Immeasurable dilution smashes valuation, once more (Dolfines)

Immeasurable dilution smashes valuation, once more TARGET CHANGE CHANGE IN TARGET PRICE € 0.00 vs 0.01 -65.8% In the aftermath of our latest update 2 weeks ago, Dolfines has completed another round of share issuance with 1.9bn new shares. While there have been no changes to our financial estimates given no new updates on the business front, the dilution has slashed the valuation and massively weighed on the target price. CHANGE IN NAV € 0.01 vs 0.03 -65.1% Given the significant n

Business growth embarked, but dilution kills the valuation (Dolfines)

Business growth embarked, but dilution kills the valuation TARGET CHANGE CHANGE IN EPS 2023 : € 0.00 vs 0.00 ns 2024 : € 0.00 vs 0.00 ns Our FY22 figures have been decreased with the integration of the annual results as the net attributable result was negatively impacted by exceptional financial expenses. CHANGE IN NAV € 0.03 vs 0.10 -71.5% Similarly, share dilution has reduced the NAV valuation by more than 70% despite a slight increase in the absolute net value of the assets t

Battered Dolfines illuminates a future path with the HSE acquisition

After a long period of searching for another profitable acquisition, Dolfines decided to expand its footprint in the Health, Safety and Environment market and buy out AEGIDE International, which has more than 200 clients across the world. In FY22, the acquired company generated turnover of €2.75m, and had averaged 15% annual growth over the last three years. In our view, the acquisition enhances Dolfines’ opportunities and sheds some light on the future path of the company.

Tapping into the HSE market with new equity-financed acquisition

Dolfines has executed an equity financing programme to prop up its balance sheet and finance an acquisition in FY22. The result was a year-long downhill trend on the share price at a stupefying level of 98%. Committed to the strategy to generate more revenues and expand market share, Dolfines embarked on another cash-accretive acquisition opportunity this year, again with equity line financing that will sustain downward pressure on the stock for at least until the end of Q1.

Target cut by -21.6% (Dolfines)

TARGET CHANGE CHANGE IN TARGET PRICE € 0.06 vs 0.07 -21.6% The target price is reduced due to the declining DCF and NAV values. At such low prices, a slight change in the price brings about significant change. CHANGE IN NAV € 0.10 vs 0.14 -27.4% The NAV decrease stems from the massive dilution the company carried out in FY2022 with the number of shares increasing by more than 12x. The share issuance continued in early FY2023, further reducing the NAV. CHANGE IN DCF € 0.09 vs 0.12

Capital increase slashes the valuation (Dolfines)

Capital increase slashes the valuation TARGET CHANGE CHANGE IN NAV € 0.14 vs 0.27 -48.4% Since our last update, Dolfines has continued its capital increase programme with the conversion of the remaining bonds. The conversion of notes resulted in a massive dilution by creating more than 100 million shares (almost doubling), which was reflected in the tanking share price since September 2022. Accordingly, our NAV is severely impacted by the rising number of shares. CHANGE IN DCF € 0.12

Costly financing cuts the target price (Dolfines)

Costly financing cuts the target price TARGET CHANGE CHANGE IN TARGET PRICE € 0.14 vs 0.40 -66.0% In the aftermath of last week's developments on equity line financing, we have updated our model. The massive dilution resulted in a 3x increase in the number of outstanding shares. We are expecting the financing woes to continue into next year, and have hence downgraded our target price. CHANGE IN EPS 2022 : € (0.01) vs (0.02) ns 2023 : € (0.01) vs (0.03) ns The dilution as a resul

Can Dolfines’ shareholders survive its financing hurricane?

In a recent round of equity line financing with convertible bonds, Dolfines was able to bring €4,135k to finance a new acquisition, pay debts and invest in research and development projects. But this came at a grave cost for the shareholders as the share price nose-dived. At this point, the company and the shareholders could only hope for this precarious form of financing to do its job and facilitate cash generation from investments.

H1: Growth in both segments

Revenue stood at €4.3m in H1, confirming the positive momentum communicated in Q1. The Oil & Gas activities recovered sharply with the high oil price, while the strong growth continued at 8.2 France. The prospects also look good for H2, with drilling activity remaining elevated and with the workforce growing in Renewable energies. Overall, a positive update, which will help to support the stock price.

Development continues in renewables

The strategy update was in line with the recent communications from the company, but provided more details ahead of the capital increase. While the oil & gas activities continue to recover, the priority remains on renewables (both inorganic and organic). A large share of the proceeds will fund acquisitions, with one soon to be announced in renewables services. Furthermore, the company is aiming to break-even at operating cash flow level by the end of the year.

Target cut by -20.3% (Dolfines)

TARGET CHANGE CHANGE IN EPS 2022 : € (0.02) vs (0.02) ns 2023 : € (0.03) vs (0.03) ns We have updated our model with the integration of the FY21 results and net loss of €1.55m. Estimates for FY22/FY23 are unchanged. CHANGE IN NAV € 0.83 vs 1.01 -17.0% Following the FY21 results, we have added a €4m capital increase, at a subscription price of €0.30 per share, leading to the creation of 13.3m shares. This represents a c. 30% discount on the 29/04/2022 closing price (day of the annou

FY21: recap as investments accelerate in renewables

The FY21 results came in below our expectations as Covid-19 dragged on mobility thus limiting oil & gas activities, although the strong start to the year confirms that the recovery is ongoing. As investments ramp up, the company has announced a c. €4m recap, split between debt conversion and an equity increase. The latter should be enough to sustain research & development activities in renewables for both the new floater and the telescopic arm for offshore wind inspection.

EPS upgrade (2021: from € -0.06 to -0.06, 2022: from € -0.03 to -0.02) (Dolfines)

EPS CHANGE CHANGE IN EPS 2021 : € (0.06) vs (0.06) ns 2022 : € (0.02) vs (0.03) ns The company has published a positive release, with a strong January and February in inspection and audit (Factorig). We are thus slightly increasing our estimates for Factorig, to €3m of revenue for FY22 vs €2.5m previously, partly offset by lower estimates in Services, where we now forecast revenue of €1.5m vs €1.7m previously.

Strong start of the year

The stock is up 15% at pixel time on a positive press release showing a turnover (for January and February) higher than in 2019 (at €1.3m). This is led by Factorig (inspection division), where the company performs work in Latin America, and has a strong commercial activity.

Prequalified in Saudi Arabia for rig inspection

Positive news in oil & gas with this prequalification for rig inspection and acceptance services for Saudi Aramco Drilling. The Middle East has been particularly resilient to the oil crisis, where Factorig has recently signed several contracts with new customers. Overall, the low breakeven levels, as well as continuing development works, will allow a decent level of activity in inspection services across the whole business cycle.

LIBERUM: Trident Royalties: Mexican standoff

Chariot Limited (AIM: CHAR): Imminent partner in Morocco

• The US$2.7 mm cash position at the end of June is in line with our expectations. • Although inflation across the industry and rig availability had complicated and delayed the finalization of a farm-in agreement for Anchois in Morocco, negotiations on partnering are in the final stages. A partner could be announced very soon. • Progress has been made across the portfolio. Onshore Morocco, permitting is under way with drilling now expected to start in early 2024 with up to four wells. Prospects

LIBERUM: Trident Royalties: Benefitting from rising rate environment

LIBERUM: Trident Royalties*: Utah lithium royalty acquisition

Interim Results

Diversified reported strong interim results, with production that was marginally below our estimate more than outweighed by tight cost control to deliver EBITDA ahead of our forecast; we broadly retain our FY23 estimates.

Pantheon Resources - Positive Outlook for Pantheon Resources

We believe that the outlook for Pantheon Resources is significantly improving.

Touchstone Exploration+ (TXP, House Stock at 68p) - Cascadura production update

Central Asia Metals: H1 2023 Interim Results

Central Asia Metals (CAML LN) results in H1 2023 follow a record prior comparable period, with the swing between the two primarily due to commodity price performance. H1 2023 net revenue of US$93.6m was down 18% YoY, EBITDA of US$48.9m was down 35% YoY. COGS was up 9.8% YoY given global inflationary pressures. Other charges on the P&L were minimal particularly now CAML is debt free. Owing to the timing of tax charges and some unfavourable working capital movements which we expect to be resolved

Touchstone Exploration+ (TXP, House Stock at 62p) - Cash generation and scale in Trinidad to the fore

Bushveld Minerals: H1 results; progress at Vanchem post period end

Bushveld Minerals (“BMN”) has released its results for H1 2023 having already released production of 1,784t at a weighted average cash cost of US$26.6/kgV, with H1 sales of 2,096tV through destocking during the period. Revenue for the period was US$78.4m, with adj EBITDA of US$10.3m and attributable NPAT of -US$14m. The company finished H1 with US$3.7m of cash and US$90.7m of debt. We expect H2 production of 1,992tV, split between 925tV from Vanchem and 1,067tV from Vametco, bringing full year p

LIBERUM: Shanta Gold: Solid beat at interims

Interim results

Bushveld delivered as robust a financial performance as could reasonably be expected in H1 2023 given the operational challenges faced. We are encouraged by the reported progress made at both Vametco and Vanchem since, and vanadium price aside (current prices are soft, and pose a downside risk if they do not recover in-line with our assumptions) we think Bushveld is broadly on course to meet our full-year estimates. But given its stressed balance sheet, concluding the refinancing of its c.US$45m

Chariot - Anchois Partnering in Final Stages

The partnering process at Anchois is now close to a conclusion, with farm-out negotiations in their final stages. The FEED phase of the Anchois gas development was completed in March, with Chariot continuing to make progress across all the Anchois technical and commercial workstreams. Post period, Chariot added the synergistic, low-cost, low-risk Loukos Onshore licence. Loukos Onshore contains several near-term drilling opportunities, which, if successful could lead to fast-tracked gas productio

LIBERUM: Lithium - Rock Developers: EMH, SAV, ALL, PLL & ZNWD are all stand outs, on post-tax bases

Value anomaly despite resilient trading