Joel’s Resource Report – underperformers coming to the fore? #MKA #ADT1 $ADT

Joel’s Resource Report – underperformers coming to the fore? #MKA #ADT1 $ADT

At the time of writing the author holds a long positions in the companies mentioned

Hi all, I hope your portfolios have been putting in slightly more performance than mine!

Over the past week or so a couple of companies that I’ve previously covered have put out announcements that may be of interest.

Mkango – Titanium exploration program

Mkango resources owns 51% of the globally significant Songwe rare earths project in Malawi.

It’s is a company which I previously held in both my ISA and SIPP. I sold the shares in my ISA after being disappointed in the company’s incredibly slow feasibility study schedule.

The company’s lack of pace is so slow that I almost wonder whether they want to release the feasibility study.

Last week Mkango made an announcement which made me take a another a news flow they’ve made a few announcements which may be of note:

  1. Rare Earth’s Recycling project – personally I wish the company would focus on delivering the Songwe project as the company’s other R&D investments haven’t exactly a resounding success.
  2. Rutile & Ilmenite Discovery – Rutile & Ilmenite both contain titanium. Rutile primarily contains titanium dioxide (TiO2) and is the most common natural form of TiO2. Rutile doesn’t require the type of processing which Ilmenite does which dramatically increases margins to those with Rutile projects.
    1. Mkango Resources probably got the idea to look for Rutile due to ASX listed peer Sovereign Metals who’ve made a high grade Rutile discovery in Malawi.
  3. Rutile Exploration Program – given that Rutile is highly valuable it’s great that Mkango are exploring for it. It adds another string to the company’s bow.

I’m still not a huge fan of Mkango management given their sloth like execution however with the feasibility study due next year and a potential meaningful Rutile discovery the shares may continue to interest investors.

Adriatic Metals – Full steam ahead

I recently covered Adriatic and noted my disappointment that the NPV/IRR numbers hadn’t been improved.

Since then the company has made the following announcements:

  1. Binding Terms Signed for $28 million financing – key terms:
    1. $20 million 8.5% convertible debentures to Queen’s Road Capital Investment Ltd
    2. $8 million shares at a subscription price of £1.175 to European Bank for Reconstruction and Development (EBRD)
  2. Sandfire Litigation Update – Adriatic and Sandfire have agreed that Sandfire will pay ~$8.5 million for nearly ~$5 million pursuant to Sandfire’s anti-dilution right.

I’m not at all surprised to see that the EBRD is investing into Adriatic’s project. It’s a high-quality project which will provide meaningful employment in a country which sorely needs it. Adriatic and Sandfire’s agreement is great news for investors in both companies – litigation is typically costly and time consuming.

Despite my lack of enthusiasm at the feasibility Adriatic continues to deliver and Sprott have also released a positive note on the company which may explain the recent uptick in the share price.

Till next week!

 

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