RE:RE:RE:RE:Year End Financials just released
Red_Deer, Ceetong, I believe you both bring very valid points.
On the topic of private valuations being opaque, that is certainly true, but this is not limited to AAB alone. Management makes estimates based on various factors, ATP's are PGM prices, Desert Lion Energy, for instance, was the last private placement. Obviously, the true market value for these cannot be concretely established until one of the following two things happens. 1) Project is sold and a realized value is achieved. 2) Project/company is taken public, and a market-quoted price is established. That is not to say that the intrinsic value could be higher or lower than what the maker would provide, for instance, many believe the bulk of lithium juniors are in a bubble based on the public markets giving them a signficant premium based on lithium demand forecasts and production targets that might never materialize. Based on how I understand the private valuations, the company bases them off of funds invested and recent financings, which I believe understates their value, rather than inflating them. Price of commodities, which is always fluctuating, has a big role. I.e. if platinum prices were $1500-$2000 USD, I believe the viability of ATP would be a completely different story. Platinum price forecasts and market prices have been disconnected for some time, who knows how long that will persist.
Ceetong, when you bring up Pitchblack Resources, I agree, the company doesn't have assets that appear to be worth very much. Let's keep things in perspective, and acknowledge that as at January 31, the position represented about 0.6% of their public portfolio, and an even smaller percentage of their NAVPS. I think where we disagree is your insinuation that management or friends of management are driving up prices producing a fake paper value. I don't believe this is the case based on the holdings I've tracked vs. AAB's reporting period. I do agree wholeheartedly, however, that Valencia and Pitchblack have very little going on, let's see how they develop this year relative to AAB's comments that they're companies that are poised for "significant, transformative growth."
I think every investor has the ability to come to their own conclusions, but I believe the NAVPS does mean something. The market price per share is more reflective of a holding company discount, magnified by the fact that AAB is a micro-cap, with a market cap around $12 million. I look at the more meaty holdings, such as their remaining 50% of PLASA, which appers on January 31 as having a value of $6.8 million. What's interesting is that 30% is already guaranteed to command $5.5 million in LIX shares, leaving the remaining 20% with a $1.3 million valuation. Based on LIX's current market cap of $130 million, and allotting $30 million to Clayton Valley and Azizaro (being generous, here), that leaves their 80% stake in PLASA being worth appx. $100 million. Yes, let's assume that the market is already pricing in the dilution of the shares that will be given to AAB. If 80% of the project is worth $100 million, you could make the arguement that the entire project is worth around $125 million. If AAB owns 20% of that project, based on today's valuation, that stake is worth around $25 million. If the company was intentionally trying to pump up their valuation, why would they not be expliciting stating this implied value? That's around $0.28 per share in NAV? I believe it's because they're intentionally being conservative. Could PLASA or LIX be worth much less at the end of this year, of course, but I'm using facts and figures based on today's valuations.
All I'm saying is that if you're going to point out questionable valuations on holdings that amount to 0.3% of NAV, you should also do the math on some of the larger or more promising holdings as well. You have a right to be cynical and skeptical, but to actively hold shares in a company and assume management is acting against your best interests in every transaction is nonsensical.