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Update on FCL, FSLR, SLX and some lithium stocks

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Question asked 16/12/2023

Update on FCL, FSLR, SLX and some lithium stocks

Hi MM, Queries on a few, quite different stocks follow:

FCL - On 17/08/2023, MM stated that: "MM is now neutral FCL with the position under review"; and I notice that FCL is no longer listed as "Active" in the Emerging Companies portfolio. The price has also come off quite a bit since that date. Can you please update on FCL, including what the outcome of MM's review is and if FCL might be worth considering again at these price levels (or some other price level)?
FSLR - This remains "active" and MM updated just under a month ago, remaining long and bullish "despite prolonged share price weakness". After recovering a little, FSLR has had another bout of share price weakness despite falling bond yields, etc. I know it hasn't been that long since your last update but does MM remain comfortable and patient with FSLR, and what do you think will be necessary for the share price to recover more sustainably?
MM has written quite a bit about potentially buying PLS and/or IGO at or around current levels. What will it take to push MM over the line so as to start accumulating these one or more of these stocks? Also, given IGO's Project Cosmos announcement today (including another impairment), how does this affect MM's view on IGO and at what price point do you see deep value despite today's announcement?
Silex: following on from today's updates and the various timeframes involved with Silex, including to ramp up production, does MM see Silex as a very long-term proposition in terms of sustainable share price gains? What are the price catalysts/milestones that MM thinks will hopefully lead to sustainable share price gains in the interim?

Thanks, Darren

Answer

Hi Darren,

Fineos (FCL) – frustratingly raised money in August this year, a move we felt wasn’t warranted based on the company’s balance sheet and progress towards cashflow breakeven. We pulled the ‘Active’ tag on the Emerging Companies Portfolio at the time and shares have been weak since. We have stuck with the position and are now becoming more confident in the outlook. While the raise was painful for shareholders including ourselves, we note that having the flexibility of the additional cash reserves is a positive. We are likely to hold into the next update before making a call. We are making this ‘Active’ again given recent weakness.
First Solar (FSLR US) – short answer is yes, we remain bullish on FSLR at current levels ~$US160. It’s a very volatile stock, and while bond yields are important, they are only one piece of the puzzle. Jeffries actually initiated coverage of the stock on Thursday, with a buy at $211 price target which saw the stock pop 8%.
Lithium – Our Active Growth Portfolio holds 20 positions currently with only 2% cash i.e. we a full to the gills! We would need to drop a position to buy PLS or IGO right now, while noting that we already own Mineral Resources (MIN). Ultimately, we think both PLS and IGO will rally from here and our lack of action is more a function of portfolio constraints. If pressed, we prefer PLS right here given IGO has only just got a new CEO in place after the tragic death of Peter Bradford during the year, who was the architect of their major transition from a gold/nickel company, to one focused on future facing commodities.
Silex Systems (SLX) – has rallied more than 20% this week on the back of the US’ plans to ban Russian enriched uranium – we discussed the implications here. We expect to see the price of enriched uranium remain supported on the back of this news, and likely outpace any move in the spot uranium market. First material out of Silex’s JV pilot plant is expected in the coming months, while Cameco (CCJ US) has some decisions to make around an option to increase their stake in the project. NB: We also own Cameco (CCJ) in the International Equities Portfolio.

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Pilbara Minerals Ltd (PLS)

LAST UPDATED 15/12/2023 21:39

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