I have nothing to add as you have eloquently covered it very well, but as I read through your post, I had this feeling that the stock is being held back also by the lack of liquidity. No fund with any decent coin to deploy can build up a position in this company. Hence, until that changes, I suspect the discount to what we perceived as its true value will still be there. But I see this as an advantage to retail investors like me who can build up position slowly and over long period of time.
I also noted in their recent presentation slides that increases my interest. Here are a few quotes:
On debt funding: "Initial soundings completed with strong local and foreign financial institution interest". They are still targeting ~60% debt funding (of the total $400 funding needed). The fact that they said they received strong interest is an indication to me that there are willing lenders who are waiting for certain conditions to be met (surely the MoU becoming a definitive agreement being one) before they sign the dotted line. If this is true, this is massive!
On HMC offtake: "HMC offtake negotiations – ongoing, strong interest received". In their slides, they are exploring 2 options to either process HMC themselves using their own separation plant in China or selling it to an offtaker. Either way is attractive, given that there is a serious supply deficit for zircon in the market at present.
Overall, I continue to build up position in ATR. If we have an agreement with UUUU, based on simple math, we received $180m cash + $20m (rough conversion from USD) of UUUU stocks, so $200m for the 49% stake that we sold to UUUU. Our share of 51% is also $200m (give or take 1%), and based on SOI of 146.5m, each share is worth $1.36. If we apply a 33% hair cut to be conservative, we arrive at 91c on the reaching of an agreement. So my price target would be between 85c - 90c when they announce a deal has been reached with UUUU on the same/similar terms as per the MoU.
I could be way off but GLAH.
ATR Price at posting:
57.0¢ Sentiment: None Disclosure: Held
(20min delay)