Volt has secured A$3.2m via two share issues to existing and new shareholders. The two raises (A$2.3m on 1 November and A$0.9m on 3 November 2017) will allow Volt to complete the critical path revised feasibility study (FS) on its Bunyu graphite project and for working capital purposes. These fund-raises will go towards completing management’s revised FS to better tailor its Bunyu graphite project to more closely match the opportunity in the battery-anode and fire-retardant end-markets, both of which provide the highest growth end-markets for future Bunyu graphite products. We also consider the success of these fund-raises, with the first heavily oversubscribed (56% above the original A$1.5m value), as a vote of confidence in Tanzania and its ability to treat graphite as an industrial mineral and separate from the ongoing negotiations regarding producers of precious metals and diamonds in country.
Written by
Volt Resources |
Fully funded to complete pre-development goals |
Fund-raise |
Metals & mining |
3 November 2017 |
Share price performance
Business description
Next events
Analysts
Volt Resources is a research client of Edison Investment Research Limited |
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Volt has secured A$3.2m via two share issues to existing and new shareholders. The two raises (A$2.3m on 1 November and A$0.9m on 3 November 2017) will allow Volt to complete the critical path revised feasibility study (FS) on its Bunyu graphite project and for working capital purposes. These fund-raises will go towards completing management’s revised FS to better tailor its Bunyu graphite project to more closely match the opportunity in the battery-anode and fire-retardant end-markets, both of which provide the highest growth end-markets for future Bunyu graphite products. We also consider the success of these fund-raises, with the first heavily oversubscribed (56% above the original A$1.5m value), as a vote of confidence in Tanzania and its ability to treat graphite as an industrial mineral and separate from the ongoing negotiations regarding producers of precious metals and diamonds in country.
Year end |
Revenue (A$m) |
PBT* |
EPS* |
DPS |
P/E |
Yield |
06/15 |
0.0 |
(0.7) |
(0.3) |
0.0 |
N/A |
N/A |
06/16 |
0.0 |
(3.3) |
(0.7) |
0.0 |
N/A |
N/A |
06/17 |
0.0 |
(2.4) |
(0.3) |
0.0 |
N/A |
N/A |
Note: *PBT and EPS are normalised, excluding amortisation of acquired intangibles, exceptional items and share-based payments.
Phase 1 small enough to keep CY18 as start-up
Pending a successful completion of its Phase 1 financing (see our 25 October update note), Volt targets end CY18 for first graphite production from the Bunyu graphite project. This is also dependant on project execution milestones such as completion of a revised FS, all permit approvals being received and conversion of its pre-commercial MOU-type agreements into binding commercial offtake agreements.
A$4.8m available from options expiring end CY17
Volt has a total of 240.1m options exercisable at 2c expiring before end CY17. Given the current share price of 2.4c, if exercised these options would raise a further potential A$4.8m in funds to Volt.
Valuation: Cheap on EV/t basis, DCF on hold for FS
Our previous Namangale pre-feasibility study valuation of A$0.27/share is on hold while Volt completes a revised project scope and phasing for Namangale. This will involve a staged modular design to allow a ramp-up in production as the graphite market moves away from demand tied to traditional uses such as foundry products and towards growth in the markets for expandable graphite and battery anode material. However, in terms of its enterprise value per tonne of graphite resource (US$0.05/t), we calculate that it trades at a very high 99% discount to the wider market average of US$6.42/t. This is likely due to both its very large resource base and its early stage of project development.
Exhibit 1: Financial summary
Accounts: IFRS, Year-end: June, A$000s |
|
|
2015 |
2016 |
2017 |
Profit & loss account |
|||||
Total revenues |
|
|
0 |
0 |
0 |
Cost of sales |
|
|
0 |
0 |
0 |
Gross profit |
|
|
0 |
0 |
0 |
SG&A (expenses) |
|
|
(668) |
(3,351) |
(3,307) |
Other income/(expense) |
|
|
0 |
0 |
0 |
Exceptionals and adjustments |
Exceptionals |
|
0 |
0 |
0 |
Depreciation and amortisation |
|
|
(3) |
0 |
0 |
Reported EBIT |
|
|
(670) |
(3,351) |
(3,307) |
Finance income/(expense) |
|
|
5 |
24 |
52 |
Other income/(expense) |
|
|
0 |
0 |
0 |
Exceptionals and adjustments |
Exceptionals |
|
0 |
0 |
0 |
Reported PBT |
|
|
(666) |
(3,327) |
(3,255) |
Normalised PBT |
|
|
(666) |
(3,327) |
(2,368) |
Income tax expense (includes exceptionals) |
|
|
0 |
0 |
153 |
Profit from discontinued operations (net of tax) |
|
|
0 |
(480) |
0 |
Reported net income |
|
|
(666) |
(3,807) |
(3,102) |
Basic average number of shares, m |
|
|
244 |
583 |
968 |
Basic EPS (cents) |
|
|
(0.3) |
(0.7) |
(0.3) |
Normalised EPS (cents) |
|
|
(0.2) |
(0.4) |
(0.3) |
Balance sheet |
|
|
|||
Property, plant and equipment |
|
|
0 |
0 |
124 |
Goodwill |
|
|
0 |
0 |
0 |
Intangible assets |
|
|
0 |
0 |
0 |
Other non-current assets |
|
|
703 |
10,773 |
16,614 |
Total non-current assets |
|
|
703 |
10,773 |
16,738 |
Cash and equivalents |
|
|
554 |
7,618 |
102 |
Inventories |
|
|
0 |
0 |
0 |
Trade and other receivables |
|
|
17 |
104 |
148 |
Other current assets |
|
|
0 |
104 |
52 |
Total current assets |
|
|
571 |
7,826 |
303 |
Non-current loans and borrowings |
|
|
0 |
0 |
0 |
Other non-current liabilities |
|
|
0 |
0 |
0 |
Total non-current liabilities |
|
|
0 |
0 |
0 |
Trade and other payables |
|
|
160 |
1,108 |
667 |
Current loans and borrowings |
|
|
0 |
0 |
0 |
Other current liabilities |
|
|
0 |
0 |
22 |
Total current liabilities |
|
|
160 |
1,108 |
689 |
Equity attributable to company |
|
|
1,336 |
17,707 |
16,570 |
Non-controlling interest |
|
|
(222) |
(216) |
(218) |
Cash flow statement |
|
|
|||
Profit for the year |
|
|
(666) |
(3,807) |
(1,965) |
Depreciation and amortisation |
|
|
3 |
0 |
0 |
Share based payments |
|
|
216 |
1,774 |
0 |
Other adjustments |
|
|
3 |
554 |
0 |
Movements in working capital |
|
|
91 |
117 |
0 |
Cash from operations (CFO) |
|
|
(353) |
(1,362) |
(1,965) |
Capex |
|
|
(24) |
(3,039) |
(6,400) |
Acquisitions & disposals net |
|
|
(178) |
(364) |
(10) |
Other investing activities |
|
|
0 |
0 |
0 |
Cash used in investing activities (CFIA) |
|
|
(202) |
(3,403) |
(6,410) |
Net proceeds from issue of shares |
|
|
590 |
11,829 |
866 |
Movements in debt |
|
|
0 |
0 |
0 |
Other financing activities |
|
|
0 |
0 |
0 |
Cash from financing activities (CFF) |
|
|
590 |
11,829 |
866 |
Currency translation differences and other |
|
|
0 |
0 |
0 |
Increase/(decrease) in cash and equivalents |
|
|
36 |
7,064 |
(7,509) |
Cash and equivalents at end of period |
|
|
554 |
7,618 |
102 |
Net (debt) cash |
|
|
554 |
7,618 |
102 |
Movement in net (debt) cash over period |
|
|
554 |
7,064 |
(7,516) |
Source: Company accounts, Edison Investment Research
|
|
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