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Plenty of tin at Alphamin (JSE: APH)

The company has achieved record quarterly production

It was a good day to be an Alphamin shareholder on Wednesday, with the share price closing 4.4% higher on the news of record quarterly production. Compared to the immediately preceding quarter, tin production increased by 28%.

Although ore processed increased by 52% to achieve that number, highlighting an efficiency risk around reduced tin grade, the overall growth is obviously excellent. Oddly, tin sales actually fell by 21%, with the company expecting to clear out the increased tin stocks in the third quarter. It’s also worth noting that the preceding quarter was abnormally high for sales as they were clearing a backlog from Q4 2023 when the roads were damaged.

This is why EBITDA is only 4% higher than the previous quarter, despite the average tin price achieved being up 20%.

Based on this, Q3 should be very strong provided tin prices hold up.

Sirius is tapping the market once more (JSE: SRE)

When the institutional investor ducks are quacking, property funds like to feed them

Successful property funds are capital raising machines. The business model is quite simple, really. They invest in properties and return the cash profits to shareholders in the form of a dividend yield. Where possible, they recycle capital by selling properties at great prices and buying at low prices. If they get this right for a long enough period, the market throws money at the management team to do it at scale.

This is how a healthy market operates. What goes wrong is when the market starts doing this with almost any management team regardless of the track record or intended use of funds. At that point, you’re in a bubble.

The best funds will inevitably raise just as the cycle starts to turn positive, as they have the best chance of attracting capital. This is why it’s so interesting to note Sirius raising capital once more, this time to the extent of £150 million from institutional investors. This comes after a raise of £147 million in November 2023 to fund an acquisition pipeline in Germany and the UK.

The acquisition criteria applied by Sirius still focus on UK and German assets, with an identified pipeline of two assets in Germany and three in the UK.

The latest raise is an accelerated bookbuild process for South African investors, a wonderful throwback to the glory days on the JSE for property stocks. There is a process for retail investors to get involved, but frustratingly only on the UK register to the extent of £2.5 million. The accelerated bookbuild will be wrapped up within a day of the raise being announced, while the retail raise will take a couple of days.

In the announcement, Sirius doesn’t miss the opportunity to point out that the fund acquired 58 assets between 2014 and 2024 at a blended net initial yield of 6.3%. They’ve achieved significant improvements in the portfolio across rentals, net operating income and occupancy levels, which is what Sirius is known for. They disposed of 14 properties over the same period for a total of 67% more than they paid for them.

Tharisa’s production was up in the third quarter (JSE: THA)

On a nine-month basis though, production has moved lower

Tharisa announced its production for the third quarter. Before you question everything you know about the months of the year, remember that this is the third quarter of the financial year, not the calendar year.

Production moved slightly higher quarter-on-quarter, up 4.5% vs. the second quarter. If you look over the nine months though (on a year-on-year basis), production was actually down by 5.4%.

This pales in comparison to the disaster that is PGM prices. For the nine-month period, they have plummeted by 34%. There’s nothing Tharisa can do about this obviously, but it’s worth reminding investors about the state of play for PGMs. As an encouraging story, prices increased 3.6% quarter-on-quarter. Tharisa reports the prices in dollars.

Thankfully, chrome production is up quarter-on-quarter (1.9%) and for the nine months (9.3%). Prices also moved in the right direction, up 8% quarter-on-quarter and 14.3% for the nine months.

The balance sheet is strong, with a net cash position of $92.2 million, up from $70.6 million at the end of March 2024. They are using the weak market conditions to execute a share buyback programme, which speaks to capital allocation maturity.

Little Bites:

• Director dealings:
  • A director of a major subsidiary of Stefanutti Stocks (JSE: SSK) bought shares worth R45.5k.

• Rex Trueform (JSE: RTO) is increasing its stake in Telemedia to 88.71% through an acquisition of 25% in the company from various minority shareholders. This decision is based on the strong performance of Telemedia since the initial stake was acquired in 2020. For Rex Trueform, this investment diversifies its portfolio to include a media and broadcasting segment. The purchase price payable to the vendor is R14.1 million in cash. As a whole, Telemedia made a profit for the 11 months to May 2024 of R11.4 million.

• Barloworld (JSE: BAW) has been trading under cautionary since April. The company has renewed its cautionary and at this stage, there’s still no information on the nature of the underlying discussions that could impact the share price. We don’t even know if it relates to a disposal or acquisition.

• Following the resignation of the managing director of Metrofile’s (JSE: MFL) South African business, the CFO of the group will be stepping into that role on an interim basis as an additional set of responsibilities. It’s never ideal when a company can’t promote from within to fill a vacancy.

• Tongaat Hulett (JSE: TON) has released a circular to the shareholders related to the approved business plan. This is a requirement for the Vision Investments equity subscription to go ahead, as Vision would own around 97.3% of the company after the subscription. The threshold that triggers a special resolution is an issuance of more than 30% of shares already in issue, so goodness knows the transaction smashes through that barrier. If you have an interest in reading a circular that is so strongly linked to a business rescue plan, you’ll find it here.