Analysts like Genmin’s Gabon iron ore project
Our new iron ore Investment, Genmin (ASX: GEN), is the subject of a recent MST Access analyst report which puts out an interesting price target:
(Source)
A valuation of 36c against a current price of 9c.
While that price target does look interesting, we should be clear that analyst price targets are based on a number of assumptions that may be incorrect - they (or us) don't have a crystal ball. It’s definitely possible GEN does not reach these share prices. This is a small cap tech stock. Never invest on a price target alone, and always do your own research.
MST noted in its report:
“Peaceful regime change in Gabon – highly supportive of this major project: Gabon’s transitional government is highly supportive of Baniaka's development, recognising its importance in creating employment and export income. This was demonstrated when the transitional government granted a 20-year large-scale Mining Permit just 4 months after the regime change.”
Gabon’s transitional government is keen to show that it is open for business and we noticed this recent update which profiled how the country is keen to restore the country’s democratic identity following the ouster of the Bongo family which ruled the country for 54 years:
(Source)
It’s a big positive sign in our eyes.
Meanwhile the iron ore price remains on a long term uptrend in a 10 year period:
(Source)
We’re bullish on iron ore, particularly when it is matched up with a premium product like GEN’s - read our full note on GEN below:
Click here to read why we Invested in GEN
There are some macro rumblings in the iron ore space as well, from US President Joe Biden’s announcement of new steel tariffs on Chinese steel, to fears of a Chinese economic slowdown.
The key here is green steel and green iron ore - we think GEN’s product is what truly differentiates it from other products and companies on the market - green hydropower, high grade, suitable for green steel production.
Which we think should shield GEN from any iron ore/steel geopolitical machinations.
We think the product is well suited to trends in global steel manufacturing - which we see as evidenced in the fact that GEN already has FOUR Chinese offtakers signed on via MoU’s.
With the prospect of monetary policy easing around the world, global steel consumption and thus iron ore consumption could lift too.
If everything clicks into place - this is what our ultimate upside scenario is for our GEN Investment…
Our GEN Big Bet:
“GEN re-rates 1,000% by scaling up its production over time from its iron ore project in Gabon”
NOTE: our “Big Bet” is what we HOPE the ultimate success scenario looks like for this particular Investment over the long term (3+ years). There is a lot of work to be done, many risks involved - just some of which we list in our GEN Investment Memo. Success will require a significant amount of luck. There is no guarantee that our Big Bet will ever come true
What’s next for GEN?
There are two broad categories of things we are looking for from GEN, and it comes down to financing and construction - GEN’s advanced iron ore project is shovel ready…
Financing updates 🔄
This is key - and forms the basis of Objective #3 from our GEN Investment Memo…
Objective #3: Secure US$200M in CAPEX financing
Milestones
🔲 Confirm funding strategy
🔲 Secure debt financing
🔲 Secure equity financing
🔲 Secure binding offtake agreements
🔲 Secure prepayments for offtake or other strategic capital partners.
The next major step will be mine construction…
Mine construction 🔲
Milestones
🔲 Construction contracts awarded
🔲 Construction begins
🔲 Construction completed
Read our full GEN Investment memo below which details:
- GEN’s macro thematic
- Why we Invested in GEN
- Our GEN “Big Bet” - what we think the upside Investment case for GEN is
- The key objectives we want to see GEN achieve
- The key risks to our Investment thesis
- Our Investment Plan
