Alternative Resource Capital

Alternative capital solutions for the world of natural resources

The landscape of resource capital solutions is changing rapidly. ARC has identified a very real need for a different approach to the deployment of resource capital through this cycle and the cycles to come. We know that every capital challenge is different, as are the business goals and the strategies required to achieve them. At ARC we don’t offer a ‘one-size-fits-all’ solution. We’ll look at your strengths, understand your needs and create a tailor-made plan to achieve specific results and then work hard with you to deliver handmade, client-centric solutions.
Visit provider site at https://www.altrescap.com/

Latest Content

Mkango Resources Ltd.

Songwe progress gathers pace with start of pilot processing

The start of pilot processing is a major milestone for Mkango. Developing a viable process flowsheet is arguably the key hurdle to overcome for prospective new REE market entrants, and we are therefore greatly enthused by the reported progress on optimising flotation recovery, concentrate grades and hydrometallurgical treatment steps beyond the already robust metrics envisaged in Songwe’s 2015 prefeasibility study. We thus believe Songwe is well placed to transition to the development phase on completion of the full feasibility study later this year.

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24 Feb 21
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Bushveld Minerals Limited

Solid platform for growth after challenging 2020

Overcoming coronavirus-related operational interruptions in H1 and unplanned maintenance stoppages in H2, Bushveld just about reached the lower end of its production guidance range for 2020. It is now targeting a 13-20% increase this year, albeit weighted towards the second half. Encouragingly, the group saw a recovery in demand and sales in late 2020, a trend that has continued into the new year. We are cautiously optimistic vanadium prices could strengthen further through 2021, which, together with the forecast higher production rates, should see improved profitability despite an anticipated temporary increase in production costs. Looking beyond this year, we see much greater earnings upside as Bushveld rolls out long-planned production growth initiatives at both Vametco and Vanchem, which could see group vanadium output more than double over the next few years. Schedules and capital budgets will be firmed up by ongoing studies, but last year’s US$65m financing with Orion Mine Finance significantly de-risks these expansion ambitions. As operational performance stabilises and production expands, we see scope for further upwards re-rating of Bushveld’s shares, which, despite rallying late last year, remain at a significant discount to our risk-adjusted valuation of 29p.

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10 Feb 21
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Central Asia Metals Plc

2020 production targets met; lifting our earnings and dividend estimates on stronger metal prices

CAML’s 2020 year-opening production targets were reached or exceeded, an impressive feat given the unprecedented (and unforeseen) challenges posed by the coronavirus pandemic and, latterly, the tailings leak incident at Sasa. The characteristically strong operational performance was captured by our forecasts, but higher-than-anticipated metal prices through Q4 have lifted our full-year earnings estimates and our final dividend expectations. Notwithstanding the sharp rise in prices through late 2020, we retain a balanced-to-positive outlook on base metals, particularly copper. Both our revised dividend forecasts and our fundamental NAV estimate suggest value remains despite CAML’s recent strong share-price performance. We attribute the latter to the constructive commodity price backdrop, but also to CAML’s first-class response to the Sasa incident, which facilitated a rapid return to operational normalisation. In a yield-starved market, CAML’s attractive dividend policy – underpinned by its inherent low cost of metals production – remains a stand-out amongst UK-quoted junior miners.

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11 Jan 21
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Bushveld Minerals Limited

Innovative financing reignites growth drive

We consider the US$65m production financing and convertible loan note offering a watershed moment in Bushveld’s evolution, strengthening its balance sheet and thus de-risking its growth ambitions at a pivotal point in the vanadium market cycle. Vanadium’s long-term fundamentals look strong, yet pricing is currently constrained by the dual effects of COVID-related industrial depression in the West and elevated seaborne iron-ore pricing (the latter indirectly increasing V co-supply in China). We believe both phenomena will be transient, and that now is therefore the time to be building out low-cost primary capacity in anticipation of much firmer pricing ahead. Bushveld owns some of the world’s largest and highest-grade primary vanadium resources, and two of only four primary processing facilities globally. This innovative financing enhances its flexibility to progress a planned expansion of those assets, unlocking value whilst avoiding immediate dilution in what are challenging equity markets for junior miners at present. Moreover, it adds a leading mining-specialist investor well suited to support long-term growth. Completion should thus reignite interest in an equity story that offers substantial – and now greatly de-risked – growth in a highly-compelling commodity class.

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01 Dec 20
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Central Asia Metals Plc

Interim dividend beats expectations

CAML’s decision to resume its dividend policy comes as little surprise given the strong performance of the business year to date, but the magnitude of the interim dividend beats our expectations. We have revised up our full-year dividend forecast by 20% accordingly, though still consider our 12p forecast a conservative one. The generous interim dividend is testament to the inherent low-cost operating structures at both Sasa and Kounrad, where margins have remained remarkably solid despite the unprecedented challenges posed this year by the coronavirus pandemic and, more recently, the unfortunate tailings leak incident at Sasa. Our dividend forecast and fundamental NAV estimate suggest the shares remain inexpensive, and, particularly if base metals prices hold their current course, we believe the risks to our estimates on balance lie to the upside.

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11 Nov 20
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Central Asia Metals Plc

Dividend resumption in sight as Sasa back at capacity

CAML’s response to the unfortunate tailings leak incident at its Sasa zinc-lead operation in North Macedonia in September has been first class, as evidenced by it receiving approval to recommence operations within just three weeks of the incident occurring. The processing plant is now back running at full capacity, the underlying cause of the tailings leak has been addressed, and good progress is being made on the environmental clean-up of the affected river course. We believe this speedy and professional response will have limited the cash-flow impact of the incident, and therefore fully expect CAML to resume its hitherto generous dividend policy during the current quarter, as it is targeting. Our 10p full-year dividend forecast would imply a compelling 6% yield at CAML’s current share price, a share price which sits at a near 30% discount to our fundamental NAV estimate.

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05 Nov 20
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