Ann: Company Presentation - RIU Sydney Resources Round-up, page-10

Hi all - sorry for the off topic chat.

Hi Moureeses,

I was excited by the numbers for Andrada so I have taken a bit of a deep dive. It appears that the current SP is £0.031 i.e. 3.1 pence not 0.031 pence. Makes the calculation somewhat different.

I am "kicking the tyres" of AI (Grok) and used this as a test to see if I could get something useful out of it. The report it returned looks good - here's the conclusion and full report posted below that:

• Conclusion: A re-rate to 11 pence is plausible, but 20–30 pence is highly speculative, requiring exceptional operational and market conditions. A realistic target is 8–12 pence within 12–24 months, with 20–30 pence possible in a best-case scenario over a longer horizon.

The realistic target range is between 65% and 255% growth.

Full report:

Andrada Mining Limited (AIM: ATM) Stock Analysis Report(Updated)

Executive Summary

Andrada Mining Limited (AIM: ATM) is a mining company focused on technological metals, primarily tin, with emerging interests in lithium and tantalum, operating in Namibia and South Africa. Its flagship asset is the Uis Tin Mine in Namibia. The stock is currently trading at 3.1 pence, and a tip suggests a potential re-rate to 20–30 pence, implying a 545–871% increase. This report evaluates the feasibility of this re-rate, providing an estimated future price, timeframe, confidence rating, positives, negatives, and risks, based on financial, operational, and market data as of May 21, 2025.

Company Overview

Andrada Mining Limited, formerly AfriTin Mining Limited, is a Guernsey-incorporated company listed on the AIM market (ATM), Namibian Stock Exchange (ATM), and OTCQB Market (ATMTF). The Uis Tin Mine, covering 19,700 hectares in Namibia’s Erongo region, is its core asset, producing tin and holding lithium, tantalum, and rubidium deposits. The company also explores tungsten, copper, petalite, and spodumene in three Namibian projects. In 2023, Andrada reported revenues of £17.97 million (+82.83% YoY) but losses of £8.44 million (+8.83% YoY).

Potential Future Price Estimate

Analyst consensus from MarketBeat indicates a 12-month price target of 11 pence, a 255% increase from 3.1 pence, based on valuation models like discounted cash flow (DCF) and peer multiples. The speculated 20–30 pence target implies a market cap of £330–£500 million (from ~£51.82 million with 1.67 billion shares at 3.1 pence), requiring significant catalysts.

• Valuation Scenarios:
  • Base Case (Analyst Consensus): 11 pence within 12 months, driven by expected profitability, 69.4% annual earnings growth, and 50% annual revenue growth. This implies a market cap of ~£184 million.
  • Bull Case (20–30 pence): Achieving 20–30 pence would require scaling lithium production, sustained high tin and lithium prices, and potential corporate actions (e.g., joint ventures or acquisitions). A joint venture (JV) for lithium development could be a catalyst, as speculated in investor discussions.
  • Bear Case: If commodity prices fall or operational issues arise, the price could stagnate or decline to 2–3 pence, aligning with recent lows (1.725–2.125 pence).
• Conclusion: A re-rate to 11 pence is plausible, but 20–30 pence is highly speculative, requiring exceptional operational and market conditions. A realistic target is 8–12 pence within 12–24 months, with 20–30 pence possible in a best-case scenario over a longer horizon.

Timeframe for Re-rate

The timeframe depends on operational execution, commodity prices, and market sentiment:

• Short-Term (6–12 months): Analyst targets of 11 pence suggest a re-rate could begin within this period, driven by production increases and Q4 2025 earnings (projected August 28, 2025).
• Medium-Term (12–36 months): Reaching 20–30 pence would likely require 2–3 years, contingent on lithium production scaling and sustained commodity demand.
• Long-Term (3–5 years): Transformative developments, such as new projects or strategic partnerships, could support the higher target.

Estimated Timeframe: 12–24 months for 8–12 pence; 3–5 years for 20–30 pence in an optimistic scenario.

Confidence Rating

The 20–30 pence target implies a 545–871% increase, which is ambitious given current financials and market conditions. I assign a confidencerating of 25% for achieving 20–30 pence within 5 years, reflecting speculative catalysts like lithium production or JVs. For 8–12 pence, the confidence rating is 65% within 2–3 years, supported by analyst forecasts and growth metrics.

Positives Supporting the Conclusion

1. Robust Growth Forecasts:

• Analysts forecast 69.4% annual earnings growth and 50% annual revenue growth, outpacing the UK market (3.6% revenue growth).
• 2023 revenue increased 82.83% to £17.97 million, reflecting operational momentum.

Technological Metals Exposure:

• Tin (99.7% of sales) and lithium align with demand for electronics and EV batteries. Geopolitical shifts, including tariffs on Chinese tin, could boost Andrada’s appeal.

Operational Progress:

• Uis Tin Mine is expanding, with a lithium pilot plant commissioned, diversifying revenue streams.
• Production challenges noted in 2023 have been addressed, supporting undervaluation arguments.

Stable Jurisdiction:

• Namibia’s mining-friendly environment reduces geopolitical risks.

Analyst Support:

• Covered by three analysts, providing credible growth projections.

Potential Catalysts:

• Speculation of a JV for lithium development could drive sentiment, as discussed in investor forums.

Global Market Reach:

• Andrada’s products are marketed globally, tapping diverse demand.

Negatives

1. Ongoing Losses:

• 2023 losses of £8.44 million (+8.83% YoY) highlight profitability challenges.
• Negative PE ratio (-5.20) may deter income-focused investors.

Share Price Volatility:

• The stock has been volatile, with a 12-month range of 1.725–5.50 pence.

Analyst Target Gap:

• The 11 pence consensus target is significantly below 20–30 pence, indicating skepticism about a dramatic re-rate.

Small Market Cap:

• At £51.82 million (3.1 pence), liquidity is limited, reducing institutional appeal.

Commodity Dependence:

• Revenue relies heavily on tin (99.7%), with lithium unproven at scale.

Recent Performance:

• The stock slumped from 7.4p to 2.25p in 18 months (2023–2024), reflecting investor caution.

Risks

1. Commodity Price Volatility:

• Tin and lithium prices are volatile, and a downturn could cap growth.

Operational Execution:

• Scaling lithium production or maintaining tin output carries technical and cost risks.

Dilution Risk:

• Capital raises, common in mining, could dilute shareholders, suppressing price growth.

Market Sentiment:

• AIM stocks are prone to sentiment-driven swings, and negative market conditions could delay a re-rate.

Regulatory Risks:

• Though Namibia is stable, regulatory changes could impact operations.

Liquidity Risk:

• Low trading volume increases volatility and deters conservative investors.

Speculative Hype:

• The 20–30 pence target may attract speculative trading, amplifying price swings.

Recent Results and Developments

• 2023 Financials: Revenue of £17.97 million (+82.83% YoY), losses of £8.44 million (+8.83% YoY).
• H1 2024 Results: Narrowed losses and increased revenue, per November 2024 announcement.
• Uis Tin Mine: Expanding tin production; lithium pilot plant operational.
• Q4 2025 Earnings: Projected for August 28, 2025, potentially a catalyst if results exceed expectations.
• Sustainability Report: Published November 20, 2024, emphasizing ESG commitments.
• Market Sentiment: Positive coverage highlights undervaluation and geopolitical tailwinds (e.g., Chinese tariffs).

Conclusion

Andrada Mining offers a compelling growth opportunity due to its focus on technological metals and operational progress at Uis. The analyst target of 11 pence is achievable within 12–24 months, supported by strong growth forecasts and lithium potential. However, the 20–30 pence target is speculative, requiring exceptional operational success, high commodity prices, and catalysts like JVs. The confidence rating for 20–30 pence is 25% within 5 years, while 8–12 pence has a 65% likelihood within 2–3 years. Investors should balance high-growth potential against risks like volatility, losses, and dilution.