 with 4,310,345 options attached to raise an additional A$250,000. Investors should note that Edison calculates a Black Scholes valuation for the options (using Lepidico’s annual historical share price volatility) of 1.0c apiece (cf 1.4c at the time of our earlier note, on 9 May – the decline being the result of the decline in Lepidico’s share price since then, from 3.2c to 2.6c). Nevertheless, this remains equivalent to a value of 0.5c per share (there being half a new option issued per new share).

An all-share offer for Desert Lion (TSXV: DLI), whereby Lepidico will pay 5.4 shares for every one Desert Lion share in issue, or 633.8m shares in total, valuing Desert Lion at A$18.4m (C$17.1m, US$12.7m) at the time of writing, or A$0.1566/share (C$0.1455/share). On 28 June, Lepidico announced that Desert Lion shareholders had overwhelmingly voted in favour of the acquisition at its annual general and special meeting of shareholders held the day before, with 99.22% of votes cast approving the transaction. Now that the court hearing for the final order to approve the transaction has also been successfully concluded (announced 5 July), the process of closing the transaction is purely mechanical and administrative and is expected to be completed later this month. In light of this, management teams from both Lepidico and Desert Lion are in the process of travelling to Namibia to ensure a smooth post-merger transition and to commence exploration activity immediately following the deal’s closing.

A supply and marketing alliance with Gulf Fluor for the supply of sulphuric acid, including the provision of land for the construction and operation of Lepidico’s Phase 1 Plant project in the Industrial City of Abu Dhabi (ICAD).

In our last note, Lepidico (Acquisition, rights offer and Gulf Fluor alliance, published on 9 May), we considered the strategic rationale for the three initiatives, but did not immediately update our valuation, which is the function of this note.

Pilot plant updates

Apart from one slight hiccup, which caused its brief suspension (but is not expected to have any material effect on either costs or timings), the operation of Lepidico’s pilot plant has now begun. The salient features of the first campaign to date are:

The establishment of generator power on site, allowing wet commissioning of the final items of mechanical equipment to be undertaken.

The completion and sign-off of the programming of pilot plant instrumentation.

The completion of the hazard and operability (HAZOP) study.

The concentration of a 15t sample of lepidolite sourced from the Alvarrões mine in Portugal to produce 5.5t of concentrate with a grade of 4% Li2O, of which one tonne has been classified as leach feed.

The commencement of lepidolite concentrate leaching, with ramp up to continuous operation at a feed rate of 15kg/hour and the imminent production of first lithium sulphate, amorphous silica and sulphate of potash (SOP).

The first pilot plant campaign is expected to run for approximately four weeks throughout July. In the meantime, Strategic Metallurgy has developed the process design criteria for LOH-Max™ and provided it to Lycopodium to undertake the engineering of a LOH-Max circuit for the Phase 1 plant at the same time as engineering a LOH-Max circuit for the pilot plant.

Data from the first pilot plant campaign will be used to critically evaluate all construction materials and mechanical equipment in the plant. The findings from this assessment will then be used to develop a plan for optimal, sustainable operation of the pilot plant in October 2019 at the same as it is retrofitted for LOH-Max operation. At this point the pilot plant will be designated a “Demonstration Plant”, suitable for providing lithium chemical samples for the first three stages of lithium chemical qualification. A second Demonstration Plant campaign is then provisionally scheduled for November.

Valuation considerations

The principal effect of Lepidico’s three initiatives is the increase in the number of shares in issue as a result of the rights issue and Desert Lion acquisition, which is summarised in the exhibit below.

Exhibit 1: LPD share in issue following rights offer and Desert Lion merger/acquisition

Number of shares

Percentage increase

(%)

Shares currently in issue

3,356,175,188

Shares offered pursuant to entitlement offer

372,908,354

+11.1%

Shares to be issued pursuant to Desert Lion merger/acquisition

633,841,875

+18.9%

Total after completion of entitlement offer and Desert Lion merger/acquisition

4,362,925,417

+30.0%

Source: Lepidico

Inevitably, both share issues are dilutive to our valuation, albeit the effect of the dilution relating to the rights issue shares will be partly mitigated by the funds raised, while the effect of the dilution relating to the Desert Lion shares will be mitigated by the assets acquired.

Desert Lion

Exhibit 2, below, outlines Desert Lion’s balance sheet as at its last year end (31 December 2018) and our estimate of its likely balance sheet as at 30 June 2019, both in Canadian dollars (its reporting currency) and Australian dollars (for the purposes of subsequent consolidation into Lepidico’s balance sheet). In the period between 31 December 2018 and 30 June 2019, we expect that cash will have been almost exhausted in the normal course of the running of the company, while C$4.4m in interim share issues will have been used to reduce trade payables:

Exhibit 2: Desert Lion balance sheet (31 December 2018 and est 30 June 2019), C$ and A$

End-Dec 2018

(C$)

End-June 2019e

(C$)

End-June 2019e

(A$)

Assets

Current assets

Cash and cash equivalents

2,454,963

0

0

Restricted cash

0

0

0

Amounts receivable

354,165

354,165

381,152

Inventory

0

0

0

Deposits

0

0

0

Loan receivable

271,336

271,336

292,012

Prepaid expenses

44,486

44,486

47,876

Total current assets

3,124,950

669,987

721,040

Non-current assets

Deposits

30,967

30,967

33,327

Property, plant and equipment

17,315,656

17,160,020

18,467,614

Exploration and evaluation assets

6,332,646

6,474,782

6,968,160

Total non-current assets

23,679,269

23,665,769

25,469,101

Total assets

26,804,219

24,335,756

26,190,141

Liabilities

Current liabilities

Trade payables and accrued liabilities

7,365,140

2,945,858

3,170,332

Subscription receipts

0

0

0

Offtake prepayment liability

0

0

0

Unearned revenue

6,218,394

6,218,394

6,692,236

Option liability

0

0

0

Total current liabilities

13,583,534

9,164,252

9,862,568

Non-current liabilities

Liability component of convertible debenture

3,043,831

3,043,831

3,275,771

Total non-current liabilities

3,043,831

3,043,831

3,275,771

Total liabilities

16,627,365

12,208,083

13,138,339

Net assets

10,176,854

12,127,673

13,051,802

Minority interest

(1,244,665)

(1,496,120)

(1,610,125)

Minority interest (%)

-12.2

-12.3

-12.3

Net assets attributable

11,421,519

13,623,794

14,661,927

Source: Desert Lion, Edison Investment Research. Note: Totals may not add up owing to rounding.

For the purposes of our financial forecasts (see Exhibit 8), we have therefore consolidated this balance sheet into Lepidico’s as at the latter’s FY19 year end on 30 June 2019. Relative to its forecast net assets of A$14.7m as at end-June 2019, Lepidico’s consideration of A$18.4m for Desert Lion’s equity can thus be seen to include A$3.7m of goodwill, which we expect will be written off against reserves upon consolidation.

As stated previously, in mitigation of its issue of shares in consideration of Desert Lion, Lepidico will be acquiring tangible assets, particularly in the form of DLI’s resources, which are summarised below (including slimes):

Exhibit 3: Desert Lion mineral resource estimate

Category

Cut-off

(% Li2O)

Tonnage

(kt)

Grade

(% Li2O)

Contained Li2O (t)

Contained lithium carbonate equivalent (t)

Measured

0.2

0.00

0

0

0

Indicated

0.2

3,069.1

0.64

19,547

48,335

Inferred

0.2

5,837.7

0.53

30,845

76,273

Total

0.2

8,906.8

0.57

50,391

124,608

Desert Lion interest (80%)

0.2

7,125.4

0.57

40,313

99,686

Source: Lepidico, Desert Lion, Edison Investment Research. Note: NI 43-101 compliant.

LPD’s acquisition consideration of A$18.4m equates to an enterprise value multiple (including the convertible bond liability acquired) of US$149.89/t attributable lithium carbonate equivalent (LCE). This is a premium to the average value of US$53.84/t LCE (US$34.55/t for resources in the indicated and inferred categories) for non-spodumene, non-brine lithium deposits that Edison calculated in its annual report, Gold stars and black holes: Analysing the discount: From resource to sanction, published in January 2019. Excluding the strategic consideration (ie that these resources provide Lepidico with supply-side optionality for the development of its Phase 1 and Phase 2 Plants – see below), we would therefore ordinarily value such a resource at US$3.4m (attributable), or A$5.0m, or 0.09 Australian cents per fully diluted Lepidico share (ie post-rights issue and post-Desert Lion acquisition etc).

Alternatively, on 1 November 2018, Desert Lion published the results of a preliminary economic assessment (PEA) on its Namibian Lithium project. For an initial capital expenditure of US$275m, it calculated that the project had a post-tax NPV8 of US$109m and a pre-tax internal rate of return of 29% at a lithium carbonate price of US$13,000/t. Within this context, LPD’s acquisition price of US$14.9m (including Desert Lion’s convertible liability) equates to 17.2% of attributable NPV8. This compares to an average value of 11.7% for companies at PEA stage calculated in our report, Gold stars and black holes: Analysing the discount: From resource to sanction, which would imply a valuation for Desert Lion of US$10.2m, C$13.7m or A$14.8m (or 0.25 Australian cents per fully diluted Lepidico share).

Synergies and development optionality

The NPV calculated by Desert Lion and its consultants for its Nambian Lithium project was based upon a conventional mining and concentration operation at the mine site in conjunction with the operation of a chemical plant at Walvis Bay to produce lithium carbonate. Given its L-Max and LOH-Max technologies, such a chemical plant would be, at best, superfluous to Lepidico and, at worst, a liability. By contrast however, the resources of the project are of significant strategic interest.

In order to operate its 5,680tpa lithium hydroxide monohydrate Phase 1 Plant (equivalent to 5,000tpa lithium carbonate equivalent), we estimate that Lepidico will require a reliable feed of 58,000tpa of lepidolite concentrate. Whereas we had previously assumed that this would be supplied by Alvarrões in the first instance, we estimate that it could also be sourced from mining (and concentrating) Desert Lion’s Namibian Lithium project resources at a rate of c 0.6Mtpa. A conflation of Desert Lion’s resource base with that of Alvarrões is as follows:

Exhibit 4: Desert Lion plus Alvarrões resource inventory

Category

Tonnage
(Mt)

Grade
(% Li
2O)

Contained Li2O
(t)

Contained lithium
carbonate equivalent (t)

Alvarrões

Measured

0.00

0.00

0

0

Indicated

2.60

0.87

22,584

55,846

Inferred

3.27

0.87

28,471

70,403

Total

5.87

0.87

51,055

126,249

Desert Lion

Measured

0.0

0.00

0

0

Indicated

3.07

0.64

19,547

48,335

Inferred

5.84

0.53

30,845

76,273

Total

8.91

0.57

50,391

124,608

Total

Measured

0.00

0.00

0

0

Indicated

5.67

0.74

42,131

104,181

Inferred

9.11

0.65

59,316

146,676

Total

14.78

0.69

101,446

250,857

Source: Lepidico, Desert Lion, Edison Investment Research

It can be seen from this exhibit that neither Alvarrões’s nor Desert Lion’s resources alone are capable of supplying its Phase 1 Plant project at such a rate for an extended period of time. However, together they are capable of doing so for almost 30 years (with the proviso that inferred resources are eventually upgraded to the indicated category so that they may then become part of the mineral reserve inventory). As a consequence of Lepidico’s acquisition of DLI (and for the purposes of its financial modelling), Edison has therefore assumed that the company will now be able to extend the life of its Phase 1 Plant project from 10 to 20 years. Self-evidently, in due course, either or both could also contribute feed to Lepidico’s Phase 2 Plant project. Other assumptions that Edison has made regarding a mining and concentrating operation at Desert Lion’s Namibian Lithium project (largely derived from its PEA – see above) are as follows:

Exhibit 5: Edison assumptions regarding Namibian Lithium project mine and concentrator

Item

Assumption

Mining operation

Stripping ratio

5.42

Variable mining costs

US$2.63/t moved

Fixed costs

US$0.74m pa

Concentrator

Concentrator opex

US$136.47 per dry metric tonne lepidolite concentrate produced

By-product credits

0

Transport costs (mine-Walvis Bay)

US$17.70 per dry metric tonne lepidolite concentrate

Freight costs (Walvis Bay-Phase 1 Plant)

US$27.48 per dry metric tonne lepidolite concentrate

Capex

Mining capex

US$2.9m

Concentrator

US$10.3m

Tailings (included in concentrator capex)

US$1.9m

Sustaining and closure costs

US$26.3m (average US$1.3m pa)

Item

Mining operation

Stripping ratio

Variable mining costs

Fixed costs

Concentrator

Concentrator opex

By-product credits

Transport costs (mine-Walvis Bay)

Freight costs (Walvis Bay-Phase 1 Plant)

Capex

Mining capex

Concentrator

Tailings (included in concentrator capex)

Sustaining and closure costs

Assumption

5.42

US$2.63/t moved

US$0.74m pa

US$136.47 per dry metric tonne lepidolite concentrate produced

0

US$17.70 per dry metric tonne lepidolite concentrate

US$27.48 per dry metric tonne lepidolite concentrate

US$2.9m

US$10.3m

US$1.9m

US$26.3m (average US$1.3m pa)

Source: Edison Investment Research, Desert Lion NI 43-101 technical report

Based on these assumptions, we estimate that Lepidico will be able to produce lepidolite concentrate from DLI’s Namibian Lithium project assets at a cost of US$343.07/t (CFR). This compares with the US$385/t at which we previously assumed that its Phase 1 Plant project would have purchased concentrate. The extent to which LPD’s Namibian Lithium project may sell concentrate to the Phase 1 Plant project above cost is an issue of transfer pricing within the group. For the purposes of our financial analysis however, we have assumed that the mining and concentrating operation will continue to sell concentrate to the Phase 1 Plant at US$385/t (CFR) and that the resulting ‘profit’ generated from this 9.1% margin will be taxable in Namibia at a rate of 37.5%. The fact that Desert Lion owns only 80% of the project will also give rise to a minority interest in the net profit earned. In addition, we have also assumed that the enlarged group will incur US$4.93m in additional operational expenditure in FY20 and FY21 on exploration and definition drilling, mining and engineering studies and concentrator and tailings test-work.

Other

Apart from the effects of dilution inherent in the rights issue and the Desert Lion acquisition, other factors for which we have adjusted our valuation are:

The decline in Lepidico’s share price from 3.2 Australian cents per share to 2.6c at the time of writing. We continue to expect that Lepidico will look to (part) finance its Phase 1 Plant project via US$30m in equity fund-raising in FY20, which we assume will be conducted at the prevailing share price (which therefore affects future assumed dilution).

Foreign exchange rates. In the wake of the Australian general election in May the forex rate has fallen from A$1.3936/US$ to A$1.4494/US$. Moreover, the new Liberal majority government is expected to pursue economic policies that are consistent with low domestic interest rates (albeit these are set by an independent central bank) and a weak Australian dollar.

The other significant change in our assumptions concerns timing. As noted in our last report, within the last few months, Lepidico has undertaken a number of initiatives that will affect the timing of its feasibility study on the Phase 1 plant project. These include:

The extension of the Phase 1 Plant project feasibility study to incorporate an LOH-Max circuit for the production of lithium hydroxide (cf lithium carbonate from the L-Max plant alone).

The evaluation of a plant development at ICAD.

The redesign of mining activities at Alvarrões to reflect the expanded resource (see our note Alvarrões resource increases 290%, published on 12 April 2019).

Lepidico’s ICAD trade-off study is anticipated to be complete in the second half of 2019. The engineering required to incorporate an LOH-Max circuit into the plant is expected to be completed in the fourth quarter of calendar year 2019. Ore reserve delineation, mine design and scheduling at Alvarrões is expected to be finalised in early 2020. Once these studies are completed, they will then be incorporated into the final feasibility study in early 2020 at the same time that Lepidico will be seeking to finalise its offtake and financing arrangements. In recognition of these considerations therefore, whereas Edison had hitherto expected first revenue from the Phase 1 Plant project in FY21, we have now deferred this by six months to FY22.

Valuation

In the light of the issues considered above (and notwithstanding the 20.5% pro rata decline in value that alone would be expected from a 30.0% increase in shares) our valuation of Lepidico has actually increased from 6.84 Australian cents to 6.92c. A graph of our updated EPS and (maximum potential) DPS forecasts for the first 20 years of the Phase 1 Plant project life (cf 10 years previously) is as follows:

Exhibit 6: Edison estimate of future Lepidico EPS and (maximum potential) DPS

Source: Edison Investment Research

More than anything else, this increase demonstrates the effect of the increased life that the additional resources at Desert Lion potentially confer on the Phase 1 Plant project, as shown in the waterfall chart below:

Exhibit 7: Lepidico per share valuation evolution, February-June 2019

Source: Edison Investment Research

Note that this valuation is fully diluted in that it accounts not only for shares issued in respect of the one-for-nine rights issue and Desert Lion acquisition, but also for assumed US$30m equity issuance in FY20. It also treats the convertible bond as conventional debt. However, the note may be converted into Desert Lion equity at a price of C$0.20/share (equivalent to a Lepidico share price of 4 Australian cents at the time of writing) at any time prior to maturity, which is 10 December 2020. Originally bearing interest at a rate of 12% pa to be settled in cash and shares, in April DLI issued the financier, API, with shares to convert the note into a zero-coupon instrument. Nevertheless, if the convertible is instead fully converted into 108m Lepidico shares, our valuation reduces by fractionally less than 1%, to 6.85 Australian cents per share.

Exhibit 8: Financial summary

Accounts: IFRS, Yr end: June, AUD: Thousands

 

 

2015

2016

2017

2018

2019e

2020e

Total revenues

 

 

9

116

127

171

16

0

Cost of sales

 

 

0

0

0

0

(2,174)

0

Gross profit

 

 

9

116

127

171

(2,158)

0

SG&A (expenses)

 

 

(455)

(617)

(912)

(5,284)

(3,868)

(3,146)

Other income/(expense)

 

 

0

0

0

0

0

0

Exceptionals and adjustments

 

(16)

(415)

(878)

(2,171)

0

0

Depreciation and amortisation

 

 

(5)

(6)

(6)

(6)

(9)

(4,494)

Reported EBIT

 

 

(467)

(923)

(1,670)

(7,290)

(6,035)

(7,640)

Finance income/(expense)

 

 

(18)

(5)

128

70

24

34

Other income/(expense)

 

 

(559)

(448)

(3,815)

0

0

0

Exceptionals and adjustments

 

0

(888)

0

0

0

0

Reported PBT

 

 

(1,044)

(2,263)

(5,357)

(7,220)

(6,011)

(7,607)

Income tax expense (includes exceptionals)

 

 

0

0

0

0

0

0

Reported net income

 

 

(1,044)

(2,263)

(5,357)

(7,220)

(6,011)

(7,607)

Basic average number of shares, m

 

 

178

465

1,802

2,624

3,632

5,199

Basic EPS (c)

 

 

(0.0)

(0.0)

(0.0)

(0.0)

(0.0)

(0.0)

 

 

 

 

 

 

 

 

 

Balance sheet

 

 

Property, plant and equipment

 

 

9

4

8

27

25,434

65,786

Goodwill

 

 

0

0

0

0

0

0

Intangible assets

 

 

0

16,204

16,698

19,027

19,027

19,027

Other non-current assets

 

 

1,485

715

1,620

730

7,731

7,731

Total non-current assets

 

 

1,494

16,922

18,326

19,783

52,191

92,544

Cash and equivalents

 

 

53

650

3,307

4,860

10,015

10,015

Inventories

 

 

0

0

0

0

1

0

Trade and other receivables

 

 

4

3,886

706

712

1,077

0

Other current assets

 

 

0

0

0

0

0

0

Total current assets

 

 

57

4,537

4,013

5,572

11,094

10,015

Non-current loans and borrowings

 

 

0

0

0

0

3,276

19,419

Other non-current liabilities

 

 

0

0

0

0

0

0

Total non-current liabilities

 

 

0

0

0

0

3,276

19,419

Trade and other payables

 

 

105

614

1,663

804

10,394

259

Current loans and borrowings

 

 

115

0

0

0

0

0

Other current liabilities

 

 

40

33

46

51

51

51

Total current liabilities

 

 

260

647

1,709

856

10,445

310

Equity attributable to company

 

 

1,292

20,812

20,630

24,500

51,174

84,441

Non-controlling interest

 

 

0

0

0

0

(1,610)

(1,610)

 

 

 

 

 

 

 

 

 

Cash flow statement

 

 

Profit for the year

 

 

(1,044)

(2,263)

(5,357)

(7,220)

(6,011)

(7,607)

Taxation expenses

 

 

0

0

0

0

0

0

Depreciation and amortisation

 

 

5

6

6

6

9

4,494

Share based payments

 

 

450

40

1,736

2,138

0

0

Other adjustments

 

 

(451)

1,036

(162)

2,066

0

0

Movements in working capital

 

 

(10)

132

133

(28)

82

(9,057)

Interest paid / received

 

 

0

0

0

0

0

0

Income taxes paid

 

 

0

0

0

0

0

0

Cash from operations (CFO)

 

 

(1,050)

(1,049)

(3,644)

(3,038)

(5,920)

(12,170)

Capex

 

 

(9)

(63)

(861)

(3,057)

(6,948)

(44,846)

Acquisitions & disposals net

 

 

0

32

122

110

0

0

Other investing activities

 

 

(563)

(80)

0

0

0

0

Cash used in investing activities (CFIA)

 

 

(572)

(111)

(739)

(2,947)

(6,948)

(44,846)

Net proceeds from issue of shares

 

 

1,505

1,872

7,040

7,555

18,023

40,873

Movements in debt

 

 

100

(115)

0

0

0

16,143

Other financing activities

 

 

0

0

0

0

0

0

Cash from financing activities (CFF)

 

 

1,605

1,757

7,040

7,555

18,023

57,016

Increase/(decrease) in cash and equivalents

 

 

(18)

597

2,657

1,570

5,155

0

Currency translation differences and other

 

 

0

0

0

(17)

0

0

Cash and equivalents at end of period

 

 

53

650

3,307

4,860

10,015

10,015

Net (debt) cash

 

 

(61)

650

3,307

4,860

6,740

(9,403)

Movement in net (debt) cash over period

 

 

(61)

711

2,657

1,553

1,880

(16,143)

Source: Company accounts, Edison Investment Research


General disclaimer and copyright

This report has been commissioned by Lepidico and prepared and issued by Edison, in consideration of a fee payable by Lepidico. Edison Investment Research standard fees are £49,500 pa for the production and broad dissemination of a detailed note (Outlook) following by regular (typically quarterly) update notes. Fees are paid upfront in cash without recourse. Edison may seek additional fees for the provision of roadshows and related IR services for the client but does not get remunerated for any investment banking services. We never take payment in stock, options or warrants for any of our services.

Accuracy of content: All information used in the publication of this report has been compiled from publicly available sources that are believed to be reliable, however we do not guarantee the accuracy or completeness of this report and have not sought for this information to be independently verified. Opinions contained in this report represent those of the research department of Edison at the time of publication. Forward-looking information or statements in this report contain information that is based on assumptions, forecasts of future results, estimates of amounts not yet determinable, and therefore involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of their subject matter to be materially different from current expectations.

Exclusion of Liability: To the fullest extent allowed by law, Edison shall not be liable for any direct, indirect or consequential losses, loss of profits, damages, costs or expenses incurred or suffered by you arising out or in connection with the access to, use of or reliance on any information contained on this note.

No personalised advice: The information that we provide should not be construed in any manner whatsoever as, personalised advice. Also, the information provided by us should not be construed by any subscriber or prospective subscriber as Edison’s solicitation to effect, or attempt to effect, any transaction in a security. The securities described in the report may not be eligible for sale in all jurisdictions or to certain categories of investors.

Investment in securities mentioned: Edison has a restrictive policy relating to personal dealing and conflicts of interest. Edison Group does not conduct any investment business and, accordingly, does not itself hold any positions in the securities mentioned in this report. However, the respective directors, officers, employees and contractors of Edison may have a position in any or related securities mentioned in this report, subject to Edison's policies on personal dealing and conflicts of interest.

Copyright: Copyright 2019 Edison Investment Research Limited (Edison). All rights reserved FTSE International Limited (“FTSE”) © FTSE 2019. “FTSE®” is a trade mark of the London Stock Exchange Group companies and is used by FTSE International Limited under license. All rights in the FTSE indices and/or FTSE ratings vest in FTSE and/or its licensors. Neither FTSE nor its licensors accept any liability for any errors or omissions in the FTSE indices and/or FTSE ratings or underlying data. No further distribution of FTSE Data is permitted without FTSE’s express written consent.

Australia

Edison Investment Research Pty Ltd (Edison AU) is the Australian subsidiary of Edison. Edison AU is a Corporate Authorised Representative (1252501) of Crown Wealth Group Pty Ltd who holds an Australian Financial Services Licence (Number: 494274). This research is issued in Australia by Edison AU and any access to it, is intended only for "wholesale clients" within the meaning of the Corporations Act 2001 of Australia. Any advice given by Edison AU is general advice only and does not take into account your personal circumstances, needs or objectives. You should, before acting on this advice, consider the appropriateness of the advice, having regard to your objectives, financial situation and needs. If our advice relates to the acquisition, or possible acquisition, of a particular financial product you should read any relevant Product Disclosure Statement or like instrument.

New Zealand

The research in this document is intended for New Zealand resident professional financial advisers or brokers (for use in their roles as financial advisers or brokers) and habitual investors who are “wholesale clients” for the purpose of the Financial Advisers Act 2008 (FAA) (as described in sections 5(c) (1)(a), (b) and (c) of the FAA). This is not a solicitation or inducement to buy, sell, subscribe, or underwrite any securities mentioned or in the topic of this document. For the purpose of the FAA, the content of this report is of a general nature, is intended as a source of general information only and is not intended to constitute a recommendation or opinion in relation to acquiring or disposing (including refraining from acquiring or disposing) of securities. The distribution of this document is not a “personalised service” and, to the extent that it contains any financial advice, is intended only as a “class service” provided by Edison within the meaning of the FAA (i.e. without taking into account the particular financial situation or goals of any person). As such, it should not be relied upon in making an investment decision.

United Kingdom

This document is prepared and provided by Edison for information purposes only and should not be construed as an offer or solicitation for investment in any securities mentioned or in the topic of this document. A marketing communication under FCA Rules, this document has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of the dissemination of investment research.

This Communication is being distributed in the United Kingdom and is directed only at (i) persons having professional experience in matters relating to investments, i.e. investment professionals within the meaning of Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the "FPO") (ii) high net-worth companies, unincorporated associations or other bodies within the meaning of Article 49 of the FPO and (iii) persons to whom it is otherwise lawful to distribute it. The investment or investment activity to which this document relates is available only to such persons. It is not intended that this document be distributed or passed on, directly or indirectly, to any other class of persons and in any event and under no circumstances should persons of any other description rely on or act upon the contents of this document.

This Communication is being supplied to you solely for your information and may not be reproduced by, further distributed to or published in whole or in part by, any other person.

United States

The Investment Research is a publication distributed in the United States by Edison Investment Research, Inc. Edison Investment Research, Inc. is registered as an investment adviser with the Securities and Exchange Commission. Edison relies upon the "publishers' exclusion" from the definition of investment adviser under Section 202(a)(11) of the Investment Advisers Act of 1940 and corresponding state securities laws. This report is a bona fide publication of general and regular circulation offering impersonal investment-related advice, not tailored to a specific investment portfolio or the needs of current and/or prospective subscribers. As such, Edison does not offer or provide personal advice and the research provided is for informational purposes only. No mention of a particular security in this report constitutes a recommendation to buy, sell or hold that or any security, or that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person.

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

1,185 Avenue of the Americas

3rd Floor, New York, NY 10036

United States of America

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

1,185 Avenue of the Americas

3rd Floor, New York, NY 10036

United States of America

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

General disclaimer and copyright

This report has been commissioned by Lepidico and prepared and issued by Edison, in consideration of a fee payable by Lepidico. Edison Investment Research standard fees are £49,500 pa for the production and broad dissemination of a detailed note (Outlook) following by regular (typically quarterly) update notes. Fees are paid upfront in cash without recourse. Edison may seek additional fees for the provision of roadshows and related IR services for the client but does not get remunerated for any investment banking services. We never take payment in stock, options or warrants for any of our services.

Accuracy of content: All information used in the publication of this report has been compiled from publicly available sources that are believed to be reliable, however we do not guarantee the accuracy or completeness of this report and have not sought for this information to be independently verified. Opinions contained in this report represent those of the research department of Edison at the time of publication. Forward-looking information or statements in this report contain information that is based on assumptions, forecasts of future results, estimates of amounts not yet determinable, and therefore involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of their subject matter to be materially different from current expectations.

Exclusion of Liability: To the fullest extent allowed by law, Edison shall not be liable for any direct, indirect or consequential losses, loss of profits, damages, costs or expenses incurred or suffered by you arising out or in connection with the access to, use of or reliance on any information contained on this note.

No personalised advice: The information that we provide should not be construed in any manner whatsoever as, personalised advice. Also, the information provided by us should not be construed by any subscriber or prospective subscriber as Edison’s solicitation to effect, or attempt to effect, any transaction in a security. The securities described in the report may not be eligible for sale in all jurisdictions or to certain categories of investors.

Investment in securities mentioned: Edison has a restrictive policy relating to personal dealing and conflicts of interest. Edison Group does not conduct any investment business and, accordingly, does not itself hold any positions in the securities mentioned in this report. However, the respective directors, officers, employees and contractors of Edison may have a position in any or related securities mentioned in this report, subject to Edison's policies on personal dealing and conflicts of interest.

Copyright: Copyright 2019 Edison Investment Research Limited (Edison). All rights reserved FTSE International Limited (“FTSE”) © FTSE 2019. “FTSE®” is a trade mark of the London Stock Exchange Group companies and is used by FTSE International Limited under license. All rights in the FTSE indices and/or FTSE ratings vest in FTSE and/or its licensors. Neither FTSE nor its licensors accept any liability for any errors or omissions in the FTSE indices and/or FTSE ratings or underlying data. No further distribution of FTSE Data is permitted without FTSE’s express written consent.

Australia

Edison Investment Research Pty Ltd (Edison AU) is the Australian subsidiary of Edison. Edison AU is a Corporate Authorised Representative (1252501) of Crown Wealth Group Pty Ltd who holds an Australian Financial Services Licence (Number: 494274). This research is issued in Australia by Edison AU and any access to it, is intended only for "wholesale clients" within the meaning of the Corporations Act 2001 of Australia. Any advice given by Edison AU is general advice only and does not take into account your personal circumstances, needs or objectives. You should, before acting on this advice, consider the appropriateness of the advice, having regard to your objectives, financial situation and needs. If our advice relates to the acquisition, or possible acquisition, of a particular financial product you should read any relevant Product Disclosure Statement or like instrument.

New Zealand

The research in this document is intended for New Zealand resident professional financial advisers or brokers (for use in their roles as financial advisers or brokers) and habitual investors who are “wholesale clients” for the purpose of the Financial Advisers Act 2008 (FAA) (as described in sections 5(c) (1)(a), (b) and (c) of the FAA). This is not a solicitation or inducement to buy, sell, subscribe, or underwrite any securities mentioned or in the topic of this document. For the purpose of the FAA, the content of this report is of a general nature, is intended as a source of general information only and is not intended to constitute a recommendation or opinion in relation to acquiring or disposing (including refraining from acquiring or disposing) of securities. The distribution of this document is not a “personalised service” and, to the extent that it contains any financial advice, is intended only as a “class service” provided by Edison within the meaning of the FAA (i.e. without taking into account the particular financial situation or goals of any person). As such, it should not be relied upon in making an investment decision.

United Kingdom

This document is prepared and provided by Edison for information purposes only and should not be construed as an offer or solicitation for investment in any securities mentioned or in the topic of this document. A marketing communication under FCA Rules, this document has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of the dissemination of investment research.

This Communication is being distributed in the United Kingdom and is directed only at (i) persons having professional experience in matters relating to investments, i.e. investment professionals within the meaning of Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the "FPO") (ii) high net-worth companies, unincorporated associations or other bodies within the meaning of Article 49 of the FPO and (iii) persons to whom it is otherwise lawful to distribute it. The investment or investment activity to which this document relates is available only to such persons. It is not intended that this document be distributed or passed on, directly or indirectly, to any other class of persons and in any event and under no circumstances should persons of any other description rely on or act upon the contents of this document.

This Communication is being supplied to you solely for your information and may not be reproduced by, further distributed to or published in whole or in part by, any other person.

United States

The Investment Research is a publication distributed in the United States by Edison Investment Research, Inc. Edison Investment Research, Inc. is registered as an investment adviser with the Securities and Exchange Commission. Edison relies upon the "publishers' exclusion" from the definition of investment adviser under Section 202(a)(11) of the Investment Advisers Act of 1940 and corresponding state securities laws. This report is a bona fide publication of general and regular circulation offering impersonal investment-related advice, not tailored to a specific investment portfolio or the needs of current and/or prospective subscribers. As such, Edison does not offer or provide personal advice and the research provided is for informational purposes only. No mention of a particular security in this report constitutes a recommendation to buy, sell or hold that or any security, or that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person.

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

1,185 Avenue of the Americas

3rd Floor, New York, NY 10036

United States of America

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

1,185 Avenue of the Americas

3rd Floor, New York, NY 10036

United States of America

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

Share this with friends and colleagues