Guys, I visited ADN yesterday, met with James, Nick, Joe and the team. Here is my take. I’ll try and be as unbiased as I can, knowing that as a significant holder, negative comments may hurt me.
·WhilstI was super excited, like all of us, when we got close to being a $1B company,we are not there yet. IMO, we need to become a whole lot more corporate beforewe deserve that valuation.
·Offtakes,concrete additives, and research turning into money are a bit harder to achievethan everybody had hoped. The wheels in the real world always move a lot slowerthan one expects in the phases of early excitement. Inertia is far and wide andtakes time and energy to overcome. But it will happen. The fundamentals arejust so strong.
·Theindustry, as we know, is very different to iron ore, Cu, or Li etc. There areno massive individual manufacturing offtakes. Hence, there is a fine balancebetween smaller direct OTAs at higher margins, and larger OTAs with adistributor and smaller margins. Standard business decisions that many of usface all day every day.
·Potentialwith concrete additive, the high purity kaolin and halloysite (HPA, carboncapture, slow release fertiliser, water treatment, micro plastics etc) remains.Very promising research is ongoing. Whilst funding at Uni of Newcastle has beencut drastically, Prof Vinu’s team has remained relatively unscathed with some60(!) people working in his team. Any breakthrough there, (and I believe Jamesand Rhod visited them for more than scones and a signing ceremony) could open up stratospheric opportunities, especially as ADN is set up to double dip:1. Capture the IP value, and then 2. Sell additional product at unbelievablemargins!
·Seeingthe product with your own eyes and holding the vials in your own hands, thewhite brightness and the shapes – and understanding that some almost comes outof the ground like that is awe inspiring.
·Somany irons in the fire. As I’ve always said, ADN is not a one trick pony, verydifferent to all other junior miners I know. Start simple, then, as you earncash, advance, largely self funded. Little dilution. Simple process. Low risk.All you may need is a little bit more patience. Where do you get that?
·Asmentioned, plant will be modular and flexible. That is a good things. Allows usto respond to different product specs, and again, be more resilient. I believe DFS willshow how that affects initial IRR vs a possible slightly later but larger NPV and profit,and also vs self financed component. Many options on the table. As I’ve saidbefore, not trivial at all.
·Everythingis on track. You can feel the vibe. Nobody is worried. They are just getting onwith it. Working hard. Building a team. Culture. Appointing senior people and engineers.Working through the mining application process. Public exhibition has closed.All as per process. DFS on track.
·Ihave no doubt the mine – and we really should not call it that, it is a quarry- will be built and will be spectacularly profitable. The product will be sold.You could even proceed on the basis: Built it and they will come as the marketis rock solid, not hyped, with a very stable yet steadily increasing demand,and decreasing supply.
·Infact, we do not even need an OTA to finance the quarry establishment. Evenafter the recent SP drop, our costs are still well less than 20% of our mc. I am not worried that we cannot sell our product, andneither is James. Because we have something fantastic, a very unique product witha long mine life that is in demand, will remain in demand and will increasinglybe even more demanded including some truly transformational applications (carbon capture, hydrogen, medicine) with a massive global impact.
That is blue sky stuff though. But, if you not only want to be able to leave your children a $ADN inheritance, but also say that you supported the company that brought e.g. a viable carbon storage technology to market, and you are very LT, then that's a much more worthwhile investment ethos to have, IMO, than making your money spreading FUD and shorting.
·Allwe need is patience, and the guts to stomach the occasional dip when news isnot as fantastic or fast as we may have been expecting.
I now believe the current process – while very painful – may have been healthy, especially if it entices a large institutional holder to come onboard. I do believe we need that, but these guys often do not want to make a move until the DFS is released. If you have a healthier risk appetite, you can see the value others cannot see, and you have at least a 12-18 months investment outlook, IMO, I’d consider ADN (not investment advice). I’ll certainly share this with my family and friends as a fair dinkum Aussie story where, for a change, us small battlers can make some decent coin, as long as we hold our nerves when it storms.
IMO, my gut feel current fair value is around the 30-35c mark. That still represents an amazing >50% upside for those jumping in now, or any additional parcel you buy now.
(20min delay)