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Research: Metals & Mining
Alphamin’s performance in Q321 came roaring back, after a Q2 in which it encountered an area of unexpectedly low grade. Overall, tonnes processed during the quarter were almost exactly in line with our prior expectations. However, the grade mined was 0.2pp better at 3.5% tin, while metallurgical recovery was 3.7pp better than Q2 after the commissioning of the fine tin recovery plant to result in the company’s second best quarter ever, in terms of tin production, after Q420. Coupled with an achieved tin price that was 19.5% better (quarter-on-quarter), this resulted in EBITDA guidance for the quarter of US$53.0m – 55.5% higher than Q221. Note that this report updates our forecasts for both Q321 and Q421. Full financial results are scheduled for 10 November.
Alphamin Resources |
Roaring back |
Q3 production results |
Metals & mining |
5 October 2021 |
Share price performance
Business description
Next events
Analyst
Alphamin Resources is a research client of Edison Investment Research Limited |
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Alphamin’s performance in Q321 came roaring back, after a Q2 in which it encountered an area of unexpectedly low grade. Overall, tonnes processed during the quarter were almost exactly in line with our prior expectations. However, the grade mined was 0.2pp better at 3.5% tin, while metallurgical recovery was 3.7pp better than Q2 after the commissioning of the fine tin recovery plant to result in the company’s second best quarter ever, in terms of tin production, after Q420. Coupled with an achieved tin price that was 19.5% better (quarter-on-quarter), this resulted in EBITDA guidance for the quarter of US$53.0m – 55.5% higher than Q221. Note that this report updates our forecasts for both Q321 and Q421. Full financial results are scheduled for 10 November.
Year end |
Revenue (US$m) |
PBT* |
EPS* |
DPS |
P/E |
Yield |
12/19 |
27 |
(3) |
0.01 |
0.00 |
118.5 |
N/A |
12/20 |
187 |
(1) |
(0.01) |
0.00 |
N/A |
N/A |
12/21e |
311 |
118 |
0.06 |
0.00 |
12.6 |
N/A |
12/22e |
265 |
94 |
0.05 |
0.00 |
14.1 |
N/A |
Note: *PBT and EPS are as reported.
Immediate results from new mining practices
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 an average tin grade of 3.5% for the quarter, including 3.8% processed during both August and September (implying, among other things, an average tin grade processed in July of c 2.9%). In addition to improved grade control, run-of-mine volumes and waste development were reported to have increased by 5% quarter-on-quarter and, although this probably caused costs to increase by marginally more than we would otherwise have expected, the company nevertheless provided EBITDA guidance of US$53.0m in Q321 (+55.5% cf Q221).
Achieves net cash
In addition to its production results, Alphamin reported that it is in a net cash position for the first time at the end of Q321 and that it will devise a strategy in Q4 to balance capital allocations between ongoing exploration drilling, the potential fast-track development of the Mpama South deposit and shareholder distributions.
Valuation: Exploration is key
Our valuation of Alphamin is under review pending a reconsideration of our long-term tin price. Assuming that the current three-month price of tin (US$33,835/t) prevails for the remainder of Bisie’s life however (ie adopting the current tin price as our long-term price), we calculate a valuation for Alphamin (excluding any blue-sky exploration potential) of 70.0 US cents, or 88.1 Canadian cents, per share. However, this would rise to potentially as high as US$1.58/share (C$2.00/share) in the event that management is successful in its exploration strategy (see Alphamin’s recent exploration updates) to the extent that it replenishes reserves and resources and keeps its plant at full capacity beyond FY27 and into the future.
Q321 production results
A summary of Alphamin’s production results for Q321 plus Edison’s updated financial forecasts (which also now consider the Q221 reported results) for FY21, by quarter (with the appropriate caveats – regarding the warrant charge and deferred tax, in particular), is provided in the table below:
Exhibit 1: Edison forecast of Alphamin income statement, Q121a–Q421e (US$ unless otherwise indicated)
Q121a |
Q221a |
Q321e |
Q421e |
FY21e |
FY21e |
|
Tons Processed (t) |
93,997 |
105,294 |
*108,901 |
108,000 |
416,192 |
383,072 |
Tin Grade (%) |
3.8 |
3.2 |
*3.5 |
3.4 |
3.46 |
4.03 |
Contained tin (t) |
3,572 |
3,369 |
*3,812 |
3,638 |
14,391 |
15,425 |
Overall plant recovery (%) |
74 |
72 |
*75.2 |
78 |
74.6 |
75.8 |
Actual payable tin produced (t) |
2,611 |
2,412 |
*2,832 |
2,850 |
10,739 |
11,693 |
Payable Tin Sold (t) |
3,351 |
2,404 |
*2,710 |
2,266 |
10,887 |
11,779 |
Tin Price achieved (US$/t) |
23,083 |
28,326 |
*33,863 |
33,023 |
29,143 |
27,111 |
Revenue |
76,032,045 |
68,053,576 |
91,768,730 |
74,821,772 |
310,676,123 |
318,012,509 |
Cost of goods sold |
(37,256,106) |
(29,780,333) |
(34,039,234) |
(24,717,131) |
(125,792,804) |
(119,019,873) |
Depreciation |
6,380,606 |
6,423,261 |
6,511,323 |
6,599,386 |
25,914,576 |
25,905,182 |
Gross profit |
32,395,333 |
31,849,982 |
51,218,173 |
43,505,255 |
158,968,743 |
173,087,454 |
General and administrative |
(4,549,884) |
(4,729,496) |
(4,729,496) |
(4,729,496) |
(18,738,372) |
(18,288,330) |
Operating profit/(loss) |
27,845,449 |
27,120,486 |
46,488,677 |
38,775,759 |
140,230,371 |
154,799,124 |
Other |
||||||
Warrants |
(5,636,827) |
(10,293,542) |
(15,930,369) |
(5,636,827) |
||
Profit on foreign exchange |
16,595 |
(45,653) |
(29,058) |
16,595 |
||
Loss on write off of assets |
0 |
0 |
0 |
0 |
||
Interest expense |
(2,648,401) |
(2,280,673) |
||||
Interest income |
11 |
298 |
||||
Net interest |
(2,648,390) |
(2,280,375) |
(1,235,712) |
(296,969) |
(6,461,446) |
(6,196,756) |
Profit before taxes |
19,576,827 |
14,500,916 |
45,252,964 |
38,478,790 |
117,809,498 |
142,982,136 |
Current income tax expense |
(11,113) |
(11,499) |
(11,313,241) |
(9,619,698) |
(20,955,551) |
(30,862,440) |
Deferred tax movement |
(8,713,199) |
(9,588,773) |
(18,301,972) |
(8,713,199) |
||
Total tax |
(8,724,312) |
(9,600,272) |
(11,313,241) |
(9,619,698) |
(39,257,523) |
(39,575,639) |
Effective tax rate (%) |
(44.6) |
66.2 |
25.0 |
25.0 |
33.3 |
27.7 |
Net profit/(loss) |
10,852,515 |
4,900,644 |
33,939,723 |
28,859,093 |
78,551,975 |
103,406,497 |
Other Comprehensive income |
||||||
Items that may be reclassified to profit or loss |
0 |
(7,237) |
(7,237) |
|||
Exchange differences on translation of foreign operations |
(1,803) |
0 |
(1,803) |
(1,803) |
||
Total comprehensive profit/(loss) for the period |
10,850,712 |
4,893,407 |
33,939,723 |
28,859,093 |
78,542,935 |
103,404,694 |
Profit/(loss) and total comprehensive profit/(loss) attributable to: |
||||||
Shareholders |
8,002,190 |
4,900,644 |
28,556,883 |
24,282,041 |
65,741,758 |
85,877,110 |
Non-controlling interests |
2,850,325 |
0 |
5,382,840 |
4,577,052 |
12,810,217 |
17,529,387 |
Minority (%) |
26.3 |
0.00 |
15.86 |
15.86 |
16.3 |
17.0 |
Total |
10,852,515 |
4,900,644 |
33,939,723 |
28,859,093 |
78,551,975 |
103,406,497 |
Weighted average number of shares in period |
1,182,251,580 |
1,188,156,191 |
1,192,267,057 |
1,192,267,057 |
1,188,897,472 |
1,184,798,408 |
Derivatives |
119,536,582 |
95,621,651 |
95,181,199 |
95,181,199 |
95,181,199 |
98,507,626 |
Fully diluted weighted average number of shares in issue |
1,301,788,162 |
1,283,777,842 |
1,287,448,256 |
1,287,448,256 |
1,284,078,671 |
1,283,306,034 |
Headline earnings |
8,002,190 |
4,900,644 |
28,556,883 |
24,282,041 |
65,741,758 |
85,877,110 |
EPS (US$/share) |
0.0068 |
0.0041 |
0.0240 |
0.0204 |
0.0553 |
0.0725 |
Diluted EPS (US$/share) |
0.0061 |
0.0038 |
0.0222 |
0.0189 |
0.0512 |
0.0669 |
HEPS (US$/share) |
0.0068 |
0.0041 |
0.0240 |
0.0204 |
0.0553 |
0.0725 |
Diluted HEPS (US$/share) |
0.0061 |
0.0038 |
0.0222 |
0.0189 |
0.0512 |
0.0669 |
Source: Alphamin, Edison Investment Research. Note: Company presented basis; *Actual.
Exhibit 2: Financial summary
Accounts: IFRS, Yr end: December, US$000s |
|
|
2018 |
2019 |
2020 |
2021e |
2022e |
Income statement |
|
|
|
|
|
|
|
Total revenues |
|
|
0 |
27,221 |
187,445 |
310,676 |
265,366 |
Cost of sales |
|
|
0 |
(7,915) |
(119,554) |
(125,793) |
(125,809) |
Gross profit |
|
|
0 |
19,306 |
67,892 |
184,883 |
139,558 |
SG&A (expenses) |
|
|
(9,440) |
(14,526) |
(17,238) |
(18,738) |
(18,918) |
Other income/(expense) |
|
|
0 |
0 |
0 |
0 |
0 |
Exceptionals and adjustments |
|
0 |
(3,673) |
(7,649) |
0 |
0 |
|
Depreciation and amortisation |
|
|
(20) |
(7,927) |
(25,471) |
(25,915) |
(26,831) |
Reported EBIT |
|
|
(9,460) |
(3,147) |
25,182 |
140,230 |
93,808 |
Finance income/(expense) |
|
|
3 |
(6,330) |
(15,614) |
(6,461) |
102 |
Other income/(expense) |
|
|
7 |
(4) |
(1,518) |
(29) |
0 |
Exceptionals and adjustments |
|
6,272 |
6,850 |
(8,776) |
(15,930) |
0 |
|
Reported PBT |
|
|
(3,178) |
(2,632) |
(725) |
117,809 |
93,910 |
Income tax expense (includes exceptionals) |
|
|
0 |
7,755 |
(7,141) |
(39,258) |
(23,477) |
Reported net income |
|
|
(3,178) |
5,123 |
(7,866) |
78,552 |
70,432 |
Basic average number of shares, m |
|
|
733 |
845 |
1,066 |
1,189 |
1,192 |
Basic EPS (US$/share) |
|
|
(0.00) |
0.01 |
(0.01) |
0.06 |
0.05 |
|
|
|
|
|
|
|
|
Adjusted EBITDA |
|
|
(9,440) |
8,453 |
58,302 |
166,145 |
120,640 |
Adjusted EBIT |
|
|
(9,460) |
526 |
32,831 |
140,230 |
93,808 |
Adjusted PBT |
|
|
(9,450) |
(5,809) |
15,699 |
133,740 |
93,910 |
Adjusted EPS (C$/share) |
|
|
(0.00) |
0.01 |
(0.01) |
0.07 |
0.06 |
Adjusted diluted EPS (US$/share) |
|
|
(0.00) |
0.00 |
(0.01) |
0.05 |
0.05 |
|
|
|
|
|
|
|
|
Balance sheet |
|
|
|
|
|
|
|
Property, plant and equipment |
|
|
230,626 |
255,125 |
239,103 |
221,995 |
199,502 |
Other non-current assets |
|
|
2,467 |
10,632 |
15,882 |
22,033 |
24,743 |
Total non-current assets |
|
|
233,093 |
265,757 |
254,985 |
244,028 |
224,244 |
Cash and equivalents |
|
|
17,105 |
5,941 |
6,559 |
20,337 |
117,569 |
Inventories |
|
|
3,235 |
27,755 |
21,866 |
17,023 |
14,541 |
Trade and other receivables |
|
|
0 |
1,486 |
7,601 |
31,068 |
26,537 |
Other current assets |
|
|
3,738 |
17,633 |
6,710 |
6,710 |
6,710 |
Total current assets |
|
|
24,078 |
52,815 |
42,736 |
75,138 |
165,356 |
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 |
17,281 |
17,283 |
Current loans and borrowings |
|
|
0 |
16,339 |
25,810 |
0 |
0 |
Other current liabilities |
|
|
5,711 |
16,290 |
13,250 |
13,250 |
13,250 |
Total current liabilities |
|
|
12,742 |
56,116 |
56,098 |
30,531 |
30,533 |
Equity attributable to company |
|
|
131,914 |
145,215 |
171,735 |
240,757 |
300,018 |
Non-controlling interest |
|
|
24,921 |
29,371 |
26,196 |
39,006 |
50,176 |
|
|
|
|
|
|
|
|
Cashflow statement |
|
|
|
|
|
|
|
Profit before tax |
|
|
(3,178) |
(2,632) |
(725) |
117,809 |
93,910 |
Net finance expenses |
|
|
0 |
5,456 |
15,616 |
0 |
0 |
Depreciation and amortisation |
|
|
20 |
7,927 |
26,504 |
25,915 |
26,831 |
Share based payments |
|
|
300 |
403 |
471 |
0 |
0 |
Other adjustments |
|
|
(6,272) |
(6,851) |
8,842 |
0 |
0 |
Movements in working capital |
|
|
3,942 |
(6,710) |
(20,281) |
(18,380) |
7,016 |
Interest paid / received |
|
|
0 |
(3,092) |
(11,378) |
0 |
0 |
Income taxes paid |
|
|
0 |
0 |
(843) |
(39,258) |
(23,477) |
Cash from operations (CFO) |
|
|
(5,188) |
(5,498) |
18,205 |
86,087 |
104,280 |
Capex |
|
|
(116,094) |
(22,720) |
(7,448) |
(14,957) |
(7,048) |
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) |
(14,957) |
(7,048) |
Net proceeds from issue of shares |
|
|
55,235 |
11,936 |
10,010 |
3,280 |
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) |
(57,351) |
0 |
Currency translation differences and other |
|
|
0 |
0 |
0 |
0 |
0 |
Increase/(decrease) in cash and equivalents |
|
|
9,869 |
(11,164) |
617 |
13,778 |
97,232 |
Cash and equivalents at end of period |
|
|
17,105 |
5,941 |
6,559 |
20,337 |
117,569 |
Net (debt) cash |
|
|
(63,791) |
(88,627) |
(54,073) |
20,337 |
117,569 |
Movement in net (debt) cash over period |
|
|
(63,791) |
(24,836) |
34,554 |
74,410 |
97,232 |
Source: Company sources, Edison Investment Research
|
|
Research: TMT
Expert.ai reported 11% y-o-y revenue growth in H121, and as a result of the focus on product development and strengthening the sales and marketing function the EBITDA loss widened to €7.0m from €4.6m in H120. We maintain our forecasts for FY21, which assume similar seasonality to previous years. The planned shift in listing from AIM Italia to Borsa Italiana should widen the potential investor audience for expert.ai and improve liquidity.
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