MNB (ASX) Ann: Quarterly Activities Report and Appendix 5B

Originally posted by chuk: ↑

"No update on funding essentially. This is in contrast with the confidence displayed via phone calls"

How can you expect an update on funding until it's closed? It is undergoing its normal DD. Regardless of how confident the management is of closing the finance, when the company receives the final approval, they will announce it. What are they supposed to announce in the meantime other than what was announced today?

In the quarter report, the closing cash balance of $4.6million was estimated to be sufficient funding for 1.5 quarters or 4.5 months based on the ASX reporting requirements but I'd expect that it would probably be significantly less than 4.5 months. They might spend a million dollars over the next month on earthworks for example. However, I don't think we will get anywhere near even 2 or 3 months before the IDC loan is approved and that would allow the company to fully ramp up construction work.
Could there be a cr as well? After the US$14mill IDC loan is received, they will need another US$12mill. That could be less now after they announced further reductions in spending yesterday. They are also still negotiating that last part of the funding. Maybe there will be a cr and maybe there won't but any potential dilution won't be "massive" as one poster claimed.
The current mc is $68mill. What will the mc be after the IDC loan is approved and the construction goes full pace?
$80, 90 or 100mill? Who knows but assuming any cr is done at the lower end of that range at say $80mill (10c cr) and assuming the company raised the full US$12mill as equity, that's A$18mill. That dilutes the stock by 22%. That's significant but it certainly is not "massive" and it's less than 22% when factoring in rthe fully diluted shares which I always do when estimating upside potential.
To put it into perspective;
Assuming the market cap will reach the base case, after tax NPV once in full production later this year. That's US$202mill or A$307mill.
At the current share base and allowing for dilution from all existing options, the fully diluted mc is $74mill at 8.6c.
Upside to the NPV is 4.1 times. That is factoring in that all outstanding options are exercised. That conversion would raise $6mill in cash for the company. More than half of those options have an exercise price of 10c, 15c and 17c but I expect all will get exercised because I expect the sp to easily exceed 17c before they expire.
So 4.1 times upside to NPV equates to 36c.
If the company raised the full $18mill as described above for 22% more shares on issue, the fully diluted market cap at 10c would be A$105mill (A$87mill without the cr). Upside from that 10c price and $105mill mc would be 2.9 times and equates to 29.5c.
36c sounds better than 29.5c but 29.5c sounds a hell of a lot better than the current 8.6c and there certainly is no guarantee of any cr - but even if one is done for the full remaining US$12mill, we could still expect around 3.4 times upside from the current 8.6c sp in less than 12 months.
Based on this, I'd expect a 90% chance or better for at least 100% upside from here inside of 12months with plenty of room for much more upside if the mc does reach the after tax NPV (better than three fold upside) or if there is less dilution than assumed above or if the market cap starts to factor in some valuation for the very promising green ammonia project, how much more upside might we expect? To me, 30c within a year seems very realistic if the company is in full production. There is also upside potential from the South African exports not factored in above.
More importanbtly, the calculations above do not allow for the strongly upgraded production guidance recently released.
Risks of competing products is very low based on pricing and freight advantages as well as a binding MOU and the government support for the local product. Technical risk on a beneficiated phosphate fertiliser is very low. Years of field trials remove almost all performance risks. I don't know of any other stock where I can be this confident of a minimum 2-3 fold increase in 12 months even allowing for a cr to complete funding and all existing options being exercised, with more upside if updated guidance is met and as the green ammonia project progresses.

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. I don't know of any other stock where I can be this confident of a minimum 2-3 fold increase in 12 months even allowing for a cr to complete funding and all existing options being exercised, with more upside if updated guidance is met and as the green ammonia project progresses.

Last edited by chuk: 31/01/24
MNB Price at posting: 8.5¢ Sentiment: Buy Disclosure: Held

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Last 4.7¢		Change 0.002(4.44%)		Mkt cap ! $45.82M

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4.5¢	4.7¢	4.4¢	$10.31K	227.4K

Ann: Quarterly Activities Report and Appendix 5B, page-228

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