Last year was a breakout year for Atalaya Mining. It hit record production and paid its first dividend.
This year, the company has greenlit a new processing plant at the Rio Tinto mine in Spain that takes it a step further down the value chain.
The dividend was made possible by Atalaya clearing a longstanding debt to a former partner, Astor Management. This meant a €53mn (£44mn) payment — and potentially a further €15mn in interest — but has cleared a block to dividends.
Investors are well aware of these developments. Atalaya is trading at double its pre-Covid-19 share price and is up almost a quarter on a year ago.
Chief financial officer César Sánchez and Rio Tinto mine general manager Enrique Delgado have turned this share price strength into major gains, exercising share options in January for between 144p and 309p and selling large proportions of their holdings last week for 440p. Sanchez sold 300,00 shares of the 650,000 issued through the options, while Delgado sold 250,000 of 550,000. Sanchez paid £1.25mn for his 650,000 shares, while Delgado paid £1mn for 550,000.
The company still has some hurdles to come — it is still fighting to get environmental approval for a second brownfield mine from Spanish authorities and much-increased energy costs will hit 2022 earnings, although exposure to energy prices will be reduced by an upcoming solar power plant.
Morses Club chief departs after selling shares
Things are not going well for Morses Club, the provider of “non-standard finance” including doorstep loans.
The company issued a profit warning in February, saying its adjusted pre-tax profit was likely to be between 20-30 per cent lower than the current consensus of £7.5mn. Like others in the industry, it had been hit “by a rapid increase in claim volumes submitted by claims management companies”. It also said that chief executive Paul Smith, who joined the business in 2014 and led its 2016 IPO, had left the business “with immediate effect”.
The sting in the tail came in a subsequent announcement that Smith had sold about £198,000 of shares ahead of the warning. He notified the company on the preceding Friday that he had sold the shares on the Thursday.
This sent the company’s shares into a tailspin, closing 65 per cent lower on the day. They have now lost almost 80 per cent of their value since the start of the year.
Morses is operating in a shrinking market, and one that has been dogged by companies offering to pursue claims with the Financial Ombudsman Service in return for a cut (often around 30 per cent) of any compensation received.
Provident Financial, a competitor, closed its consumer credit division in December at a cost of £100mn cost after being deluged with claims. When announcing its decision in March last year, it said the number of complaints to the ombudsman across the home credit market were 200 per cent higher in the second half of 2020 than they were in the first.
Shore Capital placed its recommendation on Morses Club’s shares under review. Until the recent announcements, the company “appeared to be doing a relatively good job” of handling claims when compared to its peers, research analyst Gary Greenwood said.
“In all likelihood, the shares have now become uninvestable,” he added.
A deep value investor might be interested, given that its market cap has now slumped below £18mn, or just three times last year’s adjusted earnings. The potential for this dropping to zero means the shares are probably not worth betting the farm on, though.
