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GIGAChad

4,970 Posts.

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12/05/23

10:10

Post #: 67737606
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Originally posted by RoyE: ↑

Many on here have posted that ADN is cheap and have questioned why anyone would sell now (with the new management and mine approval in place etc).

Personally, I see it somewhat differently:

- IMO ADN is not cheap. Yes, it's cheap compared to historical prices but they were simply ridiculous as most now accept. I say most as I still see posters writing that they won't sell for under $0.16 etc. $0.16 represents a market cap of approx $500 million. Why would ADN be worth $500 million? The only way this would be plausible is if they pull a massive rabbit out of the hat, which personally I doubt will happen (and I'll only believe it when it's absolutely set in stone, not because JM/other say it may happen).
- ADN's Enterprise value is still nearly $100 million. $100 million. And what have they actually got in rock sold commercial business case after nearly 3 years of marketing and product promotion - a BOA of ceramics, a BOA for paint additive and a BOA for the concentrate product with capital cost $50+ million still to come.
- Re the concrete additive, personally I'm skeptical re the commercial viability of this. Note that it appears that this concrete additive was not mentioned in the recent Carbon Capture announcement at the end of the announcement where it describes ADN's businesses. If I were a shareholder I would ask ADN management very directly about the viability of this concrete additive - I would expect that they have a very good idea by now about its commercial viability. Hopefully it won't be like the Carbon capture where shareholders were chasing news for months and months and months and then eventually ADN came clean.
- HPA is miles off - it has large capital cost $200+ million and ADN has no competitive advantage in HPA except an attractive feedstock (feedstock is a secondary consideration for HPA, with the overriding issue being technology/capital cost).
- The Au and REE JV's aren't worth much (< $10 million) unless they get very lucky and hit serious paydirt with further drilling.

IMO ADN will become a producer and incrementally over the years secure more customers and start to make a reasonable return. However, I don't see them shooting the lights out anytime soon. IMO there is a fairly long road ahead - secure finance (most likely via a large capital raise, I'm skeptical re their ability to borrow funds from financiers but of course I may be proven wrong), start producing and incrementally secure extra customers as their product gets out into the market and gains a good reputation for quality and reliability, so that they can gradually crank up volumes to bring down unit costs to ultimately become a profitable kaolin (and associated products) producer. IMO this process will take a number of years, not months. I expect the share price to track real progress made (i.e. the pump and dump days are over for ADN). IMO this means that future share price gains will be muted and will only occur when real tangible progress (as opposed to irresponsible promotion) is delivered. In the short term I expect we may see some further price weakness in anticipation of a possible capital raise and until a clear and viable pathway forward is clearly spelt out.

GLTA & DYOR

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I think around 2c (~$50m mc) is nearing fair value, infact i think i said that 2 years ago but ofcourse i was just a downramper at that point before.

ADN Price at posting: 3.4¢ Sentiment: Sell Disclosure: Not Held
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0 Great analysis

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