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Research: Metals & Mining
Excluding an (exceptional) warrant charge, a superprofit tax and deferred tax, post-tax profits in Q421 were within US$0.6m (or 1.3%) of our prior quarterly net profit forecast (US$44.2m) and resulted in a maiden dividend of C$0.03/share for the year. Contained tin production and sales guidance for FY22 remains unchanged at 12,000 tonnes, which is in line with the company’s operational performance in Q122. In addition, Alphamin has also announced the start of development of the Mpama South project.
Alphamin Resources |
Mpama South continues the charge |
Q421/FY21 results |
Metals & mining |
13 April 2022 |
Share price performance
Business description
Next events
Analyst
|
Excluding an (exceptional) warrant charge, a superprofit tax and deferred tax, post-tax profits in Q421 were within US$0.6m (or 1.3%) of our prior quarterly net profit forecast (US$44.2m) and resulted in a maiden dividend of C$0.03/share for the year. Contained tin production and sales guidance for FY22 remains unchanged at 12,000 tonnes, which is in line with the company’s operational performance in Q122. In addition, Alphamin has also announced the start of development of the Mpama South project.
Year end |
Revenue (US$m) |
PBT* |
EPS* |
DPS |
P/E |
Yield |
12/20 |
187 |
(1) |
(0.01) |
0.00 |
N/A |
N/A |
12/21 |
353 |
132 |
0.04 |
0.02 |
22.6 |
2.6 |
12/22e |
520 |
315 |
0.12 |
0.05 |
7.7 |
5.1 |
12/23e |
542 |
328 |
0.15 |
0.05 |
6.0 |
6.0 |
Note: *PBT and EPS (fully diluted) are as reported.
Mpama South maiden resource and PEA
In addition to its financial results, Alphamin has announced (1) a maiden (and updated) resource at its adjacent Mpama South prospect, (2) the initial outcomes of a preliminary economic assessment (PEA) and (3) that it has decided to start development of the project this year. The Mpama South resource amounts to 4.27Mt of ore at a grade of 2.47% tin containing 105.5kt of tin, which Alphamin estimates it can put into production at a rate of 468ktpa to produce 7,232t tin per annum (cf Mpama North c 12,000t tin per annum). According to the International Tin Association’s Tin Industry Review 2020, this makes the Mpama South resource the second highest grade and one of the largest publicly reported CRIRSCO tin mineral resources globally. Assuming that commercial production starts in FY24, we estimate that Mpama South could add 8c/share to Alphamin’s earnings, 9c/share to its (maximum potential) dividends and that it is worth an immediate US$0.299 per share to the company on an attributable basis.
Forecast net cash sufficient to fund Mpama South
Barring the exceptional and the extraordinary, with reported net cash on its balance sheet of US$129.5m as at end-Q222, Alphamin has sufficient cash on its balance sheet to both develop Mpama South and pay a materially increased dividend in FY22 (currently the basis of our financial forecasts, above).
Valuation: Exploration opens way to C$2.49/share
Taking Mpama North and Mpama South together and assuming that the current three-month price of tin (US$42,793/t cf US$38,432/t in Q421) prevails for the remainder of Bisie’s life (ie adopting the current tin price as our long-term price), we calculate a value for Alphamin (excluding blue-sky exploration potential) of 125.1 US cents, or 158.1 Canadian cents, per share. However, with further ongoing exploration success, we estimate that this valuation could rise to potentially as high as US$1.98/share (C$2.49/share).
Alphamin Resources is a research client of Edison Investment Research Limited
Q421/FY21 and Q122 results
Alphamin’s Q421 financial results were released in the context of known operating results, which were announced on 11 January. Subsequently, on 4 April, Alphamin announced its operational performance for Q122. Both are summarised in the table below relative to prior quarters.
Exhibit 1: Alphamin operating results, Q320–Q122
Q320 |
Q420 |
Q121 |
Q221 |
Q321 |
Q421e |
Q421a |
*Change |
**Variance |
Q122a |
***Change (%) |
|
Tonnes processed |
96,086 |
93,560 |
93,997 |
105,294 |
108,901 |
108,000 |
107,981 |
-0.8 |
0.0 |
105,565 |
-2.2 |
Tin grade (%) |
3.8 |
4.2 |
3.8 |
3.2 |
3.5 |
3.4 |
3.9 |
+11.4 |
+14.7 |
3.7 |
-5.1 |
Contained tin (t) |
3,651 |
3,930 |
3,572 |
3,369 |
3,812 |
3,638 |
4,211 |
+10.5 |
+15.8 |
3,924 |
-6.8 |
Overall plant recovery (%) |
71 |
74 |
74 |
72 |
75.2 |
78 |
75 |
-0.3 |
-3.8 |
78 |
+4.0 |
Actual payable tin produced (t) |
2,563 |
2,898 |
2,611 |
2,412 |
2,832 |
2,850 |
3,114 |
+10.0 |
+9.3 |
3,061 |
-1.7 |
Payable tin sold (t) |
2,695 |
2,306 |
3,351 |
2,404 |
2,710 |
2,850 |
3,056 |
+12.8 |
+7.2 |
3,336 |
+9.2 |
Tin price achieved (US$/t) |
17,436 |
18,497 |
23,083 |
28,308 |
33,704 |
36,916 |
38,084 |
+13.0 |
+3.2 |
43,813 |
+15.0 |
Source: Alphamin Resources. As reported. Note: *Q421 cf Q321; **Q321a cf Q421e; ***Q122 cf Q421.
Alphamin’s underlying financial results for Q421/FY21 are provided in Exhibit 2, below. A number of features of both its operational and financial performance are noteworthy:
■
Plant throughput held steady at higher levels and was very close to our prior expectations for Q4. This performance continued into Q122, albeit at a slightly lower grade (as expected).
■
Metallurgical recovery of 78% in Q122 represented a new record for the plant.
■
There was a noticeable sale of material out of inventory in Q122 – that is to say sales exceeded production by 9.0% (or 275t) during the quarter. However, this is a relatively common feature of Bisie’s operational performance in the first quarter of the year, as inventories that are conventionally built up in the fourth quarter as a result of the disruptions on account of the rains in North Kivu are unwound in the following three-month period.
■
All-in sustaining costs (AISC) in Q421 increased 2.4% quarter-on-quarter to US$15,117/t, driven by a 10.7% increase in unit off-mine costs (note that off-mine costs are inextricably linked to the tin price in the form of royalties, export duties, marketing fees and smelter deductions etc) and unit sustaining capex, but largely offset by a 7.5% reduction in unit on-mine costs (per tonne of tin sold). Note that the AISC in Q122 is anticipated to have been ‘in line’ with Q421.
■
Alphamin’s operational performance was achieved by significantly improved underground mining practices since mid-July 2021, relating to stope planning, delineation and blasting. This resulted in the average tin grade in Q421 increasing from both the 3.5% of the previous quarter and the 3.8% recorded in August and September.
■
EBITDA of US$74.3m in Q421 fractionally exceeded prior guidance of US$74.0m, which itself represented a 37.8% increase relative to Q321. EBITDA guidance of US$98.0m for Q122 nevertheless represents a new quarterly record.
■
Excluding a US$6.9m warrant charge (which we habitually decline to attempt to forecast on a quarterly basis), pre-tax profits in Q421 were US$4.3m (or 7.2%) ahead of our prior expectations; however, this outperformance at the operational and pre-tax level was reversed by a relatively large current tax charge, which was US$19.8m in excess of our prior forecast – albeit augmented by a US$14.8m DRC ‘superprofit’ tax levied in the final quarter. Superprofit taxes are triggered when the average sales price for the year exceeds the tin price used in the DRC feasibility study by more than 25%. For these purposes, in instances in which excédent brut d’exploitation (an OHADA, or Francophone Africa, accounting concept that is analogous to EBITDA) for the year is more than 25% higher than that stipulated in the feasibility study, then a superprofit tax of an additional 20% applies, taking the effective tax rate on that incremental portion of profit from 30% to 50%. As a result of the imposition of the superprofit tax, Alphamin’s effective tax rate in Q4 amounted to 55.1% excluding the warrant charge, or 61.7% including the warrant charge. However, this, in part, reflected the fact that the superprofit tax charged in Q421 relates to the full year, but was only levied in Q4. Overall, excluding the warrant charge (but including the superprofit tax), the effective rate of tax for Alphamin in FY21 was 43.1%. In the absence of the warrant charge, the superprofit tax and deferred tax, post-tax profits would otherwise have been within US$0.6m (or 1.3%) or our prior quarterly net profit forecast of US$44.8m (see Exhibit 2, below). Note that, in the medium term, the company expects, subject to sufficient exploration success, to submit further DRC feasibility studies that should mitigate the impact of future superprofit taxes. In the meantime, however, we have attempted to forecast the effect of near-term superprofits taxes on both earnings and cash flows in Exhibits 3 and 11, below.
■
Alphamin’s net cash position (including lease liabilities) in Q421 improved by US$67.2m from US$1.0m to US$68.2m (before a positive adjustment of US$1.2m for unamortised fees). This performance followed an increase in net cash (or a decline of net debt) on the same basis of US$30.5m in Q321, US$17.0m in Q221 and US$11.0m in Q121. As a consequence, after the year end, the board resolved to declare an FY21 dividend of C$0.03 per share (approximately US$30m in aggregate), which was paid to shareholders on 11 February 2022. Net cash was then reported to have improved by a further US$61m to US$129.5m in Q122 (post dividend).
Exhibit 2, below, provides an analysis of Alphamin’s underlying financial results for Q421 relative to both Q321 and our prior expectations:
Exhibit 2: Edison forecast of Alphamin income statement, Q121–Q421 (US$ unless otherwise indicated)
Q121 |
Q221 |
Q321 |
Q421e |
Q421a |
Change |
Variance |
FY21 |
||||||||
Revenue |
76,032,045 |
68,053,576 |
91,350,482 |
105,209,384 |
117,447,117 |
28.6 |
11.6 |
352,883,220 |
|||||||
Cost of goods sold |
(37,256,106) |
(29,780,333) |
(32,384,856) |
(33,651,013) |
(38,796,112) |
19.8 |
15.3 |
(138,217,407) |
|||||||
Depreciation |
6,380,606 |
6,423,261 |
6,790,732 |
6,897,328 |
7,037,866 |
3.6 |
2.0 |
26,632,465 |
|||||||
Gross profit |
32,395,333 |
31,849,982 |
52,174,894 |
64,661,044 |
71,613,139 |
37.3 |
10.8 |
188,033,348 |
|||||||
General and administrative |
(4,549,884) |
(4,729,496) |
(5,280,772) |
(5,280,772) |
(5,193,778) |
-1.6 |
-1.6 |
(19,753,930) |
|||||||
Operating profit/(loss) |
27,845,449 |
27,120,486 |
46,894,122 |
59,380,272 |
66,419,361 |
41.6 |
11.9 |
168,279,418 |
|||||||
Other |
|
|
|||||||||||||
Warrants |
Excl* |
Excl* |
Excl* |
Excl* |
Excl* |
|
|
Excl* |
|||||||
Profit on foreign exchange |
16,595 |
(45,653) |
(123,440) |
(721,162) |
484.2 |
N/A |
(873,660) |
||||||||
Loss on write off of assets |
0 |
0 |
0 |
0 |
N/A |
N/A |
0 |
||||||||
Interest expense |
(2,648,401) |
(2,280,673) |
(1,782,310) |
(1,647,775) |
-7.5 |
N/A |
(8,359,159) |
||||||||
Interest income |
11 |
298 |
422 |
652 |
54.5 |
N/A |
1,383 |
||||||||
Net interest |
(2,648,390) |
(2,280,375) |
(1,781,888) |
345,445 |
(1,647,123) |
-7.6 |
-576.8 |
(8,357,776) |
|||||||
Profit before taxes |
25,213,654 |
24,794,458 |
44,988,794 |
59,725,716 |
64,051,076 |
42.4 |
7.2 |
159,047,982 |
|||||||
Current income tax expense |
(11,113) |
(11,499) |
(9,907,336) |
(14,931,429) |
(34,696,810) |
250.2 |
132.4 |
(44,626,758) |
|||||||
Deferred tax movement |
(8,713,199) |
(9,588,773) |
(5,051,594) |
(577,662) |
-88.6 |
N/A |
(23,931,228) |
||||||||
Total tax |
(8,724,312) |
(9,600,272) |
(14,958,930) |
(14,931,429) |
(35,274,472) |
135.8 |
136.2 |
(68,557,986) |
|||||||
Effective tax rate (%) |
34.6 |
38.7 |
33.3 |
25.0 |
55.1 |
65.5 |
120.4 |
43.1 |
|||||||
Net profit/(loss) |
16,489,342 |
15,194,186 |
30,029,864 |
44,794,287 |
28,776,604 |
-4.2 |
-35.8 |
90,489,996 |
|||||||
Net profit/(loss) attributable to: |
|
|
|||||||||||||
Shareholders |
13,639,017 |
15,194,186 |
25,031,864 |
37,689,913 |
21,262,438 |
-15.1 |
-43.6 |
75,127,505 |
|||||||
Non-controlling interests |
2,850,325 |
0 |
4,998,000 |
7,104,374 |
7,514,166 |
50.3 |
5.8 |
15,362,491 |
|||||||
Minority (%) |
17.29 |
0.00 |
16.64 |
15.86 |
26.1 |
56.9 |
64.6 |
17.0 |
|||||||
Total |
16,489,342 |
15,194,186 |
30,029,864 |
44,794,287 |
28,776,604 |
-4.2 |
-35.8 |
90,489,996 |
|||||||
|
|
||||||||||||||
Weighted average no. shares |
1,182,251,580 |
1,188,156,191 |
1,188,156,191 |
1,193,945,424 |
1,228,300,697 |
3.4 |
2.9 |
1,195,135,996 |
|||||||
Derivatives |
119,536,582 |
95,621,651 |
99,333,451 |
95,502,832 |
26,694,586 |
-73.1 |
-72.0 |
90,280,313 |
|||||||
Fully diluted weighted average no. shares |
1,301,788,162 |
1,283,777,842 |
1,287,489,642 |
1,289,448,256 |
1,254,995,283 |
-2.5 |
-2.7 |
1,285,416,309 |
|||||||
|
|
||||||||||||||
Headline earnings |
8,002,190 |
4,900,644 |
20,911,936 |
37,689,913 |
14,390,320 |
1.7 |
-43.6 |
48,205,090 |
|||||||
Headline earnings (excl. warrant charge) |
13,639,017 |
15,194,186 |
25,031,864 |
37,689,913 |
21,262,438 |
-15.1 |
-43.6 |
75,127,505 |
|||||||
|
|
||||||||||||||
EPS (US$/share) |
0.0115 |
0.0128 |
0.0211 |
0.0316 |
0.0173 |
-18.0 |
-45.3 |
0.0629 |
|||||||
Diluted EPS (US$/share) |
0.0105 |
0.0118 |
0.0194 |
0.0292 |
0.0169 |
-12.9 |
-42.1 |
0.0584 |
|||||||
HEPS** (US$/share) |
0.0115 |
0.0128 |
0.0211 |
0.0316 |
0.0173 |
-18.0 |
-45.3 |
0.0629 |
|||||||
Diluted HEPS** (US$/share) |
0.0105 |
0.0118 |
0.0194 |
0.0292 |
0.0169 |
-12.9 |
-42.1 |
0.0584 |
Source: Alphamin, Edison Investment Research. Note: Company presented basis. *Excluded; actual Q421 charge US$6,872,118; **Headline earnings per share.
Outlook
At the time of its Q221 results, Alphamin updated its guidance for the remainder of FY21 and H122. In the light of the lower grades encountered in Q221, it expected to mine lower tin grades averaging 3.2–3.5% in H221 and into Q122, which, at higher plant recoveries of 78% (including the fine tin recovery plant) and monthly throughput of 36,000t, suggested contained tin production of 900–1,000t per month. The grade of ore mined was then expected to increase to an average of 4.0% from Q222 onwards. As per Alphamin’s Q421/FY21 production update of 11 January, contained tin production and sales guidance for the financial year ending December 2022 remains 12,000 tonnes (cf Edison’s prior forecast of 11,711t).
Quarterly estimates for Alphamin in FY22 in the light of Q421 financial results and Q122 operational results are provided in the table below, with the caveat that the quarterly results of junior mining companies can be prone to material volatility relative to both historical results and analysts’ forecasts. At the time of writing, the current three-month price of tin is US$42,793/t and, for the purposes of forecasting, we have assumed this price will prevail for the remainder of the year. As noted previously, in this case, Edison has also attempted to forecast the likely effects of the application of ongoing superprofits tax assessments on Alphamin’s financial performance for the remainder of the year.
Exhibit 3: Edison forecast of Alphamin income statement, Q122e–Q422e (US$ unless otherwise indicated)
Q122e |
Q222e |
Q322e |
Q422e |
FY22e |
FY22e |
||||||
Tons processed (t) |
105,565 |
100,275 |
100,275 |
100,275 |
406,390 |
401,100 |
|||||
Tin grade (%) |
3.7 |
3.7 |
3.8 |
3.8 |
3.76 |
3.71 |
|||||
Contained tin (t) |
3,924 |
3,660 |
3,846 |
3,846 |
15,276 |
14,871 |
|||||
Overall plant recovery (%) |
78 |
79 |
79 |
79 |
78.6 |
78.7 |
|||||
Actual payable tin produced (t) |
3,061 |
2,882 |
3,028 |
3,028 |
12,000 |
11,711 |
|||||
Payable tin sold (t) |
3,336 |
2,882 |
3,028 |
3,028 |
12,275 |
11,607 |
|||||
Tin price achieved (US$/t) |
43,813 |
42,298 |
42,338 |
42,338 |
42,331 |
38,084 |
|||||
Revenue |
146,160,168 |
120,481,514 |
126,483,614 |
126,483,614 |
519,608,909 |
442,031,699 |
|||||
Cost of goods sold |
(42,966,390) |
(34,701,694) |
(35,489,571) |
(35,501,448) |
(148,659,103) |
(141,806,539) |
|||||
Depreciation |
7,531,245 |
8,024,625 |
8,518,004 |
9,011,383 |
33,085,257 |
28,023,104 |
|||||
Gross profit |
95,662,533 |
77,755,196 |
82,476,038 |
81,970,783 |
337,864,550 |
272,202,056 |
|||||
General and administrative |
(5,193,778) |
(5,193,778) |
(5,193,778) |
(5,193,778) |
(20,775,112) |
(21,123,088) |
|||||
Operating profit/(loss) |
90,468,755 |
72,561,418 |
77,282,260 |
76,777,005 |
317,089,438 |
251,078,968 |
|||||
Other |
98,000,000 |
||||||||||
Warrants |
0 |
0 |
0 |
0 |
0 |
0 |
|||||
Profit on foreign exchange |
0 |
0 |
|||||||||
Loss on write off of assets |
0 |
0 |
|||||||||
Interest expense |
0 |
0 |
|||||||||
Interest income |
0 |
0 |
|||||||||
Net interest |
(500,000) |
(500,000) |
(500,000) |
(500,000) |
(2,000,000) |
209,469 |
|||||
Profit before taxes |
89,968,755 |
72,061,418 |
76,782,260 |
76,277,005 |
315,089,438 |
251,288,438 |
|||||
Current income tax expense |
(38,686,565) |
(30,986,410) |
(33,016,372) |
(32,799,112) |
(135,488,458) |
(62,822,109) |
|||||
Deferred tax movement |
0 |
0 |
|||||||||
Total tax |
(38,686,565) |
(30,986,410) |
(33,016,372) |
(32,799,112) |
(135,488,458) |
(62,822,109) |
|||||
Effective tax rate (%) |
43.0 |
43.0 |
43.0 |
43.0 |
43.0 |
25.0 |
|||||
Net profit/(loss) |
51,282,190 |
41,075,008 |
43,765,888 |
43,477,893 |
179,600,979 |
188,466,328 |
|||||
Attributable to |
|||||||||||
Shareholders |
43,148,835 |
34,560,512 |
36,824,618 |
36,582,299 |
151,116,264 |
158,575,569 |
|||||
Non-controlling interests |
8,133,355 |
6,514,496 |
6,941,270 |
6,895,594 |
28,484,715 |
29,890,760 |
|||||
Minority (%) |
15.86 |
15.86 |
15.86 |
15.86 |
15.86 |
15.86 |
|||||
Total |
51,282,190 |
41,075,008 |
43,765,888 |
43,477,893 |
179,600,979 |
188,466,328 |
|||||
Weighted average number of shares in period |
1,267,257,770 |
1,271,859,570 |
1,271,859,570 |
1,271,859,570 |
1,270,709,120 |
1,193,945,424 |
|||||
Derivatives |
17,490,986 |
17,490,986 |
17,490,986 |
17,490,986 |
17,490,986 |
95,502,832 |
|||||
Fully diluted weighted average number of shares in issue |
1,284,748,756 |
1,289,350,556 |
1,289,350,556 |
1,289,350,556 |
1,288,200,106 |
1,289,448,256 |
|||||
Headline earnings |
43,148,835 |
34,560,512 |
36,824,618 |
36,582,299 |
151,116,264 |
158,575,569 |
|||||
Headline earnings (excl. warrant charge) |
43,148,835 |
34,560,512 |
36,824,618 |
36,582,299 |
151,116,264 |
158,575,569 |
|||||
EPS (US$/share) |
0.0340 |
0.0272 |
0.0290 |
0.0288 |
0.1189 |
0.1328 |
|||||
Diluted EPS (US$/share) |
0.0336 |
0.0268 |
0.0286 |
0.0284 |
0.1173 |
0.1230 |
|||||
HEPS (US$/share) |
0.0340 |
0.0272 |
0.0290 |
0.0288 |
0.1189 |
0.1328 |
|||||
Diluted HEPS (US$/share) |
0.0336 |
0.0268 |
0.0286 |
0.0284 |
0.1173 |
0.1230 |
|||||
Headline EPS excl. warrant charge (US$/share) |
0.0340 |
0.0272 |
0.0290 |
0.0288 |
0.1189 |
0.1328 |
Source: Alphamin, Edison Investment Research. Note: Company presented basis.
Among other things, readers should note that we are forecasting a sharp decline in interest expenses as debt (all of which is due within 12 months) is paid off. In addition, all outstanding warrants as at end-December 2021 are now reported to have been exercised in January 2022 with the result that the customary quarterly warrant charge incurred by Alphamin should also now disappear from Q222.
Valuation: Mpama North
Assuming the current three-month price of tin (US$42,793/t cf US$39,020/t previously) prevails for the remainder of Bisie’s life (ie adopting the current tin price as our long-term price), we calculate a valuation for Alphamin (based on Mpama North only and excluding any blue-sky exploration potential) of 95.19 US cents (cf 86.1c previously), or 120.3 Canadian cents (cf 109.7c previously) per share. Note that this valuation assumes the execution of the Bisie life of mine schedule according to plan and applies a 10% discount rate to forecast dividends.
Mpama North valuation sensitivities
Exploration and mine life extensions
A key sensitivity for Alphamin is its exposure to exploration success. Alphamin’s processing schedule follows its mining schedule closely. As this drops away towards the end of the life of the mine, so too do production, earnings and cash flow. To the extent that Alphamin is successful in its exploration at Mpama North and Mpama South in keeping its plant in full production at FY27 levels into the future (see Alphamin’s latest announcements: Alphamin announces maiden mineral resource estimate and positive preliminary economic assessment for Mpama South, released on 8 March 2022, and Alphamin reports high grade exploration assay results at Mpama North mine and Mpama South development project, released on 22 March, and below), our valuation of the company (calculated at the prevailing tin price) would increase as follows:
Exhibit 4: Alphamin valuation sensitivity to exploration success (Mpama North only)
Additional years at full capacity |
To year |
Valuation |
Valuation |
Incremental change (C$/share) |
0.9519 |
1.2031 |
|||
0 |
2027 |
0.9298 |
1.1753 |
-0.0278 |
+1 |
2028 |
0.9742 |
1.2313 |
+0.0560 |
+2 |
2029 |
1.0274 |
1.2986 |
+0.0673 |
+3 |
2030 |
1.0661 |
1.3476 |
+0.0490 |
+4 |
2031 |
1.1021 |
1.3931 |
+0.0455 |
+5 |
2032 |
1.1548 |
1.4597 |
+0.0666 |
Source: Edison Investment Research
For the purposes of this valuation, we have assumed an ongoing exploration commitment at Alphamin of c US$20m initially, dropping back to US$2.7m per year to achieve the replenishment of reserves and resources required to keep the mine operating at full capacity.
On average, therefore, each additional year by which the plant is maintained at full capacity (in the short term) adds an average of 5.69 Canadian cents per share to our valuation of Alphamin (at the prevailing tin price). In the limiting case in which exploration success is sufficient to maintain production at FY27 levels indefinitely (which, for these purposes may be taken to mean c 52 years), our valuation of Alphamin rises to US$1.98/share (cf US$1.92/share previously), or C$2.487/share (cf C$2.408/share previously).
Mpama South maiden and updated resource
Coincident with its Q421/FY21 results, Alphamin announced both a maiden resource estimate at Mpama South and the results of a simultaneous PEA for the project. Mpama South’s maiden resource was then updated (and upgraded) once again, on 29 March. At the same time, the company also announced a decision to start the development of the project in order to capitalise on the current favourable tin market fundamentals and its ability to self-fund the project.
A summary of the (updated and upgraded) resource at Mpama South within the context of the existing resource at Mpama North is as follows:
Exhibit 5: Mpama South maiden resource cf existing Mpama North resources and reserves
Resources |
Reserves |
Attributable |
|||||||||||
Tonnage (Mt) |
Grade (% Sn) |
Contained tin (kt) |
Category |
Tonnage (Mt) |
Grade (% Sn) |
Contained tin (kt) |
Ownership (%) |
Resources (kt Sn) |
Reserves (kt Sn) |
||||
Bisie Mpama North |
|||||||||||||
Measured |
0.33 |
4.75 |
15.60 |
Proven |
0.05 |
3.77 |
1.89 |
84.14 |
13.13 |
1.59 |
|||
Indicated |
3.99 |
4.59 |
183.40 |
Probable |
3.28 |
4.01 |
131.49 |
84.14 |
154.31 |
110.64 |
|||
Inferred |
0.48 |
4.57 |
21.80 |
Possible |
84.14 |
18.34 |
0.00 |
||||||
Total |
4.80 |
4.60 |
220.80 |
Total |
3.33 |
4.01 |
133.38 |
84.14 |
185.78 |
112.23 |
|||
Bisie Mpama South |
|||||||||||||
Measured |
0.00 |
0.00 |
0.00 |
84.14 |
0.00 |
0.00 |
|||||||
Indicated |
0.85 |
2.55 |
21.68 |
84.14 |
18.24 |
0.00 |
|||||||
Inferred |
3.42 |
2.45 |
83.79 |
84.14 |
70.50 |
0.00 |
|||||||
Total |
4.27 |
2.47 |
105.47 |
84.14 |
88.74 |
0.00 |
|||||||
Bisie total |
|||||||||||||
Measured |
0.33 |
4.75 |
15.60 |
Proven |
0.05 |
3.77 |
1.89 |
84.14 |
13.13 |
1.59 |
|||
Indicated |
4.84 |
4.24 |
205.08 |
Probable |
3.28 |
4.01 |
131.49 |
84.14 |
172.55 |
110.64 |
|||
Inferred |
3.90 |
2.71 |
105.59 |
Possible |
84.14 |
88.84 |
0.00 |
||||||
Total |
9.07 |
3.60 |
326.26 |
Total |
3.33 |
4.01 |
133.38 |
84.14 |
274.52 |
112.23 |
|||
Change (%) |
|||||||||||||
Measured |
0.00 |
0.00 |
0.00 |
||||||||||
Indicated |
21.30 |
-7.69 |
11.82 |
||||||||||
Inferred |
712.50 |
-40.76 |
384.43 |
||||||||||
Total |
88.96 |
-21.80 |
47.76 |
Source: Alphamin Resources, Edison Investment Research. Note: Estimated using Canadian Institute of Mining, Metallurgy and Petroleum (CIM) Best Practice Guidelines (2019) and is reported in accordance with the 2014 CIM Definition Standards.
The initial maiden mineral resource was estimated from 79 drillholes totalling 23,109m (average 293m per hole) and was reported at a base case tin grade of 1.0%, which satisfied the requirement for reasonable prospects for economic extraction. However, it excluded the substantial quantity of subsequent drilling completed since September 2021 in Phases 4 and 5 of Alphamin’s exploration campaign, which yielded similarly positive results (see below) with characteristic high-grade visual cassiterite in many of the drillholes. Over 40 drillholes and over 10,000m were subsequently drilled beyond the limits of the maiden mineral resource in Phase 3 of Alphamin’s campaign and further updates will be released throughout the year as the drilling phases progress and assays are received. Compared with the original maiden resource however, which was delineated from 79 drill holes (at a rate of c 35kt resource tonnage per hole), the subsequent update on 29 March (of 1.48Mt) was delineated from a further 21 additional holes (at a rate of c 70kt per hole). Pro rata therefore, the remaining 26 holes for which assays have yet to be received could add a further 1.8Mt to resources at Mpama South when Alphamin’s next update is released. Either way however, it is notable that, in terms of tonnage, the resource at Mpama South is now comparable to that at Mpama North and it therefore might be supposed would support a mine life of comparable duration.
According to the International Tin Association’s Tin Industry Review 2020, Mpama South’s maiden resource (prior to its upgrade) ranked it as the second highest grade publicly reported CRIRSCO tin mineral resource globally and one of the largest in terms of contained tin.
In-situ valuation considerations
Alphamin’s resource multiple immediately prior to its Mpama South maiden resource announcement was US$5,573 per tonne of attributable in-situ tin. On this basis, the value of Mpama South to Alphamin would be US$494.6m (or 38.9 US cents per share).
However, US$5,573/t as an in-situ resource (based on Mpama North) is likely to over-state the value of Mpama South’s resources as it is a post-investment valuation. In this case, we calculate from Alphamin’s balance sheet that the company was required to make a (fully consolidated) investment of US$1,093 per tonne of in-situ resource (including exploration) in order to achieve this valuation. Netting this investment off against the original valuation suggests a pre-investment valuation for Mpama North of US$4,480/t. On this basis, the attributable value of Mpama South to Alphamin would be US$397.6m (or 31.3 US cents per share). This may be seen within the context of the evolution of valuation of Mpama North’s resources as the mine transitioned into production in H219:
Exhibit 6: Mpama North resource valuation evolution, by year
Year end |
2019 |
2020 |
2021 |
EV per attributable resource tonne (US$) |
1,051 |
2,188 |
5,573 |
Balance sheet value of investment required to achieve valuation (US$/t) |
1,166 |
1,097 |
1,093 |
Implied pre-investment valuation of resources (US$/t) |
(115) |
1,092 |
4,480 |
Implied valuation of Mpama South at pre-investment multiple shown (US$m) |
(10.2) |
96.9 |
397.6 |
Calculated discovery cost per resource tonne (US$/t) |
10.47 |
13.83 |
61.41 |
Source: Edison Investment Research. Note: EV denotes Alphamin’s enterprise value.
By this measure, Mpama North’s resources were of relatively little pre-investment value to the company before they were put into production (in 2019). That is to say, they were worth approximately what the company had invested historically to both find them and develop them. This may also be seen from the company’s share price, which traded around net asset value prior to FY20. However, this value subsequently increased very sharply – to US$5,573/t – as those same resources were brought to profitable account. This US$5,573/t value may also therefore be interpreted within the context of the selling price of Alphamin’s tin (of US$30,629/t in FY21) and its all-in sustaining cost of sales of US$14,173/t in FY21. In the meantime, in Mpama South’s favour is the fact that Alphamin’s management has already proved that it is capable of building a mine and successfully bringing it into production in North Kivu – thereby lowering risk.
In the immediate aftermath of its Mpama South maiden resource announcement on 7 March, Alphamin’s resource multiple fell from US$5,573/t to US$4,191/t. It remained at approximately this level until its resource update on 29 March. All other things being equal however (and with no pro rata adjustment in its share price), in the wake of its 29 March update, at Alphamin’s current price and forex rates, it will have fallen to US$3,947/t (or 9.2% of the prevailing price of tin cf Alphamin’s gross margin of 60.8% in FY21).
Readers should note that Alphamin’s calculated discovery cost of US$61.41/t in FY21 probably overstates the cost for Mpama North resources in that Mpama North resources only would have been delineated at that point, but some of the costs associated with Mpama South would also have been recognised on Alphamin’s balance sheet by that time as well. This could be indicative of the fact that, tonne for tonne (of contained tin), Mpama South’s resources are more expensive to discover than Mpama North’s. Either way however, it should be noted that the cost of resource discovery and delineation is negligible within the context both of the overall development of the deposit and its potential value once put into profitable production.
Preliminary economic assessment (PEA)
At the same time as it announced its maiden resource, Alphamin also announced the results of a PEA of Mpama South. The PEA encompassed a number of mining, metallurgical, environmental and regulatory studies, which together demonstrated the potential to expand production at Bisie by leveraging the infrastructure at Mpama North (eg power, water, site access, underground infrastructure and personnel) to build a second mine and dedicated second lookalike processing plant and mine portal at Mpama South. The main findings of the PEA were as follows:
Exhibit 7: Mpama South PEA outcomes
Item |
Value |
Total run-of-mine ore processed |
2,068kt |
Average annual run-of-mine ore mined and processed |
468kt |
Average annualised run-of-mine grade |
2.21% |
Processing recovery |
70.0% |
Average annualised contained tin produced |
7,232t |
Average annualised AISC per tonne tin sold* |
US$15,188/t |
Average annualised EBITDA* |
US$187.31m |
Development capital |
US$115.97m |
Construction timeline |
20 months |
Item |
Total run-of-mine ore processed |
Average annual run-of-mine ore mined and processed |
Average annualised run-of-mine grade |
Processing recovery |
Average annualised contained tin produced |
Average annualised AISC per tonne tin sold* |
Average annualised EBITDA* |
Development capital |
Construction timeline |
Value |
2,068kt |
468kt |
2.21% |
70.0% |
7,232t |
US$15,188/t |
US$187.31m |
US$115.97m |
20 months |
Source: Alphamin Resources. Note: *At US$40,000/t tin price; 100% basis.
The PEA is necessarily preliminary in nature. It included, for example, a portion of the inferred mineral resource that ordinarily would be regarded as too speculative geologically to be considered mineral reserves. In this case however – and in the light of the resource upgrade on 29 March and ongoing drilling – we believe that it might very well prove too conservative and that ultimate resources at Mpama South may well be capable of supporting a mine life in excess of seven years. On this basis, an analysis of Mpama South’s (implied) reserve conversion rate relative to that of Mpama North is as follows:
Exhibit 8: Mpama South reserve conversion analysis (cf Mpama North)
Resources |
Reserves |
Conversion (%) |
||||||||||
Category |
Tonnage |
Grade |
Contained tin (kt) |
Category |
Tonnage |
Grade |
Contained tin (kt) |
Tonnes |
Grade |
Contained tin |
||
Mpama North |
||||||||||||
Measured |
0.33 |
4.75 |
15.60 |
Proven |
0.05 |
3.77 |
1.89 |
15.2 |
79.4 |
12.1 |
||
Indicated |
3.99 |
4.59 |
183.40 |
Probable |
3.28 |
4.01 |
131.49 |
82.2 |
87.4 |
71.7 |
||
Inferred |
0.48 |
4.57 |
21.80 |
Possible* |
0.0 |
0.0 |
0.0 |
|||||
Total |
4.80 |
4.60 |
220.80 |
Total |
3.33 |
4.01 |
133.38 |
69.4 |
87.1 |
60.4 |
||
Mpama South |
||||||||||||
Measured |
0.00 |
0.00 |
0.00 |
Proven |
0.00 |
0.00 |
0.00 |
N/A |
N/A |
N/A |
||
Indicated |
0.85 |
2.55 |
21.68 |
Probable |
0.85 |
2.55 |
21.68 |
100.0 |
100.0 |
100.0 |
||
Inferred |
3.42 |
2.45 |
83.79 |
Possible* |
2.36 |
2.09 |
49.22 |
68.9 |
85.2 |
58.7 |
||
Total |
4.27 |
2.47 |
105.47 |
Total |
3.21 |
2.21 |
70.90 |
75.1 |
89.5 |
67.2 |
Source: Edison Investment Research, Alphamin Resources. Note: *Archaic.
Readers should note that the ‘possible’ category of reserves no longer exists and has been resurrected in Exhibit 9 merely as an instrument for demonstrating the required conversion of Mpama South’s inferred resources into reserves in order to render the mine schedule assumed by Edison achievable. In this case, it may be seen that while the required overall reserves:resources conversion factor for Mpama South is comparable to that for Mpama North, 68.9% of the resource tonnes and 58.7% of the contained tin in the inferred category of Mpama South’s resources will also need to be upgraded (probably first into the indicated category of resources and then into the probable category of reserves) in order to allow the execution of the mine schedule according to Edison’s assumptions. With this caveat, it is possible to construct a financial model for the project and to derive a valuation for it.
For these purposes, and given the company’s decision to start developing the project, we have assumed that the period of construction will run for 20 months, and that the mine will then enter production late in FY23 or early in FY24, which is in line with company’s guidance. All other parameters are otherwise adjusted to reflect the tin price of US$42,793/t used elsewhere in this report, on which basis it is possible to estimate the income statement relating to Mpama South alone for Alphamin from the start of commercial production in FY24 as follows:
Exhibit 9: Forecast life of mine Mpama South income statement
2024 |
2025 |
2026 |
2027 |
2028 |
2029 |
2030 |
|
Revenue (US$) |
258,163,659 |
302,051,481 |
302,051,481 |
302,051,481 |
302,051,481 |
302,051,481 |
302,051,481 |
Cash costs (US$) |
78,513,559 |
91,860,864 |
91,860,864 |
91,860,864 |
91,860,864 |
91,860,864 |
91,860,864 |
Royalty (US$) |
13,682,674 |
16,008,728 |
16,008,728 |
16,008,728 |
16,008,728 |
16,008,728 |
16,008,728 |
Gross profit (US$) |
165,967,426 |
194,181,888 |
194,181,888 |
194,181,888 |
194,181,888 |
194,181,888 |
194,181,888 |
Depreciation (US$) |
15,909,223 |
19,000,001 |
19,529,384 |
20,191,112 |
21,073,416 |
22,396,872 |
25,043,784 |
Operating profit (US$) |
150,058,203 |
175,181,887 |
174,652,505 |
173,990,777 |
173,108,473 |
171,785,017 |
169,138,105 |
Other (US$) |
|||||||
EBIT (US$) |
150,058,203 |
175,181,887 |
174,652,505 |
173,990,777 |
173,108,473 |
171,785,017 |
169,138,105 |
Interest income (US$) |
|||||||
Interest expense (US$) |
|||||||
Net interest (US$) |
0 |
0 |
0 |
0 |
0 |
0 |
0 |
PBT (US$) |
150,058,203 |
175,181,887 |
174,652,505 |
173,990,777 |
173,108,473 |
171,785,017 |
169,138,105 |
Tax (US$) |
45,017,461 |
52,554,566 |
52,395,751 |
52,197,233 |
51,932,542 |
51,535,505 |
50,741,431 |
Tax rate (%) |
30.0 |
30.0 |
30.0 |
30.0 |
30.0 |
30.0 |
30.0 |
PAT (US$) |
105,040,742 |
122,627,321 |
122,256,753 |
121,793,544 |
121,175,931 |
120,249,512 |
118,396,673 |
Minority (US$) |
16,659,462 |
19,448,693 |
19,389,921 |
19,316,456 |
19,218,503 |
19,071,573 |
18,777,712 |
Minority (%) |
15.86 |
15.86 |
15.86 |
15.86 |
15.86 |
15.86 |
15.86 |
Profit attributable to shareholders (US$) |
88,381,280 |
103,178,628 |
102,866,832 |
102,477,088 |
101,957,428 |
101,177,939 |
99,618,961 |
Dividend (US$) |
0 |
111,626,903 |
117,071,744 |
117,238,777 |
117,461,488 |
117,795,555 |
118,463,689 |
Retained earnings (US$) |
88,381,280 |
-8,448,275 |
-14,204,912 |
-14,761,689 |
-15,504,060 |
-16,617,616 |
-18,844,728 |
EPS (US$ per Alphamin share) |
0.0695 |
0.0811 |
0.0809 |
0.0806 |
0.0802 |
0.0796 |
0.0783 |
Diluted EPS (US$ per Alphamin share) |
0.0685 |
0.0800 |
0.0798 |
0.0795 |
0.0791 |
0.0785 |
0.0773 |
DPS (US$ per Alphamin share) |
0.0000 |
0.0878 |
0.0920 |
0.0922 |
0.0924 |
0.0926 |
0.0931 |
Source: Edison Investment Research
While not shown here, predicted balance sheets and cash flow statements for the Mpama South project have also been calculated, albeit with the caveat that, at the current time, no consideration has been paid to fluctuations in working capital, which is a refinement that will be made at a later stage.
On the basis of the above income statement, it is possible to calculate the following valuations for Mpama South to Alphamin (ie after a 15.86% minority has been accounted for) at Edison’s customary 10% discount rate:
■
A discounted dividend valuation of US$380.6m, or US$0.299/share or US$3,609 per tonne of in-situ Mpama South contained tin.
■
A discounted cash-flow valuation of US$363.3m, or US$0.286/share or US$3,445 per tonne of in-situ Mpama South contained tin.
For the purposes of the ‘per tonne’ valuations above, Edison has applied the Mpama South contained tin resource on a 100% (rather than attributable) basis. While this treatment appears irregular, it provides investors with an indication of how much extra value additional tonnes delineated at Mpama South in the future may be worth to Alphamin. Either way, however, it is notable the extent to which the ‘per tonne’ valuations above reconcile with the in-situ valuations calculated previously.
Consolidated valuation and tin price sensitivity
Considering Mpama North and Mpama South together, our consolidated valuation of Alphamin is C$1.5814/share and this valuation changes by approximately ±13.4% for every ±10% that the tin price moves from its current level of US$42,793/t. Alternatively, we calculate that Alphamin’s share price of C$1.15 discounts a long-term real tin price of US$34,055/t, which is 20.4% below the current (three-month) price of tin.
Exhibit 10: Tin price (US$/tonne) cf other metals, January 2020 to present |
Source: Refinitiv (6 April 2022). Note: Uranium price data only available until September 2021. |
As may be seen from the above graph, tin is the second best performing of 16 metals and minerals since 1 January 2020 (after prime Australian coking coal). Although it cannot be seen in the above graph, it is also the best performing of the same 16 metals and minerals since 1 January 2002.
Exploration success
Drilling at Bisie to date has achieved two important goals:
■
To narrow the gap between Mpama South and the currently operating Mpama North mine and deposit; in this respect, Mpama South drilling intercepts are now within 40m of the Mpama North orebody (cf 750m previously) at a similar mining level and the indications are that Mpama South and Mpama North were once one single zone of high-grade tin mineralisation that was subsequently displaced by a late-stage fault.
■
To demonstrate high-grade assay results at Mpama South.
Alphamin’s success in achieving these two goals creates the potential for synergies between the two deposits and expedited underground access to Mpama South, thereby connecting it to the already existing underground development, infrastructure and services of the Mpama North mine.
Mpama South drilling
Exploration at Mpama South throughout 2021 to the present has encompassed c 33,556m of drilling over 126 drillholes (average 266m per hole). Data from 100 holes have contributed to its updated resource. Data from 26 remain outstanding as at the time of writing with exploration ongoing. Selected significant intercepts encountered at Mpama South to date include:
■
22.7m at a grade of 3.12% Sn from 391.6m, including 7.7m at a grade of 4.73% Sn and 6.1m at a grade of 4.94% Sn in hole BGH095.
■
16.0m at a grade of 2.89% Sn from 297.7m in hole BGH088.
■
12.5m at a grade of 2.48% Sn from 371.9m in hole BGH094.
■
21.2m at a grade of 1.34% Sn from 387.4m, including 6.1m at a grade of 3.18% Sn from 402.7m in hole BGH101.
■
15.6m at a grade of 5.00% Sn from 290.2m down hole depth, including 10.0m at a grade of 6.1% from 291.1m in hole BGH079.
■
9.0m at a grade of 5.63% Sn from 316.9m in hole BGH079.
■
4.8m at a grade of 4.68% Sn from 335.3m and 11.4m at a grade of 2.23% Sn from 318.8m in hole BGH077.
■
26.0m at a grade of 2.71% Sn from 280.3m in hole BGH084.
■
6.1m at a grade of 2.75% Sn from 275.35m in hole BGH086.
■
14.4m at a grade of 3.2% Sn from 115.4m down hole depth in hole BGH075.
■
18.4m at a grade of 2.2% Sn from 278.9m (including 5.0m at a grade of 2.9% Sn and 2.8m at a grade of 7.2% Sn) in hole BGH074.
■
2.6m at a grade of 8.5% Sn from 276.0m in hole BGH066.
■
4.7m at a grade of 3.2% Sn from 295.8m in hole BGH067.
■
5.4m at a grade of 3.0% Sn from 331.0m in hole BGH070.
■
5.1m at a grade of 2.7% Sn from 274.6m and 4.4m at a grade of 3.6% Sn from 290.4m in hole BGH072.
These grades may be directly compared with Alphamin’s Mpama South’s updated resource grade of 2.47% Sn and Mpama North’s reserve grade of 4.01% Sn and its resource grade of 4.60% Sn (itself approximately the equivalent of a gold grade of 1oz/t in terms of the value of contained mineralisation at currently prevailing gold and tin prices). Moreover, visual cassiterite intercepts at Mpama South are now within 40m of the Mpama North mine. A phase 4 drilling campaign at Mpama South remains underway.
Mpama North drilling
Alphamin commenced extensional drilling of the Mpama North orebody in July 2021. By the end of October, approximately 6,167m of drilling had been completed over 12 drillholes (average 514m per hole) and had revealed the existence of a north-east to south-west cross-cutting fault causing a downward and westward offset of the deeper mineralisation. By refocusing drilling closer to the final drill line relative to previous exploration, holes drilled 75m further along strike succeeded in intersecting significant zones of cassiterite mineralisation. Based on its metal content factor (grade x width), for example, drillhole MND019 appears to be one of the two most significant intercept encountered on the property to date:
■
14.4m at a grade of 21.75% Sn from 432.2m, including 11.0m at a grade of 27.81% Sn
In this case, it is approximately matched by drillhole MND011, which earlier recorded:
■
19.6m at a grade for 17.16% Sn, including 14.5m at a grade of 23.0% Sn
Both visual and assayed thick high-grade tin intercepts at the Deeps target provide a significant opportunity for Alphamin. In particular, the process plant has a targeted feed grade of c 4.0% Sn. Hence, the very high-grade mineralisation intercepted in the Deeps area will need to be blended with substantial quantities of lower grade material – holding out the possibility of adding production from previously unmined lower grade blocks to the mining schedule and potentially adding low-grade areas to the resource with the effect, ultimately, of maintaining a steady feed grade at Mpama North and of extending the life of the mine. In addition, five new holes west of the identified fault have also intersected visual cassiterite providing strike extension potential on the western block in the shallower Oso target. Drilling at the Deeps and Oso will continue to refine Alphamin’s understanding of these mineralised areas with the objective of adding significantly to life-of-mine reserves and resources in due course. In addition, drilling will commence on the down dip eastern target of Mpama North in May 2022, which still remains open and untested.
Regional exploration
The Bisie Ridge is 13km long and hosts both the Mpama North and Mpama South deposits. The full length of the ridge was the subject of a follow up geochemical investigation in 2021 confirming tin and other base metal anomalies over the majority of its length. However, only a fraction (c 20%) of the ridge has been intensively drill tested to date. Six high priority drill areas have therefore been identified, with drilling at the first – Marouge – commencing in January 2022.
Financials
Between Q419 and Q421, Alphamin paid down financial net debt (ie excluding leases and unamortised fees) by US$161.0m, from US$88.6m at end-December 2019 to a net cash position of US$72.4m at end-December 2021 (equivalent to 5.6 US cents per share). As such, post year end, the company announced a C$0.03/share dividend (aggregate US$29.7m – Edison calculation), which was paid to shareholders on 11 February, as part of its newly devised strategy to balance capital allocations between ongoing exploration drilling, the fast-track development of the Mpama South deposit and shareholder distributions. Net cash was then reported to have improved by a further US$61m to US$129.5m in Q122 (post dividend).
Mpama South financing
It is not Edison’s practice to forecast net debt or net cash positions on a quarterly basis. However, we note that (excluding leases and unamortised fees) Alphamin increased its net cash position by US$67.9m in Q421 to US$72.4m and then by a further US$61m to US$129.5m in Q122, which is more than sufficient to fully fund Mpama South (which is in line with the company’s announcement to self-fund the development of the project) and pay an increased dividend for the year. Indeed, according to our calculations, an increased dividend of C$0.06/share for the year (Edison assumption) would only become compromised in the event that the tin price were to fall below US$10,000/t in the near future or if the long-term price of tin were to fall to below US$11,750/t – both of which are, to all intents and purposes, impossible.
Exhibit 11: Financial summary
Accounts: IFRS, Yr end: December, USD: Thousands |
|
|
2018A |
2019A |
2020A |
2021A |
2022E |
2023E |
Income statement |
|
|
|
|
|
|
|
|
Total revenues |
|
|
0 |
27,221 |
187,445 |
352,883 |
519,609 |
541,747 |
Cost of sales |
|
|
0 |
(7,915) |
(119,554) |
(138,217) |
(148,659) |
(151,281) |
Gross profit |
|
|
0 |
19,306 |
67,892 |
214,666 |
370,950 |
390,466 |
SG&A (expenses) |
|
|
(9,440) |
(14,526) |
(17,238) |
(19,754) |
(20,775) |
(20,775) |
Exceptionals and adjustments |
Exceptionals |
|
0 |
(3,673) |
(7,649) |
0 |
0 |
0 |
Depreciation and amortisation |
|
|
(20) |
(7,927) |
(25,471) |
(26,632) |
(33,085) |
(41,560) |
Reported EBIT |
|
|
(9,460) |
(3,147) |
25,182 |
168,279 |
317,089 |
328,131 |
Finance income/(expense) |
|
|
3 |
(6,330) |
(15,614) |
(8,358) |
(2,000) |
0 |
Other income/(expense) |
|
|
7 |
(4) |
(1,518) |
(874) |
0 |
0 |
Exceptionals and adjustments |
Exceptionals |
|
6,272 |
6,850 |
(8,776) |
(26,922) |
0 |
0 |
Reported PBT |
|
|
(3,178) |
(2,632) |
(725) |
132,126 |
315,089 |
328,131 |
Income tax expense (includes exceptionals) |
|
|
0 |
7,755 |
(7,141) |
(68,558) |
(135,488) |
(98,439) |
Reported net income |
|
|
(3,178) |
5,123 |
(7,866) |
63,568 |
179,601 |
229,691 |
Basic average number of shares, m |
|
|
733 |
845 |
1,066 |
1,195 |
1,271 |
1,272 |
Basic EPS (US$/sh) |
|
|
(0.00) |
0.01 |
(0.01) |
0.04 |
0.12 |
0.15 |
|
|
|
|
|
|
|
|
|
Adjusted EBITDA |
|
|
(9,440) |
8,453 |
58,302 |
194,912 |
350,175 |
369,691 |
Adjusted EBIT |
|
|
(9,460) |
526 |
32,831 |
168,279 |
317,089 |
328,131 |
Adjusted PBT |
|
|
(9,450) |
(5,809) |
15,699 |
159,048 |
315,089 |
328,131 |
Adjusted EPS (C$/sh) |
|
|
(0.00) |
0.01 |
(0.01) |
0.05 |
0.15 |
0.19 |
Adjusted diluted EPS (US$/sh) |
|
|
(0.00) |
0.00 |
(0.01) |
0.04 |
0.12 |
0.15 |
|
|
|
|
|
|
|
|
|
Balance sheet |
|
|
|
|
|
|
|
|
Property, plant and equipment |
|
|
230,626 |
255,125 |
239,103 |
227,720 |
243,973 |
287,161 |
Other non-current assets |
|
|
2,467 |
10,632 |
15,882 |
27,088 |
47,088 |
49,798 |
Total non-current assets |
|
|
233,093 |
265,757 |
254,985 |
254,808 |
291,061 |
336,958 |
Cash and equivalents |
|
|
17,105 |
5,941 |
6,559 |
90,640 |
228,892 |
269,369 |
Inventories |
|
|
3,235 |
27,755 |
21,866 |
20,674 |
28,472 |
29,685 |
Trade and other receivables |
|
|
0 |
1,486 |
7,601 |
47,626 |
51,961 |
54,175 |
Other current assets |
|
|
3,738 |
17,633 |
6,710 |
7,402 |
7,402 |
7,402 |
Total current assets |
|
|
24,078 |
52,815 |
42,736 |
166,342 |
316,726 |
360,630 |
Non-current loans and borrowings |
|
|
80,896 |
78,229 |
34,821 |
0 |
0 |
0 |
Other non-current liabilities |
|
|
6,699 |
9,641 |
8,872 |
31,258 |
119,746 |
79,522 |
Total non-current liabilities |
|
|
87,595 |
87,870 |
43,693 |
31,258 |
119,746 |
79,522 |
Trade and other payables |
|
|
7,030 |
23,487 |
17,037 |
55,381 |
59,056 |
41,447 |
Current loans and borrowings |
|
|
0 |
16,339 |
25,810 |
17,035 |
0 |
0 |
Other current liabilities |
|
|
5,711 |
16,290 |
13,250 |
6,742 |
6,742 |
6,742 |
Total current liabilities |
|
|
12,742 |
56,116 |
56,098 |
79,158 |
65,798 |
48,189 |
Equity attributable to company |
|
|
131,914 |
145,215 |
171,735 |
274,727 |
368,901 |
493,121 |
Non-controlling interest |
|
|
24,921 |
29,371 |
26,196 |
36,007 |
53,342 |
76,756 |
|
|
|
|
|
|
|
|
|
Cashflow statement |
|
|
|
|
|
|
|
|
Profit before tax |
|
|
(3,178) |
(2,632) |
(725) |
132,126 |
315,089 |
328,131 |
Net finance expenses |
|
|
0 |
5,456 |
15,616 |
8,359 |
0 |
0 |
Depreciation and amortisation |
|
|
20 |
7,927 |
26,504 |
26,634 |
33,085 |
41,560 |
Share based payments |
|
|
300 |
403 |
471 |
681 |
0 |
0 |
Other adjustments |
|
|
(6,272) |
(6,851) |
8,842 |
26,985 |
0 |
0 |
Movements in working capital |
|
|
3,942 |
(6,710) |
(20,281) |
(43,636) |
(8,458) |
(21,036) |
Interest paid / received |
|
|
0 |
(3,092) |
(11,378) |
(6,758) |
0 |
0 |
Income taxes paid |
|
|
0 |
0 |
(843) |
(2,196) |
(47,000) |
(138,663) |
Cash from operations (CFO) |
|
|
(5,188) |
(5,498) |
18,205 |
142,194 |
292,717 |
209,991 |
Capex |
|
|
(116,094) |
(22,720) |
(7,448) |
(22,516) |
(69,338) |
(87,457) |
Acquisitions & disposals net |
|
|
0 |
0 |
0 |
0 |
0 |
0 |
Other investing activities |
|
|
151 |
(46) |
(96) |
(3,014) |
0 |
0 |
Cash used in investing activities (CFIA) |
|
|
(115,943) |
(22,766) |
(7,544) |
(25,531) |
(69,338) |
(87,457) |
Net proceeds from issue of shares |
|
|
55,235 |
11,936 |
10,010 |
19,852 |
2,209 |
0 |
Movements in debt |
|
|
69,448 |
0 |
(18,735) |
(45,198) |
(17,035) |
0 |
Dividends paid |
|
|
0 |
0 |
0 |
(5,552) |
(70,301) |
(82,057) |
Other financing activities |
|
|
6,317 |
5,165 |
(1,319) |
(1,685) |
0 |
0 |
Cash from financing activities (CFF) |
|
|
131,000 |
17,100 |
(10,044) |
(32,582) |
(85,127) |
(82,057) |
Increase/(decrease) in cash and equivalents |
|
|
9,869 |
(11,164) |
617 |
84,081 |
138,252 |
40,477 |
Cash and equivalents at end of period |
|
|
17,105 |
5,941 |
6,559 |
90,640 |
228,892 |
269,369 |
Net (debt) cash |
|
|
(63,791) |
(88,627) |
(54,073) |
73,605 |
228,892 |
269,369 |
Movement in net (debt) cash over period |
|
|
(63,791) |
(24,836) |
34,554 |
127,678 |
155,287 |
40,477 |
Source: company sources, Edison Investment Research
|
|
Research: TMT
EQS Group continues to increase in scale and ambition, extending its remit into sustainability technology alongside its existing cloud-based offerings in corporate governance and investor relations. The recent capital raise of €45m gross at €33.00 per share puts the group on a more solid financial footing as it pursues the major opportunity in whistleblowing solutions and gives Gerlin NV a 6.2% stake. Management has reiterated its medium-term target for FY25 of group revenues of €130m and EBITDA margins of at least 30%. Our forecasts indicate that this is demanding but achievable.