Pinned straw:
FH26 result, probably the best result we have seen from C79. Units deployed continue to grow a bit better than expected. The company looks to be moving through breakeven, remember there is a large D&A charge due to the capex-heavy units, so its good news. The reason for the strong result can be seen in the chart below. The yellow is a reasonable return on units, while the grey is additional volumes, the "cream on top". We are seeing utilisation pick up as mainly labs process large increases in volumes. That is natural share gain, C79 has 5% market share and grwoing but also the gold price is a factor as well, incentivising additional volumes. long may it last.
contracted units were 72, whereas i have 67 for 2027 in my model, so better. there appeaars to have been a step up in penetration.
Interestingly, C79 stated that monthly samples processed are about 1m/month, capacity is 1.7m (43*40k), but the labs can scale up much better than on site mines units, but this capacity utilisation is a handy measure to follow.
i have to work through valuation, but i am prepared to cut some slack for smaller companies growing into large TAMS, as long as the story stays on track. C79 is my largest "spec" position, and i assess it as a part of my total gold exposure.
i have to fine tune numebres, but under $7 looks interesting. imo
oh i forgot to add, they kept guidance steady, which was unusual, they should go through guidance on this result. They commented that the strong $A and natural conservativeness were the reasons for no guidance raise. FX is Fx, who knows LT, otherwises i think guidance will be beat.
Discl: Held IRL 9.42% and in SM
@Solvetheriddle , aye, this was a very nice set of results, nothing to not like! Disappointed that Dirk made no mention of AI ...!
SUMMARY
- Revenue growing nicely, buoyed by a sharp increase in Additional Assay Charges from a spike in samples processed
- Good sales momentum - 8 units contracted during 1HFY26, 6 more contracted post period - this is one of the strongest halfs in recent years in terms of new lease agreements
- Gross Margins were sustained at 76.3%, EBITDA margin has increased sharply to 33.1%, a big YoY jump 19.5% and HoH jump from 28.2% - operating leverage is kicking in as fleet untilisation increases
- Sample volumes are going gang busters given strong gold market conditions - getting close to 1m samples per month
- $21.6m cash on hand, with undrawn debt facilities of $50.4m, with a further syndicated refinancing facility of $200m available
REVENUE
- The HoH revenue improvement was a much lower 17.0% which is very good, but provides a clearer indicator of sequential growth - the YoY number is quite misleading I think
- MMAP revenue was on trend at $31.5m, a 4.8% HoH increase
- What was very impressive was the sharp above trend Additional Assay Charges (AAC) revenue which jumped 71.3% HoH, reflecting the impact of both the “halo effect” of PhotonAssay technology and the current strong gold mining cycle - AAC now contributes 27% of 1HFY26 revenue vs 11.2% in 1HFY25
- Reflects continued global adoption of PhotonAssay, strong gold market conditions and materially higher utilisation across the deployed fleet
PROFITABILITY
- NPAT was $0.7m - NPAT has oscillated between profit and loss in the past 3 years
- EBITDA has steadily increased and is at its highest this half at 33.1%, up from 19.5% in 1HFY25 and 28.2% in 2HFY25
- Gross Margins have also sustained in the mid 70%’s, coming in at 76.3% this half - in line with the Gross Margin for FY25 as a whole
COST RATIO’S
- Cost management has been really good - operating leverage and economies of scale of the regional Hub approach is kicking in nicely
- Employee cost and D&A as a percentage of revenue has been falling - employee cost is falling very noticeably
- Maintenance Costs, these being the direct costs, have risen in line with rising revenue, but the rate of increase is rather mild
- Cost base has no seasonality - mostly related to global staffing
DEPLOYMENT vs NEW CONTRACTED UNITS
- 4 units deployed in the half - 1-2 units slower than I would like, but management is flagging deployment acceleration in 2HFY26
- But the very good news is 8 new contracts were signed in the half, and a further 6 units signed post period, to bring total contracted units to 72 - that is really good momentum
- 6 of these are with ALS
- 6 are direct to mine-sites
- 1 with Bureau Veritas, Chile
- 1 “XN” generation unit deployed to SGS in Perth
- Inventory on hand is 5-10 units, which should comfortably see the 2HFY26 deployments through - management also said that some of these units were already sitting in ports near its regional hubs as part of expediting deployment timelines
- 70% of the top 20 gold miners are now engaged
- Increased momentum in direct relationship with miners:
- Newmont committed to their 2nd unit
- Allied Gold committing to adopt PhotonAssay across its operations
SAMPLE VOLUMES
- The increase in sample volumes QoQ is impressive - trending towards 1m samples per month and is likely to continue on this trajectory
- Revenue from each sample drips straight to the bottomline and adds to operational leverage as there is probably very little to no marginal cost, but the cost base is spread across higher utilisation and higher revenue - very nice!
CASH
- Operating leverage is translating into good cash generation - $8.6m in Net Operating Cash Flow
- $21.6m cash, undrawn debt of $50.4m
- Capex costs are still in the ~$4m cost range
FUNDING
- Looks well under control with the additional $200m Syndicated facility - can be drawn down anytime with no contraints
- Increased the debt availability by a further $105m
GUIDANCE
- No change other than guiding to the upper end of the guidance range, despite half-year run rate suggesting that guidance is likely to be exceeded
- Management has taken a conservative view as there are potentially FX headwinds