Molten Ventures — Let the good times keep rolling

Molten Ventures (LSE: GROW)

Last close As at 22/06/2024

GBP4.25

23.00 (5.73%)

Market capitalisation

GBP803m

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Research: Financials

Molten Ventures — Let the good times keep rolling

In H122, Molten Ventures saw a continuation of the strong performance reported in FY21, with 27% fair value growth in the period taking gross portfolio value to £1,350m. Management reconfirmed its expectation for c 35% fair value growth for FY22 ‘subject to wider market conditions’, well ahead of management’s initial guidance of below-trend 15% growth. H122 NAV per share increased by 19% to 887p per share, with the five-year CAGR now over 20%. With an uncertain outlook, Molten Ventures offers a diversified portfolio across multiple technology segments, with its funds’ strategy capturing unique deal flow, delivering the potential for returns uncorrelated to the wider market. Management expects strong markets to persist for at least the next 12–18 months, with the launch of the growth fund a key focus for 2022, now that the preparatory work is complete.

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Financials

Molten Ventures

Let the good times keep rolling

H122 interim results

Listed venture capital

8 December 2021

Price

924p

Market cap

£1.41bn

Net plc cash (£m) at 30 September 2021
(including £16m of restricted cash)

156

Shares in issue

153.0m

Free float

93%

Code

GROW

Primary exchange

LSE

Secondary exchange

Euronext Dublin

Share price performance

Business description

Molten Ventures (formerly Draper Esprit) is a London-based venture capital firm that invests in the European technology sector. It has a portfolio of c 70 investee companies and includes a range of funds (seed, EIS and VCT) within the group, as well as its flagship balance sheet VC fund.

Next events

Investor day

3 March 2022

FY22 results

May 2022

Analysts

Richard Williamson

+44 (0)20 3077 5700

Dan Ridsdale

+44 (0)20 3077 5700

Molten Ventures is a research client of Edison Investment Research Limited

In H122, Molten Ventures saw a continuation of the strong performance reported in FY21, with 27% fair value growth in the period taking gross portfolio value to £1,350m. Management reconfirmed its expectation for c 35% fair value growth for FY22 ‘subject to wider market conditions’, well ahead of management’s initial guidance of below-trend 15% growth. H122 NAV per share increased by 19% to 887p per share, with the five-year CAGR now over 20%. With an uncertain outlook, Molten Ventures offers a diversified portfolio across multiple technology segments, with its funds' strategy capturing unique deal flow, delivering the potential for returns uncorrelated to the wider market. Management expects strong markets to persist for at least the next 12–18 months, with the launch of the growth fund a key focus for 2022, now that the preparatory work is complete.

Period
end

Plc cash*
(£m)

Gross portfolio value (£m)

NAV
(£m)

NAV/share
(p)

P/NAV
(x)

03/20

34.1

702.9

659.6

555

1.67

09/20

62.1

702.4

714.7

600

1.54

03/21

160.7

983.8

1,033.1

743

1.24

09/21

156.2

1,350.2

1,357.4

887

1.04

Note: *Includes restricted cash but not funds held on behalf of EIS/VCT investors.

H122 results: Growth momentum carried over

Gross portfolio value rose 27% in H122 to £1,350m (FY21: £984m), with management reconfirming its expectation of 35% growth for FY22 ‘subject to wider market conditions’. H122 NAV per share increased to 887p (FY21: 743p), a 19% increase. Plc cash at period end stood at £156m (FY21: £160m), following investments of £165m (H121: £32m) and cash realisations of £67m (H121: £106m), together with net proceeds from the June 2021 funding round of £107.7m.

Outlook: Continuing demand for late-stage rounds

Management remains confident in the outlook for European technology investment, seeing rising demand for late-stage rounds in leading companies. In H122, Molten Ventures committed £165m to investments, exceeding the company’s targeted £150m annual investment. With total liquidity of £221m at period end, the company is also able to sell-down post-IPO stakes in Trustpilot and UiPath, providing additional investment capital. On this basis, together with envisaged exits, management can identify at least 12–18 months of cash runway. Management believes that strong growth will continue over this timeframe and remains focused on launching its Series B+ growth fund in 2022 to capitalise on the opportunity.

Valuation: Sector leader justifying a premium rating

Sector valuations have fallen recently with renewed concerns over rising interest rates, high technology valuations and latterly with the spectre of the omicron variant. Molten Ventures offers a diversified technology investment portfolio that has delivered a consistent track record of growth. After its strong performance in 2020 and 2021, the group demonstrated why it warrants a premium rating as a mature leader in the technology venture capital (VC) sector, a sector that offers the potential for returns uncorrelated with the wider market. Molten Ventures trades on 1.04x H122 NAV, in the top half of our field of peers.

H122 results: Momentum carried through

Following two trading updates, one prior to the H122 period end and one post period end, there are few surprises in the H122 results. After recent sector weakness, Molten Ventures’ shares continue to trade at a reduced premium to the H122 net asset value (NAV) of 887p per share (see Valuation section). The portfolio has continued to perform strongly in H122 and the launch of a potential growth fund remains a focus for FY22. Cash realisations of £67m included proceeds from the exits from SportPursuit, Conversocial and PremFina, as well as selling shares (post-initial public offering (IPO)) in Trustpilot and UiPath.

The fair value of the portfolio rose 27% in H122 to £1,350m (FY21: £984m), with management reconfirming its expectation for 35% fair value growth for FY22 ‘subject to wider market conditions’. H122 NAV per share increased to 887p (FY21: 743p), a 19% increase. Plc cash at period end stood at £156m (FY21: £160m), including £16m of restricted cash, following investments of £165m in H122 (H121: £32m), ahead of the group’s target of over £150m for FY22, and cash realisations of £67m (H121: £106m), together with net proceeds from the June 2021 funding round of £108m. The group also has a £65m undrawn credit facility, meaning that total available liquidity as at 30 September 2021 was £221m.

Net portfolio value rose to 91% of gross portfolio value (GPV) in H122 from 88% in FY21, as external carry fell from 10% to 9% of GPV, largely due to a reduction in deferred tax from £20m in FY21 to a credit of £0.2m in H122. In H122, Molten Ventures benefited from foreign exchange gains (£12.6m profit), having suffered a £51.2m foreign exchange loss in FY21.

Income came from £252m of investment gains (H121: £56m), together with fee income from management fees and directors’ fees of £10m (H121: £6m). G&A costs rose substantially to £11.2m (H121: £6.6m) as Molten Ventures continued to invest in its team and infrastructure, but nevertheless net operating costs of £5.7m (H122: £1.3m) (net of fee income), including £2.4m of exceptional costs relating to the move to the Main Market, remained comfortably below 1% of NAV (management’s target), with net income and NAV both rising in the period. The company reported net income of £218m (H120: £54m).

Post period-end, Molten Ventures committed a further £11m of net investment. Investment of £37m included a new investment in Satellite Vu (a £15m Series A round for a UK-based satellite scale-up led by Seraphim Space Investment Trust) and realised cash proceeds of £26m from further Trustpilot and UiPath share sales. As confirmed in November 2021, Draper Esprit changed its name to Molten Ventures – ‘recognising the company's transformation, accelerated growth and inclusion in the FTSE 250, as well as its unique role in the democratisation of venture capital’. Despite the change in name, we understand that Molten Ventures remains part of the Draper Venture Network.

Portfolio update: A diversified technology investor

Despite changes to the constituents of the core portfolio (holdings with a fair value above £20m) in H122 (four new entrants: CoachHub, Form3, ISAR Aerospace and N26; one exit: SportPursuit; and three holdings falling below the £20m threshold: Perkbox, Freetrade and Endomag), there remain 17 companies in the core portfolio, with 72 companies across the full portfolio. The value of the core portfolio remains at 68% of GPV (FY21: 68%), with the average core holding valued at £54m (FY21: £39m) and an average holding across the full portfolio of £19m (FY21: £14m).

These figures highlight the asset growth that Molten Ventures has enjoyed in FY21, with the average core holding rising in value by 36% over the H122 period. This also helps underline why management is looking to raise a growth fund in 2022. The growth fund will raise additional capital to invest at Series B+, allowing the company to continue to lead rounds with a larger commitment and hold investments for longer as round sizes grow and competition for leading UK and European businesses increases, in the face of increasing US investment.

As well as having a broad-based mix of assets, Molten Ventures’ portfolio is well distributed across four segments of the technology space: consumer technology; enterprise technology; hardware and deeptech; and digital health and wellness (Exhibit 2). The rationale is that this spread affords the group a degree of diversification, with each segment following slightly different cycles. This offers Molten Ventures the opportunity to be selling down in one sector, while simultaneously finding attractive investment opportunities in another.

Exhibit 1: 17 members of the core portfolio

Exhibit 2: Spread of technology exposure

Source: Molten Ventures

Source: Molten Ventures

Exhibit 1: 17 members of the core portfolio

Source: Molten Ventures

Exhibit 2: Spread of technology exposure

Source: Molten Ventures

In terms of diversification, the group’s funds programme is another key pillar of the business. Despite Molten Ventures seeing heightened competition with increasingly larger rounds for late-stage businesses, this same dynamic is not being seen for early-stage investment. Molten Ventures is increasingly being seen as a strategic partner of choice, receiving a rising number of incoming opportunities to participate in high-quality seed fund rounds, both as a knowledgeable investor and for the group’s ability to support the growth of seed companies in follow-on rounds.

Exhibit 3: Molten Ventures’ fund-of-funds strategy

Source: Molten Ventures

Molten Ventures has committed a further £75m to this programme over the next five years, having already built a network of 47 funds, with a further 12 funds added in H122, in total covering 900 companies. Through its fund investments, Molten Ventures is able to identify and build relationships with a breadth of early-stage companies that it would not be able to source directly, positioning itself to participate and lead future, larger rounds as the fund investee companies mature. Added to this strategic benefit, fund investments have also delivered an attractive financial return, with 2x returns earned on investments to date.

Exhibit 4: Investment portfolio summary

£m

Fair value of investments

Investments

Realisations

Total change in fair value in H122

Fair value of investments

Proportion of GPV

Cumulative share of GPV

31 Mar 2021

H122

H122

£m

%

30 Sept 2021

%

%

1

Trustpilot

85.5

-

(2.5)

36.7

40%

119.7

8.9%

9%

2

Graphcore

108.8

-

-

1.9

2%

110.7

8.2%

17%

3

Revolut

20.4

-

-

69.3

340%

89.7

6.6%

24%

4

Ledger

41.8

10.0

-

18.5

68%

70.3

5.2%

29%

5

Aiven

45.5

-

-

15.2

33%

60.7

4.5%

33%

6

Form3

10.2

25.0

-

24.0

480%

59.2

4.4%

38%

7

UiPath

100.3

-

(35.8)

(8.7)

(44)%

55.8

4.1%

42%

8

Lyst

35.1

7.2

-

8.0

43%

50.3

3.7%

46%

9

Aircall

32.8

3.6

-

12.9

50%

49.3

3.7%

49%

10

Thought Machine

18.4

15.4

-

11.1

144%

44.9

3.3%

53%

11

Ravenpack

29.9

-

-

5.0

17%

34.9

2.6%

55%

12

CoachHub

12.4

14.7

-

5.9

166%

33.0

2.4%

58%

13

Cazoo

25.7

-

(0.1)

7.2

28%

32.8

2.4%

60%

14

M-Files

29.7

-

-

(0.4)

(1)%

29.3

2.2%

62%

15

N26

10.0

-

-

15.3

153%

25.3

1.9%

64%

16

Isar Aerospace

14.8

-

-

10.3

70%

25.1

1.9%

66%

17

Smava

23.8

-

-

0.3

1%

24.1

1.8%

68%

Core portfolio

645.1

75.9

(38.4)

232.5

42%

915.1

67.8%

68%

Remaining Portfolio

336.1

89.1

(29.1)

36.6

29%

432.7

32.0%

100%

Total

981.2

165.0

(67.5)

269.1

37%

1,347.8

99.8%

Co-Invest

2.6

-

-

(0.2)

2.4

0.2%

Gross portfolio value

983.8

165.0

(67.5)

268.9

37%

1,350.2

100.0%

Source: Molten Ventures

GPV as at 30 September 2021 reached £1.35bn (31 March 2021: £984m), with cash proceeds from realisations (including escrows) of £68m during the period. Molten Ventures committed £165m of investment (£98m net investment), with a gross change in fair value of £269m, including a £13m foreign exchange gain. Molten Ventures targets 20% growth in GPV through the cycle (H122: 27%), as well as 10–15% realisations as a percentage of GPV through the cycle (H122: 7%).

Outlook: Focused on the growth fund in 2022

Management remains confident in the outlook for European technology investment, seeing rising demand for late-stage rounds in leading companies. In H122, Molten Ventures committed £165m to investments, exceeding the company’s targeted £150m annual investment. With total liquidity of £221m at period end, the company is also able to sell-down post-IPO stakes in Trustpilot and UiPath, providing additional investment capital. On this basis, together with envisaged exits, management can identify at least 12–18 months of cash runway. Management believes that strong growth will continue over this timeframe and remains focused on launching its Series B+ growth fund in 2022 to capitalise on the opportunity.

Looking ahead, on the results call, management was keen to clarify that the group has continued to make good progress on preparatory work for the growth fund, which will be a continued focus in 2022. The proposed growth fund is a co-investment fund that would be able to deploy third-party capital alongside Molten Ventures’ balance sheet for Series B+ funding rounds, providing Molten Ventures with a greater ability to lead deals and secure allocation in competitive funding rounds.

Management anticipates FY22 fair value growth of around 35%, subject to wider market conditions, taking into consideration continued revenue growth within its portfolio, as well as financing rounds and exits, and a healthy pipeline of new investment opportunities.

Valuation: Molten has justified a premium valuation

Molten Ventures’ most direct competitors are private European VCs such as Accel Partners, Balderton Capital, Index Ventures, Northzone and Partech Partners. However, there is also now a growing list of peers on the public markets and we would identify the companies in Exhibit 5 as Molten Ventures’ closest quoted comparables and the most relevant valuation benchmarks.

Exhibit 5: Quoted peer group

Price

Currency

Market cap (£m)

Last NAV reported (£m)

Net cash/
(debt) (£m)

NAV per share (p)

NAV premium/
discount

Molten Ventures

924

GBp

1414

1,357

156

887

1.04

 

3i Group

1409

GBp

13,785

11,173

(931)

1,153

1.22

Augmentum Fintech

162

GBp

294

267

44

142

1.14

Eurazeo

73

EUR

5,760

7,900

(306)

99

0.73

Forward Partners

111

GBp

150

102

37

104

1.06

HgCapital Trust

420

GBp

1,885

1,850

(101)

415

1.01

IP Group

114

GBp

1,193

1,439

249

135

0.84

Mercia Asset Management

36.8

GBp

163

186

52

42.4

0.87

Oakley Capital Investments

377

GBp

676

804

172

445

0.85

Seraphim Space IT

125

GBp

264

221

124

104

1.20

TMT Investments

7.68

USD

241

237

41

7.49

1.02

VNV Global

104

SEK

12,193

13,023

527

122.50

0.85

Peer group mean

0.98

Peer group median

1.01

Source: Company accounts, Refinitiv. Note: Priced at 7 December 2021.

As an investment company, Molten Ventures’ financial performance centres around its balance sheet, the growth in fair value of its investment portfolio (H122: 27%, FY22 c 35% growth expected by management), the resultant growth in net assets (H122: 31%) and NAV per share (H122: 19%, five-year CAGR of 20%), and the total liquidity available to the company (c £221m) to allow it to continue to invest in new assets as well as fund new portfolio companies to maturity and exit.

Sector valuations have fallen recently with renewed concerns over rising interest rates, high technology valuations and growing unease over the Omicron variant of COVID-19. Molten Ventures offers a diversified technology investment portfolio that has delivered a consistent track record of growth and, after its strong performance in 2020 and 2021, it has demonstrated why it warrants a premium rating as a mature and rapidly scaling leader in the technology VC sector. As technology valuations come under pressure, this will be the time for Molten Ventures to demonstrate that it can offer returns uncorrelated with the wider market. Molten Ventures trades on 1.04x H122 NAV, in the top half of our field of peers, which largely trade in a range between 0.8x and 1.2x NAV.

Environmental, social and governance

Molten Ventures continued to develop its environmental, social and governance (ESG) roadmap in H122. Management has started to collect annual carbon emissions data to feed into its Streamlined Energy and Carbon Reporting for FY22. Although, as a Chapter 15 company, Molten Ventures is not required to report on Task Force on Climate-Related Financial Disclosures project, it is doing so voluntarily. The group has also strengthened its board and governance, released its board diversity and inclusion policy and started to engage with its portfolio companies on ESG (Exhibit 6).

Exhibit 6: Continued progress on the ESG front

Source: Molten Ventures

Exhibit 7: Financial summary

£'000

FY17

FY18

FY19

FY20

FY21

Year end 31 March

IFRS

IFRS

IFRS

IFRS

IFRS

INCOME STATEMENT

Change in unrealised gains on investments

35,744

66,603

114,715

40,755

276,307

Fee income

1,673

7,163

6,101

11,255

12,507

Revenue

 

 

37,417

73,766

120,816

52,010

288,814

Cost of Sales

-

-

-

-

-

Gross Profit

37,417

73,766

120,816

52,010

288,814

Operating costs

(3,832)

(5,945)

(7,937)

(10,330)

(14,494)

Investment and acquisition costs

-

(424)

(207)

(239)

(262)

Normalised operating profit

 

 

33,585

67,397

112,672

41,441

274,058

Amortisation of acquired intangibles

-

-

-

-

-

Exceptionals

-

(229)

(34)

-

94

Share-based payments

(4,551)

(4,896)

(3,089)

(990)

(1,548)

Reported operating profit

29,034

62,272

109,549

40,451

272,604

Net Interest

-

112

120

(1,302)

(1,809)

One-off items (incl FX)

221

(1,530)

1,481

1,234

(3,348)

Profit Before Tax (norm)

 

 

33,806

65,979

114,273

41,373

268,901

Profit Before Tax (reported)

 

 

29,255

60,854

111,150

40,383

267,447

Reported tax

(438)

43

11

(17)

(26)

Profit After Tax (norm)

34,309

65,931

114,262

41,390

268,901

Profit After Tax (reported)

28,817

60,897

111,161

40,366

267,421

Minority interests

(330)

(3,131)

(582)

(659)

-

Discontinued operations

-

-

-

-

-

Net income (normalised)

33,979

62,800

113,680

40,731

268,901

Net income (reported)

28,487

57,766

110,579

39,707

267,421

Basic average number of shares outstanding (m)

32

65

96

118

129

EPS - basic normalised (p)

 

 

105.4

96.6

118.4

34.5

208.7

EPS - diluted normalised (p)

 

 

103.8

95.9

113.6

33.7

207.3

EPS - basic reported (p)

 

 

88.4

88.9

115.1

33.6

207.5

Dividend (p)

-

-

-

-

-

Revenue growth (%)

97.1

63.8

(57.0)

455.3

Gross Margin (%)

100.0

100.0

100.0

100.0

100.0

Normalised Operating Margin

89.8

91.4

93.3

79.7

94.9

BALANCE SHEET

Fixed Assets

 

 

116,716

242,629

572,658

669,379

879,392

Intangible Assets

10,335

10,232

10,130

10,028

10,936

Tangible Assets

152

229

209

1,760

1,368

Investments

105,971

231,910

562,061

657,333

867,088

Investments in Associates

258

258

258

258

-

Current Assets

 

 

25,419

61,481

51,498

41,857

164,377

Stocks

-

-

-

-

-

Debtors

527

4,840

1,140

7,719

3,700

Cash & equivalents

24,892

56,641

50,358

32,255

158,417

Restricted cash

-

-

-

1,883

2,260

Current Liabilities

 

 

(1,548)

(2,948)

(4,959)

(5,396)

(9,990)

Creditors

(1,548)

(2,948)

(4,959)

(5,038)

(9,645)

Tax and social security

-

-

-

-

-

Lease liabilities

-

-

-

(358)

(345)

Short term borrowings

-

-

-

-

-

Other (incl deferred consideration)

-

-

-

-

-

Long Term Liabilities

 

 

(716)

(651)

(631)

(46,222)

(638)

Long term borrowings

-

-

-

(44,636)

393

Lease liabilities

-

-

-

(975)

(669)

Other long term liabilities

(716)

(651)

(631)

(611)

(362)

Net Assets

 

 

139,871

300,511

618,566

659,618

1,033,141

Minority interests

104

2,792

234

-

-

Shareholders' equity

 

 

139,767

297,719

618,332

659,618

1,033,141

CASH FLOW

Op Cash Flow before WC and tax

33,712

67,557

112,835

41,961

274,708

Revaluation of investments held at fair value through P&L

(35,744)

(66,603)

(114,715)

(40,755)

(276,307)

Working capital

(42,306)

(62,249)

(212,927)

(61,750)

74,684

Exceptional & other

(438)

(74)

97

(17)

68

Tax

28

(107)

(32)

(3)

(2)

Net operating cash flow

 

 

(44,748)

(61,476)

(214,742)

(60,564)

73,151

Capex

(166)

(155)

(58)

(368)

(143)

Acquisitions/disposals

-

-

-

-

(650)

Equity financing

69,665

95,086

207,496

292

104,285

Dividends

-

-

-

-

-

Other

-

(49)

-

-

-

Net Cash Flow

24,751

33,406

(7,304)

(60,640)

176,643

Opening net debt/(cash)

 

 

0

(24,892)

(56,641)

(50,358)

12,381

FX

221

(1,530)

1,481

1,234

(3,348)

Other non-cash movements

(80)

(127)

(460)

(3,333)

(2,104)

Closing net debt/(cash)

 

 

(24,892)

(56,641)

(50,358)

12,381

(158,810)

Closing net debt/ (cash) (inc restricted cash)

 

(24,892)

(56,641)

(50,358)

10,498

(160,470)

Source: Company accounts, Edison Investment Research

General disclaimer and copyright

This report has been commissioned by Molten Ventures and prepared and issued by Edison, in consideration of a fee payable by Molten Ventures. Edison Investment Research standard fees are £60,000 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. The research analyst primarily responsible for the preparation of this report personally holds an equity position in the company of less than 1%.

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 2021 Edison Investment Research Limited (Edison).

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

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

1185 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

1185 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 Molten Ventures and prepared and issued by Edison, in consideration of a fee payable by Molten Ventures. Edison Investment Research standard fees are £60,000 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. The research analyst primarily responsible for the preparation of this report personally holds an equity position in the company of less than 1%.

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 2021 Edison Investment Research Limited (Edison).

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

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

1185 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

1185 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

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Research: Metals & Mining

Alphamin Resources — Presenting the bull case

Edison’s last note on Alphamin (Underlying results exceed prior forecasts, published on 6 December) was released using Edison’s erstwhile long-term tin price of US$23,425/t applied to financial forecasts beyond Q421. At the time of writing, the three-month price of tin was US$39,020/t, a 66.6% premium to our prior long-term price. It is Edison’s normal practice to use spot prices for near-term (ie quarterly) forecasts within the same financial year and then to use long-term prices thereafter. In recognition of the wide divergence of tin prices from our prior long-term prices this year, however, this note updates our forecasts on the assumption that the tin price remains at current levels throughout FY22. Note that this is the assumption on which our contingent valuation (below) is already based.

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