Lycopodium is not the type of company I have any natural attraction for or interest in, but @Bear77 ’s constant banging on about it and enthusiasm for it (I very much respect his opinion in mining and mining services, where I lack understanding) warrants a look.

Investment Analysis:

·        Rock solid balance sheet, A$77m (FY25) cash (no debt) with only risk that the Trade Receivables balance is quite high at $115m (about a third of revenue) and customers are global.

·        Solid growth rate (Sales and NPAT) maybe a little lumpy, great ROE and ROC but trending down a little last year.

·        Strong NPAT margin around 10% or above historically (and forecasted) with a capital light business model, but cash conversion lags due to the growing Trade Receivables.

·        Shown very conservative management over a long period, share count unchanged in 10 years and no debt. SAXUM acquisition shows caution and prudence on dilution and balance sheet.

·        Expect it to continue to be well managed and to grow on a three year rolling average over 10%, unsure how much the current gold price rise and SAXUM will convert into growth, the market seems to be pricing in a lot of growth, I don’t have a strong enough understanding to price this in.

·        Current PE around 15 is at the top of the range for the company, a PE around 10 has been the average over the last decade, so exceptional growth is needed.

·        Global operations, including in Africa (57% revenue) which brings risk that explains it’s low average PE, however as @Bear77 pointed out with the Reko Diq project, they may be cautious of risky sites or price in the risk. “Overall strategic commitment to prioritise high-quality work over high-risk work” per their presentation.

·        Dividend yield is low due to current share price, but historically has been good.

·        Good track record and prospects, offers strong long-term possibilities.

Conclusion:

It’s going on the watch list with a view that I would be interested sub $11 despite it being a bit outside my comfort zone, but under this price and with it’s track record I feel there is a fair margin of safety. The low liquidity my offer deep discounts in the case there is a large seller. I would be buying it as a steady long-term income hold, but would exit if it became over valued like I currently view it.