“Edison’s accessible and high-quality research gives us the opportunity to communicate an independent perspective of Tyman to a wide variety of potential stakeholders.”
Currency in CAD
Last close As at 07/06/2023
CAD0.83
— 0.00 (0.00%)
Market capitalisation
CAD1,057m
Research: Metals & Mining
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.
Alphamin Resources |
Presenting the bull case |
Updating FY22 estimates |
Metals & mining |
8 December 2021 |
Share price performance
Business description
Next events
Analyst
Alphamin Resources is a research client of Edison Investment Research Limited |
|||||||||||||||||||||||||||||||||||||||||||||||||
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$39,020/t, a 66.6% premium to our prior long-term price. It is Edison’s normal practice to use spot prices for near-term (ie quarterly) forecasts within the same financial year and then to use long-term prices thereafter. In recognition of the wide divergence of tin prices from our prior long-term prices this year, however, this note updates our forecasts on the assumption that the tin price remains at current levels throughout FY22. Note that this is the assumption on which our contingent valuation (below) is already based.
Year end |
Revenue (US$m) |
PBT* |
EPS* |
DPS |
P/E |
Yield |
12/19 |
27 |
(3) |
0.01 |
0.00 |
76.0 |
N/A |
12/20 |
187 |
(1) |
(0.01) |
0.00 |
N/A |
N/A |
12/21e |
341 |
135 |
0.06 |
0.00 |
12.7 |
N/A |
12/22e |
442 |
251 |
0.13 |
0.00 |
5.8 |
N/A |
Note: *PBT and EPS are as reported.
Increasing tin price forecasts
From its pandemic low of US$13,335/t on 23 March 2020, the (cash) tin price has advanced in an almost unbroken fashion to reach US$39,214/t at the time of writing (ie a 0.5% premium to the three-month price, above), with accelerated price appreciation since it reached US$18,642/t on 30 November 2020. It surpassed Edison’s erstwhile long-term price of US$23,425/t on 29 January 2021 and, according to a recent poll of 16 base metals analysts by Reuters, is now expected to average US$30,580/t in CY22. The lowest price forecast in the poll was US$25,250/t, which was nevertheless 14.8% higher than the most bullish forecast of US$22,000/t in the equivalent poll in January 2021, which at the time recorded a mean expectation for CY22 of US$19,800/t. Recently, Fitch Solutions increased its CY22 forecast by 25%, from US$26,000/t to US$32,500/t, and expects it to remain on a ‘firm uptrend’ in the coming decade, with an average of US$35,500/t by 2030.
Valuation: US$0.858 or C$1.083/share
Our valuation of Alphamin remains under review pending a reconsideration of our long-term tin price. In the meantime, assuming that the current three-month price of tin (US$39,020/t cf US$33,863/t in Q321) prevails for the remainder of Bisie’s 11-year life (ie adopting the current tin price as our long-term price) and with some slight refinements to operating and capital costs in FY22, we calculate an ostensibly unchanged valuation for Alphamin (excluding any blue-sky exploration potential) of 85.8 US cents, or 108.3 Canadian cents, per share. However, this rises to potentially as high as US$1.91/share (C$2.39/share) in the event that management is successful in its exploration strategy to the extent that it replenishes reserves and resources and keeps its plant at full capacity beyond FY27 (at the prevailing tin price). Note that, within this context, recent exploration activity has both narrowed the gap between Mpama North and Mpama South and substantially increased the zone of high-grade mineralisation at Mpama South leading to the possibility of an expedited development strategy.
Updated FY22 estimates
Exhibit 1: Financial summary
Accounts: IFRS, year-end: December, US$000s |
|
|
2018 |
2019 |
2020 |
2021e |
2022e |
INCOME STATEMENT |
|
|
|
|
|
|
|
Total revenues |
|
|
0 |
27,221 |
187,445 |
340,645 |
442,032 |
Cost of sales |
|
|
0 |
(7,915) |
(119,554) |
(133,072) |
(141,807) |
Gross profit |
|
|
0 |
19,306 |
67,892 |
207,573 |
300,225 |
SG&A (expenses) |
|
|
(9,440) |
(14,526) |
(17,238) |
(19,841) |
(21,123) |
Exceptionals and adjustments |
|
0 |
(3,673) |
(7,649) |
0 |
0 |
|
Depreciation and amortisation |
|
(20) |
(7,927) |
(25,471) |
(26,492) |
(28,023) |
|
Reported EBIT |
|
(9,460) |
(3,147) |
25,182 |
161,240 |
251,079 |
|
Finance income/(expense) |
|
3 |
(6,330) |
(15,614) |
(6,365) |
209 |
|
Other income/(expense) |
|
7 |
(4) |
(1,518) |
(152) |
0 |
|
Exceptionals and adjustments |
|
6,272 |
6,850 |
(8,776) |
(20,050) |
0 |
|
Reported PBT |
|
|
(3,178) |
(2,632) |
(725) |
134,672 |
251,288 |
Income tax expense (includes exceptionals) |
|
|
0 |
7,755 |
(7,141) |
(48,215) |
(62,822) |
Reported net income |
|
|
(3,178) |
5,123 |
(7,866) |
86,457 |
188,466 |
Basic average number of shares, m |
|
|
733 |
845 |
1,066 |
1,188 |
1,194 |
Basic EPS (US$/sh) |
|
|
(0.00) |
0.01 |
(0.01) |
0.06 |
0.13 |
Adjusted EBITDA |
|
|
(9,440) |
8,453 |
58,302 |
187,732 |
279,102 |
Adjusted EBIT |
|
|
(9,460) |
526 |
32,831 |
161,240 |
251,079 |
Adjusted PBT |
|
|
(9,450) |
(5,809) |
15,699 |
154,723 |
251,288 |
Adjusted EPS (C$/sh) |
|
|
(0.00) |
0.01 |
(0.01) |
0.08 |
0.17 |
Adjusted diluted EPS (US$/sh) |
|
|
(0.00) |
0.00 |
(0.01) |
0.06 |
0.12 |
BALANCE SHEET |
|
|
|
|
|
|
|
Property, plant and equipment |
|
|
230,626 |
255,125 |
239,103 |
223,271 |
199,586 |
Other non-current assets |
|
|
2,467 |
10,632 |
15,882 |
23,871 |
36,581 |
Total non-current assets |
|
|
233,093 |
265,757 |
254,985 |
247,142 |
236,167 |
Cash and equivalents |
|
|
17,105 |
5,941 |
6,559 |
41,894 |
226,838 |
Inventories |
|
|
3,235 |
27,755 |
21,866 |
18,666 |
24,221 |
Trade and other receivables |
|
|
0 |
1,486 |
7,601 |
34,065 |
44,203 |
Other current assets |
|
|
3,738 |
17,633 |
6,710 |
6,710 |
6,710 |
Total current assets |
|
|
24,078 |
52,815 |
42,736 |
101,334 |
301,972 |
Non-current loans and borrowings |
|
|
80,896 |
78,229 |
34,821 |
0 |
0 |
Other non-current liabilities |
|
|
6,699 |
9,641 |
8,872 |
8,872 |
8,872 |
Total non-current liabilities |
|
|
87,595 |
87,870 |
43,693 |
8,872 |
8,872 |
Trade and other payables |
|
|
7,030 |
23,487 |
17,037 |
18,278 |
19,474 |
Current loans and borrowings |
|
|
0 |
16,339 |
25,810 |
0 |
0 |
Other current liabilities |
|
|
5,711 |
16,290 |
13,250 |
33,301 |
33,301 |
Total current liabilities |
|
|
12,742 |
56,116 |
56,098 |
51,579 |
52,775 |
Equity attributable to company |
|
|
131,914 |
145,215 |
171,735 |
246,877 |
405,453 |
Non-controlling interest |
|
|
24,921 |
29,371 |
26,196 |
41,148 |
71,039 |
CASH FLOW STATEMENT |
|
|
|
|
|
|
|
Profit before tax |
|
|
(3,178) |
(2,632) |
(725) |
134,672 |
251,288 |
Net finance expenses |
|
|
0 |
5,456 |
15,616 |
0 |
0 |
Depreciation and amortisation |
|
|
20 |
7,927 |
26,504 |
26,492 |
28,023 |
Share based payments |
|
|
300 |
403 |
471 |
0 |
0 |
Other adjustments |
|
|
(6,272) |
(6,851) |
8,842 |
20,050 |
0 |
Movements in working capital |
|
|
3,942 |
(6,710) |
(20,281) |
(22,022) |
(14,498) |
Interest paid / received |
|
|
0 |
(3,092) |
(11,378) |
0 |
0 |
Income taxes paid |
|
|
0 |
0 |
(843) |
(48,215) |
(62,822) |
Cash from operations (CFO) |
|
|
(5,188) |
(5,498) |
18,205 |
110,978 |
201,992 |
Capex |
|
|
(116,094) |
(22,720) |
(7,448) |
(18,649) |
(17,048) |
Acquisitions & disposals net |
|
|
0 |
0 |
0 |
0 |
0 |
Other investing activities |
|
|
151 |
(46) |
(96) |
0 |
0 |
Cash used in investing activities (CFIA) |
|
|
(115,943) |
(22,766) |
(7,544) |
(18,649) |
(17,048) |
Net proceeds from issue of shares |
|
|
55,235 |
11,936 |
10,010 |
3,638 |
0 |
Movements in debt |
|
|
69,448 |
0 |
(18,735) |
(60,631) |
0 |
Dividends paid |
|
|
0 |
0 |
0 |
0 |
0 |
Other financing activities |
|
|
6,317 |
5,165 |
(1,319) |
0 |
0 |
Cash from financing activities (CFF) |
|
|
131,000 |
17,100 |
(10,044) |
(56,994) |
0 |
Increase/(decrease) in cash and equivalents |
|
|
9,869 |
(11,164) |
617 |
35,335 |
184,944 |
Cash and equivalents at end of period |
|
|
17,105 |
5,941 |
6,559 |
41,894 |
226,838 |
Net (debt)/cash |
|
|
(63,791) |
(88,627) |
(54,073) |
41,894 |
226,838 |
Movement in net (debt)/cash over period |
|
|
(63,791) |
(24,836) |
34,554 |
95,967 |
184,944 |
Source: company sources, Edison Investment Research. Note: Income statement forecasts exclude ‘warrant charges’.
|
|
Research: Industrials
OPG Power Venture (OPG) has modern thermal power generation assets and a strong balance sheet to see it through the current coal price headwind, which is also masking the short-term valuation. Future value generation could also come from the intention to expand renewables activities, which could benefit from the group’s current roster of captive customers.
Get access to the very latest content matched to your personal investment style.
