Continues from strength to strength. This week they co-raised A$35.5 million more free cash from institutions to accelerate their mining directly to phase two production in early 2022. Phase 1 production will start within a week or two. According to the DFS, phase 2 production will give E25 an NPV of A$1.14 billion or an approximate SP (share price) of $7.60 per share.
Another way to measure its new potential value is this: By next year, in phase 2 production E25 should be making around A$75 mill NPAT per year (with a 40-year mine life, which can be extended). This should allow the SP to sit on a 10-15x p.e. giving an approximate SP of between $5 to $7.50 per share.
Our original target price was $5 per share. However, we have now increased our price target to $10+ per share.
The extra cash flow from phase two production next year should allow E25 to organically increase to Phase 3 production in 2023 - which will produce around $90 million profit p.a. and $90 million on a 10-15x p.e. which should give the company a market cap of approx $900 mill – $1.3 bill (or a share price of between $6 to $8.50 per share).
Plus there is their prospective high purity manganese (HPMN) for the batteries business on top of that. Part of the money raised last week is to complete a DFS for its battery-grade HPMN production this year. With that completed, we believe one of the big Asian battery or global car manufacturers should soon do a deal with E25. The deal will likely be that the big co pre-fund the HPMN plant’s capex in exchange for a guaranteed future offtake.
For example, VW recently stated that “To save battery costs, VW shall use nickel and manganese in the cells… and do without - more expensive cobalt.” In addition Elon Musk has just stated, “It is reasonably straightforward to do a cathode that is two-thirds Nickel and one-third manganese”. But where will they all get this HPMN from?
The latest research note from Blackwood Securities, (who did the A$35 mill cap rise last week) notes, “Existing (HPMN) production is Chinese, the other possible sources are Gabon and South Africa. But supply chains must be strictly secure and E25 provides this security.” Blackwood modelled E25’s probable HPMN production at 200,000 tonnes per year which represented over $8 per share net profit to the co, and that would be in addition to the $6 per-share value of the expanded concentrate production.
Therefore Blackwood, and their clients, like us, also see that E25’s carbon-free Mn in Australia represents by far the safest global supply chain available to any big battery or EV manufacturers. Their valuation of $8 per share for this new HPMN deal on top of the $6 per share from their expanded normal MN production, gives them a $14 per share price target for E25. This ties in with our more conservative $10+ per share target. Other 10 Bagger Calls
Finished the week with an all-time closing high of $4.98. That is up over 2050% since we called it last March. CHN, like E25, shows us the benefits of backing smart management who do aggressive deals. We expect further new highs in CHN next week too due to the rising nickel and PGE prices and their recent acquisition of a new prospective gold property near Kalgoorlie. Most early club members are now free-riding happily in CHN, for newer members however, we see better short-term upside elsewhere in our 10 bagger portfolio.
Hit a new high earlier last week of 35.5 cents. Including the free KISO’s (options) which we all received in our entry point PP (private placement) at 5.5 cents last October, we are now up 782% in under 6 months. KIS consolidated during the week after its rally to close at 29.5 cents. With funding now almost certain, we still believe that this stock should reach 50+ cents within just a few more months. Whilst many earlier members should now be free-riding in KIS, we still recommend newer members to buy it below 35 cents. To us, It’s a no brainer to go up a lot further.
Also hit a new high of 84 cents on Friday this week up 330% since we called it at 20 cents just a month ago. It closed at 76 cents. We still see this counter heading towards $1.50 - $2 per share in the next few months. For more details on why follow the chat on FRB’s dedicated channel on our discord club site.
Was the fifth official 10 bagger in our portfolio to hit a new high last week when it rallied as high as 21 cents on Wednesday. This is on the excitement as it gears up to go and drill on its prospective site near Julimar in 14 days. MAN is now up 1,650% since we first called it last April.
Our cheap gem, which has been sitting quietly the last few months, moved up 16.5 % on Friday to close at 7.1 cents on news that it is improving its place in the Julimar “nearology” stakes by taking up more land rights near CHN’s prolific site (100km away.) We still love this small $10 mill cap stock.
Its only issue is that it only has around $850,000 cash now, so we are currently reaching out to them to see if we can do a CR (cash raise) for them soon. Our view is that it won’t take too much news or effort to move this small-capped stock up to a modest $16 mill cap and therefore a share price of 12 cents - which would bring us yet another 10 bagger in our portfolio.
This online furniture retailer despite its current high of 50x pe produced yet more great results for the first half of 2021. Revenue was up 118%, EBITDA up 556%, free cash up 123% to 85 million and it showed strong growth in all departments. We still love this progressive company, which closed the week at $10.10. Indeed, we see it as just a matter of patience and time until its S.P climbs a further 100% from here to reach $20 to create yet another 10 bagger in our portfolio. Hopefully within this year.
Drifted a bit lower closing at 25 cents this week after the free loyalty options went ex. We still remain very enthusiastic about the potential for this beautiful tight shell of a company. And we still suggest members gently collect shares on any dips.
Was quiet as we await some hopefully exciting new news about its current deep drill program results from Brazil very soon.
Continued to consolidate after its recent rally. DNK potentially has some good news and momentum brewing. Also some potentially promising steps forward were made on the financing front this week. We can’t disclose anything concrete just yet. We just want to reiterate, do not underestimate this amazing and extremely undervalued project. Whoever controls this project will control the Sulphate of Potash (high-end fertilizer) market globally. Many big international operators are very aware of this fact and calculating potential buy-outs.
This also pushed up to a new closing high after it raised a handy $8 million more cash this week. It hit a high of 15.5 cents and closed Friday at 14.5 cents. That’s a rise of 285% since our fearless Stoaty first called out this oil explorer in Zimbabwe late last year. We have given a dedicated channel to this stock on Discord now, as many members seem to be invested in it.
Both BTC and ETH remained in their (healthy) consolidation phases throughout the week. We continue to recommend a strong buy on both counters. Meanwhile, the smaller altcoins remain hot with different little coins jumping in price all over the place like jackrabbits.
This week our Discord membership hit 500 on Monday, and by the end of the week it stood at 533. Our other (free or read-only) media channels continue to grow.
To accommodate this increasing number of members on Discord, this coming week we shall expand and rejig the different sections and channels. The proposed changes have been posted on the members feedback channel already. Please look at them in the next few days and make any comments if necessary.
Happy trading next week!
Disclaimer: No financial advice given. You are encouraged to do your own research (DYOR) on the above mentioned companies and their strategy/progress and make your own financial decisions.