MNB “Seals the Deal” with Angolan Government
This morning Minbos Resources (ASX:MNB) has come out of a trading halt and announced the much anticipated execution of a “Mineral Investment Contract” with the Angolan government.
Last time we wrote about MNB we said it was the most undervalued stock in our portfolio - we still think it is.
MNB is developing a phosphate (fertilizer) project in Angola with a 6 million tonne mining target and a 21 year mine life.
The company is also working with the International Fertilizer Development Centre to develop education programs to small holder farmers, utilising its phosphate fertilizer to increase crop yields.
Today’s contract with the Angolan government is a big milestone for the MNB as it essentially formalises the deal for exploration, feasibility studies and exploitation of the phosphate rock.
It also locks in engagement with Government Ministries and the Province of Cabinda (where the project is located), allowing the MNB to complete approvals, land and port access agreements, offtake agreements and an investment contract for the Granulation Plant.
This is effectively the ‘green light’ to move forward with the company’s Definitive Feasibility Study (DFS), which will firm up the project economics ahead of development.
A few months ago MNB’s released a Scoping Study indicating just US$27M CAPEX to get to production, with a payback period expected to be just 3 years.
With a mine life of 21 years, the project has an After Tax NPV of as much as US$260M.
MNB is currently capped at around $25M, in our opinion one of the most undervalued stocks in our portfolio.
We have been invested in MNB for a while now and as with all our portfolio investments we intend to hold a position for the long term to hopefully see MNB come into production.
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On top of today’s news - the market hasn’t yet had a chance to react to the quarterly progress report that MNB released on Friday morning, as MNB went into trading before the market opened.
The key takeaways from MNB’s Quarterly Report:
- Memorandum of Understanding (MOU) executed with the International Fertilizer Development Centre (IFDC) to develop the local fertilizer market in Angola.
- Appointment of three high-calibre Non-Executive Directors to the Board marking an important milestone in the Company’s strategy to develop the Cabinda Phosphate Project.
- Implementation of the World Economic Forum framework for Environmental, Social and Governance (ESG) matters.
- Advancement of multiple greenhouse and field trials in the US and Angola designed to test the economic and environmental advantages of the Cabinda Blend.
- DRA Global appointed to complete work for the Definitive Feasibility Study (DFS) on the design of the Caio Granulation Plant.
- Alphier Capital released a project finance teaser and engaged five interested lenders under non-disclosure agreements.
- $1.7M cash in the bank
Our favourite thing from the quarterly report is two 3D engineering design models showing what the granulation plant will look like - very encouraging to see such progress towards this project becoming a reality.
MNB: Strong ESG credentials
We believe that companies with a strong and reportable focus on ESG (Environmental, Social and Governance) will significantly outperform over the next few years.
“ESG first” companies create positive social and environmental impact, as well as financial returns - hence they attract more customers, the best talent and more investment dollars.
There are large amounts of capital seeking to invest in the best ESG opportunities.
MNB is a standout investment from an ESG perspective - see their ESG credentials here.
MNB is developing a fertiliser project, but is also working to train local farmers to increase crop yields through fertiliser use - which will have a long term positive impact on the local community
MNB’s ESG goals are multi-faceted in sub-Saharan Africa:
- potential to improve food security and nutrition
- decrease levels of poverty
- mitigate the impacts of climate change on farmers.
MNB is developing a fertilise project, but is also working to train local farmers to increase crop yields through fertiliser use - which will have a long term positive impact on the local community
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