Some updates below on some of recent developments. Much of the developments seem positive and I’ll try to give many disclaimers as I don’t like seeing things through purely rose tinted glasses
1/ Heaps of positive catalysts over next 6-9 months
I mentioned in a comment last week that ADT has heaps of positive catalysts over the next 6-9 months with lots of potential positive news flow.
https://hotcopper.com.au/threads/go...r-on-its-way.5510916/page-19?post_id=46007532
ADT is
actively working on bringing most of those catalysts to fruition, as seen in presentation in this thread. I mentioned in my conclusion that it is very important to note that other catalysts like Augusta group involvement, takeover offers, commodities rising,
silver rising etc. could all act as further wild cards and
possibly even bigger catalysts than above.
I’d assume that “wild card” silver’s rise could potentially have been one of the catalysts for last week’s rise, which I’ll talk about more later in this comment.
2/ Pauls’ views on $1 vs $2 billion valuation
Many thanks to
@seventhseal for sharing Paul’s views
https://hotcopper.com.au/threads/go...r-on-its-way.5510916/page-53?post_id=46034000
Daniel Earle basically seems to suggest that Paul might not be able to avoid the temptation of succumbing to multiple $1 billion takeover offers to hold on till a bigger $2 billion offer comes up to which Paul seems to be suggesting that he’s
not going to waste the great once in a lifetime opportunity of Vares and this is possible just the start. Let’s analyse it more below -
3/ Share price at different valuations
3A/ Share capital -
Go to page 15/20 of presentation in this thread.
Shares on issue
179.8 million
Options and performance rights
23.4 million
Diluted capital = 179.8 +23.4 =
203.2 million
ADT has mentioned elsewhere that after the Teth deal, Teth shareholders would own approx 6.9 of issued and outstanding ADT shares. I’m not sure but think they are talking about the 179.8 million figure above.
I’ll just round the whole thing (after dilution) to around approx 220 million shares to analyse a potential valuation.
3B/ Valuation -
220 million shares @ approx $2 per share (recent price), we get a diluted valuation of around $440 million.
220 million shares @ approx $4.5 per share, we get a diluted valuation of around $990 million.
220 million shares @ approx $9 per share, we get a diluted valuation of around $1980 million.
So in share price terms, Paul is essentially suggesting that even $4.5 per share is grossly undervaluing the company and he might hang on for more.
3 C/ Disclaimer -
A disclaimer here is that these
things take time. Also there are often
lots of hurdles along the way in achieving a bigger valuation. Companies need to
preserve cash (Extremely important) along with the way to avoid emergency capital raises which kill share price. Also ADT might have to face
vultures along the way who might want to take us over for a much lower value.
4/ Big Bosnian
Paul has talked about ADT’s bigger ambitions as shown by the recent Teth deal and of the
other opportunities in former Yugoslavia.
Anyone following ADT since long will know that ADT has always referred to itself as “
The Big Bosnian.” ADT has also mentioned in past that it is possession of
old Yugoslav era technical reports.
It could be another wild card to look out for in time to come if ADT has much broader plans in the region, to become much bigger, and take advantage of its first mover advantage in Bosnia
Disclaimer - ADT’s first focus right now should be to
preserve cash. These broader plans could involve some cash outlay, and ADT’s first focus should be on having enough cash for completion of the PFS and then DFS and then financing of Vares capex.
ADT has however done well in preserving cash with the Teth deal as it is a share based transaction, and it would be interesting to see if ADT has similar plans going forward.
5/ Silver
I passed a lengthy comment on July 6 and spoke lots about silver and precious metals (points 11 to 14)
https://hotcopper.com.au/threads/sup-karl.5483883/page-25?post_id=45682731
I was checking some recent silver prices and these are some figures (USD)-
https://au.investing.com/commodities/silver
Low of year (also multi year low) – $11.68
High of year (also multi year high) – $23.67 (last week)
July 6 (my comment referred to above) – Seems to be somewhere approx between $18.3 to $18.7
That is an approx $5 gain or around 25-30% gain just in last few weeks since my July 6 comment where I wrote that silver has fundamentals for a mega bubble.
As I acknowledged there, some of what I wrote about silver would sound like pure ramping
but we see clearly now it was not. Silver has given people a small taste of what I was talking about. As I’ve mentioned, many gold investors consider silver as “gold on steroids”.
Importantly, last week could even potentially be a far bigger breakout over here.
5 year chart shows that we’ve essentially moved from a multi year low (March) to a multi year high (last week)
https://www.finviz.com/futures_charts.ashx?t=SI&p=w1
Take a look at longer chart of silver over past 12 years and you’ll see that we
could potentially have just powered through a much bigger resistance level around $20-21
https://www.finviz.com/futures_charts.ashx?t=SI&p=m1
Silver faced resitance around $20 in early 2008 but powered through $20 onwards to $50 in the 2010-11 precious metals mania
Observe carefully and somewhere around $20-21 has been support in 2013 and 2014 before becoming resistance after that in 2016 and 2019-20. So, if silver has truly broken out, then a test of breakout would be that any further corrections in silver should ideally restrict itself to around the $20 mark
If silver keeps powering through, then major resistance levels are the zone around 26.5 to 27.5 and then around $35.
Also, check out the gold/silver ratio which is currently around 83.43
https://goldprice.com/gold-silver-ratio/#:~:text=What is the Gold/Silver,buy one ounce of gold.
It is still very high and in a true precious metals market, the ratio would ideally be substantially lower as silver inevitably goes to a more extreme position in bigger bull/ bear markets. In 2010-11, silver touched around $50 and gold around $1911 – ratio of around 40
Gold
@1900 has come close to its all time high while silver has heaps more to catch on. Gold itself IMHO has much further to go in coming years.
Disclaimer - I don’t want to sound too wildly bullish. Silver can be
incredibly volatile as 2020 itself has shown. Precious metals have seen some
deep corrections over the last few years which can shake an investor’s confidence, and this should be taken into consideration. Also, ADT is
polymetallic and might not always give an exact correlation with silver. ADT share price also often seems to have a mind of its own.
6/ Conclusions
The list of positives for ADT continues to grows. Our NPV and potential fair valuation would continue to rise as price of commodities and precious metals rise, and price assumptions in scoping study are much lower. I’ve also given a fair list of disclaimers above so that we see all sides of the story, positive and negative.
When I passed my gold analysis comment in 2015 (refer comment of July 6 mentioned above), those were the old days when NST was 2.12, EVN was 1.16, SBM was 48c and RSG was around 36c. Newcrest was the only major big gold player on the ASX. As gold caught on as a favourable investment, several tiny ASX goldies are now billion dollar stocks, with NST, EVN, SAR truly leading the way.
ASX simlarly lacks good silver plays. If ADT continue to watch out for pitfalls and focus on survival and keep ticking boxes, then there is ideally a good chance that in time to come, ASX money could pour into ADT which IMHO is one of the best silver plays and polymetallic plays on the ASX.
All IMHO. Please DYOR.