Metal Tiger Plc

Metal Tiger Plc (LON: MTR) is a financial services Company, which is providing business and financial support to Companies to expand the value of natural resource interest.

Rationale for Valuation – Speculative Buy at GBX 19.25

• The Company has a robust balance sheet, with a sound liquidity profile.
• The Company recorded a lower debt-equity ratio of 0.25x (H1 FY20) against the industry median, reflecting that MTR is less leveraged than the industry.
• It received conditional approval for a secondary listing on the ASX.
• In the last year, the Company has delivered a sparkling return of ~71.09%, which was higher as compared to the FTSE AIM All-Share Index.
• From the technical standpoint, 14-day RSI stood at around 28.29 (oversold zone), which is supporting the upside movement.

Key Risks

• Political uncertainties and macroeconomics headwinds may continue to impact the current business environment and investors sentiments.
• Risks related to the environment and climate change could hamper the operations of the Company.
• Liquidity and interest rate risks could affect the financials of the Company.
• The macro factors continued to impact operational performance adversely and resulted in an increased risk.

Recent News

On 19 March 2021, the Company announced that it has conditionally subscribed for 474,043 new ordinary shares in Trident Royalties Plc at a price of 34 pence per share and the total investment stood at £161,175.

On 19 March 2021, the Company has signed an investment agreement with Armada Exploration Limited and invested around USD 750,000 via a promissory note.

On 25 February 2021, Metal Tiger has invested in Palladium One Mining Inc., for a total consideration of around C$99,000.

Financial Highlights (for the six months ended 30 June 2020 (H1 FY20), as on 30 September 2020)

(Source: Company Website)

• The Company continues to make further investment in existing and new companies to diversify the investment portfolio for further growth.
• The profitability for the period was down, due to net loss on the investment.
• The Company was fortunate enough to enter 2020 with a relatively liquid and robust balance sheet.

One Year Share Price Chart

 (Source: Refinitiv, Thomson Reuters)

Conclusion

The Company witnessed a decline in financial performance in H1 FY20 but has a strong balance sheet. Moreover, Metal Tiger had received conditional approval for a secondary listing on the ASX (Australian Stock Exchange) and also investing in various mining exploration companies, which will expand the Company's profile, price discovery in its shares will be more convenient, and will provide access to the new potential investors. It will also improve the deal flow in Australia. It has secured an equity derivative collar financing facility against Sandfire shareholding from a global investment bank, which will further strengthen the financial position. MTR is more focused on Botswana, through holding in Sandfire and interest in KML. Overall, the Company seems to be well-positioned to continue to deliver the long-term objectives, with an increase in underlying commodity prices. The stock made a 52-week low and high of GBX 9.25 and GBX 29.00, respectively.

Based on decent growth prospects, we have given a "Speculative Buy" stance on Metal Tiger at the current market price of GBX 19.25 (as on 31 March 2021 at 9:46 AM GMT).

Disclaimer

References to ‘Kalkine’, ‘we’, ‘our’ and ‘us’ refer to Kalkine Limited.

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