Ghost Bites (Alphamin | Astral Foods | BHP | Kore Potash | Raubex)

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Alphamin releases detailed results (JSE: APH)

The catch-up quarter was highly lucrative

Investors had a good idea of what was coming in the results for the first quarter of the year, as Alphamin had already released several key metrics. Full results are now available, showing a quarter-on-quarter increase of 1% in production. That’s not the exciting part. The juicy bit is that sales volumes are up 102% i.e. have doubled, as the business could catch up on sales that didn’t happen in the three months to December due to infrastructure issues.

Tin pricing did the company a favour as well, up 7% vs. the preceding quarter. When this is combined with the sales volumes, it won’t surprise you to learn that EBITDA is up 156% vs. the preceding quarter. These numbers helped reduce net debt from $73 million to $28 million over the past three months. It also helps fund a final dividend of CAD$0.03 per share (Alphamin is listed in Canada).

And in case you’re wondering whether this result is just a function of a super soft base, it’s worth pointing out that net profit is up 25% year-on-year.

The Mpama South plant is ready for a ramp-up in tin concentrate production during May 2024, so that should bring another significant boost to Alphamin.

The share price is up 28% in the past 12 months and a rather ridiculous 404% in the past five years.

Astral Foods is celebrating vastly better numbers (JSE: ARL)

The poultry industry really deserved a break

Astral Foods has some excellent news for investors. For the six months ended March 2024, the company achieved an eyewatering increase in HEPS. The percentage growth, for what it’s worth, is between 435% and 445%!

It’s a lot more useful to know that HEPS increased from 163 cents to between 874 cents and 891 cents per share. When you see a move like this, you have to go back a few periods to give it more context. In doing so, you’ll find that earnings have been exceptionally volatile, as the industry has had to manage everything from avian flu through to lockdowns.

Here’s a summary of HEPS for the past few interim periods:

• March 2024: 874 – 891 cents
• March 2023: 163 cents
• March 2022: 1,420 cents
• March 2021: 597 cents

If you enjoy rollercoasters, now you know which sector to look at.

BHP comments on the Samarco settlement (JSE: BHG)

The company has responded to press speculation

The Samarco dam failure in 2015 really was a disaster in every sense of the word. It led to incredible heartache in the area and has cost many billions of dollars for BHP and Vale, the joint investors in Samarco.

There is regular speculation in the press around the progress in settling with the Brazilian State and Federal Government and other public entities. BHP tends to respond to speculation by issuing SENS announcements and clarifying the situation.

The current status is that BHP, Vale and Samarco have submitted a non-binding, indicative settlement proposal. Although the total amount under the proposal is $25.7 billion, this includes amounts already invested to date. The present value of BHP’s share of remaining payments is within the provision of $6.5 billion already on the BHP balance sheet as at 31 December 2023.

No final agreement has been reached yet among the parties.

Kore Potash is close to concluding the EPC contract (JSE: KP2)

The big meeting in Beijing is in early May

Kore Potash is as close as they’ve ever been to getting the all-important Engineering, Procurement and Construction (EPC) proposal for the Kola Potash project in the Republic of Congo across the line. The counterparty is PowerChina International Group and an immense amount of effort has been put into this from both sides.

The proposal was received by Kore Potash on 6 February and the parties have been negotiating since then. A meeting is set for Beijing in early May to hopefully get this thing finalised. It all sounds very James Bond, doesn’t it?

I’ll tell you what isn’t very James Bond: a cash balance of only $1.4 million. Kore Potash recently raised funding to try and get the company to the point where the contract is signed. Without the EPC contract, there’s no funding available for the next step. Thankfully, the Summit Consortium has been on the hook since April 2021 to provide funding as soon as the EPC is finalised, with a promise to put the financing in within six weeks of the execution of the contract.

And on top of all of this, the management of Kore Potash has needed to keep relations with the government of the Republic of Congo nice and friendly. This includes local ceremonies attended by dignitaries. When you dedicate your life to junior mining projects in Africa, you’ve decided to play business on hard mode.

It would be lovely to see this go ahead. Hopefully, May will see the finalisation of that contract.

Raubex’s numbers are significantly better than expected (JSE: RBX)

Despite the Beitbridge Border Post project being in the base year, there’s still solid growth

Raubex took a conservative stance on its prospects for the year ended February 2024. The Beitbridge Border Post project was in the base period and not in this one, so there was doubt over whether Raubex could grow vs. that base. The company tried hard to manage investor expectations accordingly.

As recently as March, Raubex had indicated HEPS growth of between 0% and 10% for the year, which was already a solid outcome for the group. The latest trading statement is far more exciting than that, reflecting HEPS growth of between 15% and 25%. This really is an impressive outcome, with full details due to be released on 13 May.

HEPS will be between 451.7 cents and 491 cents for the full year and the current share price is R30.50.

Little Bites:

• Director dealings:
  • The CFO of Thungela (JSE: TGA) implemented a collar hedge structure with a put strike price of R131.93 and a call price of R175.45 with expiry in April 2026. That put price (which gives downside protection) is very close to the current price of R130.33 per share. The hedge relates to a position of 250,000 shares, which is worth nearly R33 million.

• Astoria Investments (JSE: ARA) released its numbers for the quarter ended March 2024. The quarterly updates are basically just the movement in net asset value (NAV) and other financial metrics, without much commentary on underlying assets. Measured in dollars, the net asset value per share has dipped 2.9% in the past 12 months. The decrease is nearly 7.7% over three months. Most of the assets are in rands, so the dollar-based reporting hurts the NAV. In rands, it’s actually up over 12 months! The NAV per share is currently R13.8502 and the share price is R8.19.

• Ibex Investment Holdings (JSE: IBX), formerly Steinhoff Investment Holdings, announced the repurchase of its listed preference shares. The prefs will be repurchased for R93.50 plus a dividend for the period from 1 January 2024 until the scheme is implemented. The scheme consideration is a 7.13% premium to the 30-day VWAP and gives holders a chance to monetise their shares in this highly illiquid structure. This really does show you the importance of understanding complex capital structures. Steinhoff ordinary shareholders saw their value disappear, whereas preference shareholders have come out in one piece.

• Ellies (JSE: ELI) announced that the court application to liquidate Ellies Holdings is still underway. Subsidiary Ellies Electronics remains in business rescue and is continuing to trade, with the proposed business rescue plan due to be published by 10 May 2024. At subsidiary level, there is still a reasonable prospect of Ellies Electronics being rescued.

• Salungano (JSE: SLG) announced that Robinson Ramaite has had his period of appointment as the group CEO extended until 1 April 2026. He was initially appointed on 1 March 2022 for a two-year period.

• Fortress Real Estate (JSE: FFB) announced that GCR Ratings has upgraded its national scale long-term issuer rating from AA-(ZA) to AA(ZA) and affirmed its national scale short-term issuer rating at A1+(ZA). The rating outlook is Stable. Property funds require significant levels of debt to generate decent equity returns, so this is important stuff.

• Cashbuild (JSE: CSB) announced the appointment of Hanré Bester as the CFO of the group. He is currently the CFO of Pinnacle Micro.

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