November 4th, 2021 | 11:36 CET
Barsele Minerals, Mutares, Aurelius - Investments create value!
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"[...] Both the geology and the infrastructure around the project make for a very attractive cost structure. We expect to be able to produce at 50% of the current gold price. [...]" Bill Guy, Chairman, Theta Gold Mines Limited
Barsele Minerals - Not a deal-breaker
For a long time, the Canadians were in exclusive negotiations with their joint venture partner Agnico Eagle Mines about purchasing the latter's 45% interest in the promising Barsele gold project in northern Sweden. The 33,500-hectare property, in which Barsele Minerals currently holds a 55% interest, is located in the mining region of Västerbottens Län, approximately 600 km north of Stockholm.
The proposed transaction was valued at USD 45 million. Agnico would have held around 15% of the shares in Barsele Minerals upon completion of the capital measure. However, the Canadians reported that the LOI has been canceled due to "current market conditions." Commenting on the latest developments, Gary Cope, president and CEO of Barsele, said, "While both companies are disappointed that a transaction was not possible at this time, Barsele looks forward to continuing its joint venture with Agnico Eagle concerning the Barsele project. Barsele remains convinced of the potential of the Barsele project and will continue to work with Agnico Eagle."
Although the Company has not commented further on the exact reasons, we suspect that ongoing travel difficulties between America and Sweden have made the project's due diligence and on-site meetings with banks and financiers too time-consuming. But no postponements have been made. We are optimistic that the deal will still go through in the next few months. Shareholders do not seem to find the news too dramatic either. The share price has hardly reacted to the latest announcement.
For shareholders, the potential share increase by the Canadians would be a game-changer. According to the 2019 NI 43-101 compliant resource estimate, the property currently has about 2.4 million ounces of gold. Management sees the potential to increase the resource to 3.5 million ounces of gold over the medium term. Given this potential, the current market value of around CAD 76 million can be considered moderate.
Mutares - Share valued very low
As an active investor, Mutares buys companies, develops them further and then sells them again. Due to high transaction activity, the cash register of the South German Company is ringing. In the current fiscal year, the Company has projected consolidated sales of EUR 2.4 billion. The sales target for 2023 has even been raised by over 50% to at least EUR 5 billion. Thus, the investor could earn around EUR 100 million in 2023, resulting in a 2023 P/E ratio of just 5. Should the Company continue to distribute the majority of its profits to its shareholders, a dividend yield of more than 10% beckons!
A few days ago, Mutares acquired Ganter Construction & Interiors GmbH. Ganter strengthens the Goods & Services segment as a new platform acquisition. As a general contractor and expert for high-quality interior design, Ganter implements the projects of internationally renowned customers from the retail, commercial and residential sectors. The customer base includes architects, hotels, offices, restaurants, luxury brands and private property owners. With around 200 employees, Ganter recently generated revenues of EUR 110 million.
Aurelius - High number of hits
AURELIUS Equity Opportunities is also doing well. The Munich-based company is involved in corporate spin-offs and acquires medium-sized companies with development potential. The core element of the investment strategy is the operational support of the portfolio companies, which can create significant added value for the shareholders. In the last few days alone, the Company reported on three transactions.
Aurelius acquired the Norwegian dealer for workshop equipment Nordic Lift. The acquisition strengthens the AutoMaterial business of the portfolio company NDS, making NDS a leading supplier of workshop equipment in Norway. Aurelius thus once again demonstrates the success of its strategy of significantly strengthening portfolio companies through add-on acquisitions. In addition, a subsidiary of Aurelius acquired the British business activities of McKesson Corporation based in the US state of Texas. With an enterprise value of GBP 477 million, the transaction is financed through a newly created co-investment structure. McKesson UK comprises Lloyds Pharmacy and pharmaceutical wholesaler AAH. McKesson UK has an established market position in the healthcare sector and generated over GBP 5 billion and EBITDA in the high double-digit millions in 2020.
The Munich-based company was also active on the exit side, reporting the sale of Office Depot Europe to the strategic investor RAJA, based in Roissy, France, effective November 1. The RAJA Group is Europe's leading B2B mail-order company for packaging and business and warehouse equipment and a major player in the market for office supplies and furniture. The financial details of the transaction, however, were not disclosed.
Aurelius and Mutares are both specialists in leveraging potential from investments, developing powerful portfolio companies and successful exit strategies. At Barsele, the potential is also on the table, but it needs to be leveraged. We assume that the Company will continue to work on an acquisition of the entire project. Once this is completed, it will undoubtedly have a very positive impact on the share price.
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