Andrada Mining Ltd (QB) (ATMTF)

Andrada investment thesis by Bernberg:

Andrada Mining is an AIM-, NSX- and OTCQB-listed mining
company that operates the Uis tin-tantalum mine in Namibia. The
mine is operating at c0.9ktpa of tin and is ramping up to c1.9ktpa
through a fully-funded expansion programme. This, coupled with the
cost savings that the company is implementing, takes the AISC at
Uis from cUSD26,000/t of tin in FY 2024 to cUSD20,000/t in the
medium term, supporting c35% EBITDA margins. Moreover, we
believe that the market gives Andrada no credit for its compelling
co-product lithium potential. Further out, there is compelling
exploration ground around Uis and a strategic review is underway to
crystallise the value of this in the near term.

What is next for Andrada

I think Andrada will do reverse split of its shares and move from Aim to more senior market on LSE. This will be bullish for the sharer!

Berenberg research on Andrada: Too cheap at a 0.57x operating NAV

Valuation is just too cheap: Tin prices have softened by c11% over the past
month, not helped by the threat of tariffs put in place against China by the
incoming Trump administration, and ironically exacerbated by threats of
curbs on the sales of semiconductor equipment and artificial intelligence
(AI) chips to China by the outgoing Biden administration. Andrada shares
have been soft, but at its current valuation, the shares are not even pricing
in the de-risked, operational, Uis tin mine in Namibia. We calculate a value
of GBp4.1 per share for the base-case operating asset (with no lithium
upside), after adjusting for balance sheet cash and G&A expenses – implying
a P/NAV of 0.57x. Therefore, we think that the market is not giving Andrada
full credit for an operational asset, on our base case; even if we model spot
tin at USD28,000/t, it is still trading on 0.88x operational NAV. Further, this
does not assume any value for the lithium upside or expansion cases at Uis
– including this, we reach a valuation of GBp11 per share, with the stock
trading on 0.22x NAV.

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